Blue Ocean

DEFINITION of 'Blue Ocean'

A slang term for the uncontested market space for an unknown industry or innovation. Coined by professors W. Chan Kim and Renee Mauborgne in their book "Blue Ocean Strategy: How to Create Uncontested Market Space and the Make Competition Irrelevant" (2005), blue oceans are associated with high potential profits.

BREAKING DOWN 'Blue Ocean'

In an established industry, companies compete with each other for every piece of available market share. The competition is often so intense that some firms cannot sustain themselves and stop operating. This type of industry describes a red ocean, representing saturated market share, bloodied by competition.

To avoid costly competition, firms can innovate or expand in the hope of finding a blue ocean. A blue ocean exists where no firms currently operate, leaving the company to expand without competition.

RELATED TERMS
  1. Perfect Competition

    A market structure in which the following five criteria are met: ...
  2. Market Share

    The percentage of an industry or market's total sales that is ...
  3. Industry

    A classification that refers to a group of companies that are ...
  4. Monopoly

    A situation in which a single company or group owns all or nearly ...
  5. Market Saturation

    When the amount of product provided in a market has been maximized ...
  6. Sector

    1. An area of the economy in which businesses share the same ...
Related Articles
  1. Economics

    Economics Basics

    Learn economics principles such as the relationship of supply and demand, elasticity, utility, and more!
  2. Markets

    Great Company Or Growing Industry?

    Look at the big picture when choosing a company - what you see may really be a stage in its industry's growth.
  3. Term

    The History and Purpose of TQM

    Total quality management explores processes to enhance quality and productivity.
  4. Term

    What's an Incumbency Certificate?

    An incumbency certificate lists an organization’s incumbent directors and officers.
  5. Investing Basics

    Financial Boiler Rooms Today: Real-World Examples

    High-pressure sales environments pitching inflated penny stocks or faux companies exist and cost investors millions every year. Here are a few examples.
  6. Economics

    What's a Memorandum Of Understanding?

    A memorandum of understanding, or an MOU, is a written legal agreement.
  7. Economics

    Explaining Incorporation

    Incorporation is the process of legally becoming an entity that is separate from its owners.
  8. Economics

    What is a Firm?

    A firm is a business or organization that sells goods or services on a for-profit basis.
  9. Investing Basics

    Vertical Integration

    Vertical integration occurs when a company buys and controls other businesses along its supply chain.
  10. Investing

    How to Attend Berkshire Hathaway's Annual Meeting (BRK.A, BRK.B)

    An overview of what is required to go to the Berkshire Hathaway Annual General Meeting.
RELATED FAQS
  1. Do working capital funds expire?

    While working capital funds do not expire, the working capital figure does change over time. This is because it is calculated ... Read Full Answer >>
  2. Does working capital include inventory?

    A company's working capital includes inventory, and increases in inventory make working capital increase. Working capital ... Read Full Answer >>
  3. How can I calculate funds from operation in Excel?

    In general, the terms "work in progress" and "work in process" are used interchangeably to refer to products midway through ... Read Full Answer >>
  4. When does Q4 start and finish?

    Most companies such as Facebook have financial years that end on December 31st. For these companies, the fourth quarter begins ... Read Full Answer >>
  5. When is it useful to look at a company's fixed asset turnover ratio?

    It is useful to look at a company's fixed asset turnover ratio when an outside observer, such as an investor, wants to know ... Read Full Answer >>
  6. What is the difference between perfect and imperfect competition?

    Perfect competition is a microeconomics concept that describes a market structure controlled entirely by market forces. In ... Read Full Answer >>
Hot Definitions
  1. Socially Responsible Investment - SRI

    An investment that is considered socially responsible because of the nature of the business the company conducts. Common ...
  2. Presidential Election Cycle (Theory)

    A theory developed by Yale Hirsch that states that U.S. stock markets are weakest in the year following the election of a ...
  3. Super Bowl Indicator

    An indicator based on the belief that a Super Bowl win for a team from the old AFL (AFC division) foretells a decline in ...
  4. Flight To Quality

    The action of investors moving their capital away from riskier investments to the safest possible investment vehicles. This ...
  5. Discouraged Worker

    A person who is eligible for employment and is able to work, but is currently unemployed and has not attempted to find employment ...
  6. Ponzimonium

    After Bernard Madoff's $65 billion Ponzi scheme was revealed, many new (smaller-scale) Ponzi schemers became exposed. Ponzimonium ...
Trading Center