Sse blue ocean_group8a_2011

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Sse blue ocean_group8a_2011

  1. 1. SSE – Media Management<br />Group 8A<br />The picture used above is for educational purpose and was taken from http://www.flickr.com/photos/bradjward/3023082302/<br />
  2. 2. What is Blue Ocean Strategy<br />Description:<br />About doing business where there are no competitors. It is about creating NEW lands, not dividing existing land<br />Focusing on the red ocean means: accepting the key constraining factors of war such as limited terrain and the need to be better (competitive) than the enemies to succeed<br />
  3. 3. Red Ocean Characteristics<br />Characteristics of Red Ocean Strategy:<br /><ul><li>Compete in existing market space
  4. 4. Beat the competition
  5. 5. Exploit existing demand
  6. 6. Make the value/cost trade off
  7. 7. Align the whole system of a company’s activities with its strategic choice of differentiation ORlow cost
  8. 8. Limits to growth of profitability</li></li></ul><li>Blue Ocean Characteristics<br />Characteristics of Blue Ocean Strategy:<br /><ul><li>Create uncontested market space
  9. 9. Make the competition irrelevant
  10. 10. Create and capture new demand
  11. 11. Break the value/cost trade off
  12. 12. Easier to become profitable
  13. 13. Align the whole system of a company’s activities in pursuit of differentiation ANDlow cost</li></li></ul><li>Comparison of Margins<br />Study of 108 companies shows that:<br /><ul><li>86% of new ventures were line extensions = Red Oceans
  14. 14. These contribute to 62% of revenues, but only 39% of new profits
  15. 15. 14% of new ventures were in new markets = Blue Oceans
  16. 16. These contribute to 38% of revenues, but 61% of profits</li></li></ul><li>Blue Ocean Strategy<br />Facts about blue oceans:<br /><ul><li>Blue oceans are not about technology innovation
  17. 17. Can be created in the company’s core business
  18. 18. Focus outside the current industry
  19. 19. Incumbents often create blue oceans
  20. 20. Company and industry are the wrong units of analzsis
  21. 21. Creating blue oceans build brands</li></li></ul><li>Nintendo Wii as a Blue Ocean in Gaming<br />Why the old industry was a red ocean:<br /><ul><li>Industry focused on graphical advancement and complex gaming experience
  22. 22. Margins on conventional consoles were low
  23. 23. Nintendo lagged behind the Microsoft Xbox and Sony Playstation and competition was high</li></ul>Why the Wii is a blue ocean investment:<br /><ul><li>Completely new gaming experience (Simple and inclusive, family friendly)
  24. 24. Innovative way of using existing technology, not developing radically new technologies
  25. 25. Avoiding competition on graphics and processors
  26. 26. No value-cost tradeoff, margins were high
  27. 27. Updating and improving the Nintendo brand</li></li></ul><li>Sources<br />Kim & Mauborgne (2004). Blue Ocean Strategy<br />www.wii.com (accessed on January 25 2011)<br />

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