The danger of firms entering a blue ocean
While the intent of developing a blue ocean strategy is to step away from competition, there is always the danger that other firms will imitate your approach and enter your blue ocean. This can undermine the advantage that you had – while the intent of a blue ocean strategy is to avoid competition if other firms enter your market, then suddenly face competition again.
Why may firms enter a blue ocean?
The risk associated with firms entering a blue ocean comes from your success – creating a new, profitable market, without competitors may spur imitate. While other firms may not have been able to have anticipated the market, once you have proved the space is viable, other firms may want to expand to cater to this new market segment or chase customers that they have lost to you.
Sources of increased competition
There are two possible sources of increased competition that can result in your blue ocean turning to a red ocean:
Existing firms moving into your blue ocean
The first type of competitors that can imitate your strategy is firms that existed in the prior market space. These are your ‘former competitors’ that you had tried to move away from. If mobilities barriers are not high, then they may be able to change their positioning to move into the new market space.
New firms entering the blue ocean
Another possibility is brand new firms that enter the market. If there are limited entry barriers that make it difficult for new companies to enter the industry, new firms may be able to enter and compete in your blue ocean. Unlike existing firms, new entrants are not constrained by their past – they can develop an approach that directly targets the blue ocean.
How can you reduce the risk of new firms entering your blue ocean
Actively consider mobilities and entry barriers in advance
The first component of protecting your blue ocean is actively considering in advance how difficult it would be for existing firms to move into your space or the challenges that a new company would face entering. If such mobility and entry barriers are slim, then it is worth considering whether the risks and costs associated with moving into the blue ocean are worth it.
Consider dimensions that you can emphasize that others would have a hard time imitating
Another component of preventing imitation is moving into an area that others would have a specifically difficult time imitating. Potentially you can create a blue ocean in an area that you happen to possess resources and capabilities that others would have a particularly difficult time developing.
Are the significant first-mover advantages?
Similar to the unique resources that may protect your blue ocean position are strong first-mover advantages that benefit you from creating the blue ocean. If, for example, you are able to establish a brand or reputation by being the first to crate the blue ocean or high economies of scale from growing a significant size, others may face difficulties subsequently entering.
Consider ways of continually evolving your blue ocean
Another way of maintaining a blu ocean is to continually look to move into new blue oceans. Rather than seeing the move to a blue ocean as a one-off event, instead view it as a continual process, where you are always monitoring the movements of other firms towards your market space, and considering ways that you can further differentiate your offerings from these other firms.