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Blue ocean
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Sse Kim Group7

  1. 1. Blue Ocean by W. Chan Kim and Renée Mauborgne Harvard Business Review 2004 Carolina Appelqvist - 40090 Helena Brodbeck - 40093 Mikael Meijer - 40079  Riikka Murto - 40097
  2. 2. AGENDA   Executive summary Red ocean strategy Blue ocean strategy   Nintendo WII                  
  3. 3. EXECUTIVE SUMMARY Red Oceans represent the industries existing today, which are characterized by competition about existing demand.   A blue ocean strategy creates new demand and market space, which makes competition irrelevant. It also lacks the trade-off between cost and value, making it possible to pursue differentiation and low cost simultaneously.   This will be demonstrated by the example of Nintendo Wii.
  4. 4. Strategic analysis Environment Organization Industry Internal analysis RBV Model Inside->Out External analysis I/O Model Outside->In
  5. 5. FROM RED OCEANS <ul><li>&quot;Red oceans represent all the industries in existence today  </li></ul><ul><li>  - the known market space&quot; </li></ul><ul><li>  </li></ul><ul><li>In red oceans: </li></ul><ul><ul><li>industry boundaries are defined and accepted </li></ul></ul><ul><ul><li>competitive rules of the game are well understood </li></ul></ul><ul><ul><li>companies try to outperform their rivals in order to get a greater share of existing demand </li></ul></ul><ul><ul><li>prospects for profit and growth are reduced </li></ul></ul><ul><ul><li>products turn into commodities </li></ul></ul>
  6. 6. TO BLUE OCEANS <ul><li>&quot;Blue oceans denote all the industries not in existence today </li></ul><ul><li>  - the unknown market space, unattained by competition&quot; </li></ul><ul><li>  </li></ul><ul><li>In blue oceans demand is created, rather than fought over </li></ul><ul><li>2 ways to create blue oceans: </li></ul><ul><ul><li>give rise to completely new industries </li></ul></ul><ul><ul><li>create blue ocean from within red ocean by altering the boundaries of an existing industry </li></ul></ul><ul><li>  </li></ul>
  7. 7. BLUE OCEAN STRATEGY <ul><li>Findings: </li></ul><ul><ul><li>Blue oceans are not about technology innovation </li></ul></ul><ul><ul><li>Blue oceans are often created by incumbents -  and usually within their core business </li></ul></ul><ul><ul><li>Company and industry are the wrong units of analysis </li></ul></ul><ul><ul><li>Creating blue oceans builds brands </li></ul></ul><ul><li>  </li></ul><ul><li>Defining characteristics: </li></ul><ul><ul><li>creators of blue oceans never use competition as benchmark </li></ul></ul><ul><ul><li>no trade-off between value and cost -> blue ocean strategy pursues differentiation and low cost simultaneously </li></ul></ul>
  8. 8. RED OCEAN VERSUS BLUE OCEAN   Compete in existing market space   Create uncontested market space   Beat the competition   Make the competition irrelevant   Exploit existing demand   Create and capture new demand   Make the value/cost trade-off   Break the value/cost trade-off Align the whole system of a company's activities with its strategy choice of differentiation or low cost Align the whole system of a company's activities in pursuit of differentiation and low cost.
  9. 9. NINTENDO WII  Industry situation before Wii: different gaming consoles were fighting for market share Wii stretched the boundaries of the industry by combining video gaming with doing sports.    It created a blue ocean by both value and technology pioneering.
  10. 10. NINTENDO WII    Source:
  11. 11. 'Red and blue have always coexisted and always will' (Kim & Mauborgne 2004)
  12. 12. CIRQUE