Blue ocean against the "five forces" Porter


Harward Business Review. 

Andrew Burke (Andrew Burke) - Professor of Cranfield School of Management. André van Stel (Andre van Stel) nbsp; - a senior fellow at the European Institute of Management (EIM). Turik Roy (Roy Thurik) - University professor. Erasmus of Rotterdam (Netherlands).
You are a supporter of the theory of the five competitive forces by Michael Porter or a fan of the idea of ​​the "blue ocean"? In other words, if you are trying at all costs to become a leader in existing markets or looking for opportunities to build new? Each of these methods of forming business strategy its adherents. However, to our knowledge, so far no one has conducted a study that would compare the two ideological camps together. We decided to fill this gap, based on the work of the famous American economist Harold Hotelling, published in 1921. He says, as long as the market is profitable, the number of companies operating at it is growing. Then it reaches a saturation point and profitability aligned players. If this angle to look at a particular industry, you can determine which strategy is best for her - an innovative and competitive. Following the theory of the "blue ocean", you need to create a new market. Perhaps in the long run it will attract consumers. Then the industry's profits and the number of players in the market will grow. A company that managed to find a new niche, will succeed. But if, after the emergence of new players in profits, however, will begin to decline, then the amount of profit a new market was initially limited or competitors easily caught pioneer. Under this scenario, the winner will be bet on the competition.

We tested our model on the Dutch retail industry. Here all the time created new brands and a very popular strategy of differentiation. As a result, an increasing number of market segments, which, in turn, deepened and expanded. Moreover, it helps to revive "stale" sectors, such as the traditional "economic" stores. We have examined 41 type shops: data on profit margins and number of players in each type from 1982 to 2000. In 2000, our sample included 83% of the retail business in the Netherlands, and it accounted for about 90% of turnover and employment. To our surprise, the results of the survey showed that the strategy of "blue ocean" can ensure sustainable growth. More than half of the types of shops there was a positive correlation between the increase in the average income and the number of companies. Moreover, these two indicators they grew and falling parallel. Of course, it is unwise to completely abandon the strategy of competing hard. As a result, competition sooner or later, "eat" the resulting profit from innovation. But the saturation takes about 15 years, and during that time gives way to the next. Companies should try to combine both approaches. For example, use a competitive strategy to reduce the rate of decline in profitability in the existing market, and received additional funds to invest in "blue oceans".