Blue Ocean Strategy Making the Competition Irrelevant A Presentation for theAteneo Graduate School of Business: Regis Program Entrepreneurship Class Prepared by: Mildred D. Reyes II
blue ocean strategy What is BOS? What is BOS? A SNAPSHOT OF BOS Strategy is embodied by Professors W. Chan Kim and Renee Mauborgne in a book called, Blue Ocean Strategy. It was published by Harvard Business School Pres. BOS is the result of a decade-long study of 150 strategic moves spanning more than 30 industries over 100 years (1880-2000). The aim of BOS is not to out-perform the competition in the existing industry, but to create new market space or a blue ocean. BOS offers systematic and reproducible methodologies and processes in quest of blue oceans by both new and existing firms. BOS has introduced a number of practical tools, methodologies and frameworks to formulate and execute blue ocean strategies.
blue ocean strategy What is BOS? What is BOS? Red Ocean versus Blue Ocean RED OCEAN BLUE OCEAN • Compete in existing market • Created uncontested market space. space. • Beat the competition. • Make the competition irrelevant. • Exploit existing demand. • Create and capture new • Make the value-trade cost-off. demand. • Align the whole system of a • Break the value-cost trade-off. firm’s activities with its strategic • Align the whole system of a firm’s choice of differentiation or low activities with its strategic choice cost. of differentiation and low cost.
blue ocean strategy What is BOS? What is BOS? Conceptual Framework and Strategy Propositions Conceptual Framework Strategy Propositions•Value Innovation •Value Proposition•Tipping Point Leadership •Profit Proposition•Fair Process •People Proposition
blue ocean strategy Blue Ocean Strategy Tools BOS Strategy Tools Value Innovation •. Eliminate Costs •. Reduce VI Value Innovation •. Raise •. Create Value
blue ocean strategy Part Two BOS Strategy Tools Three Strategy Tools Blue Ocean Strategy Tools Strategy Canvas Four Actions Framework Six Principles
blue ocean strategy Blue Ocean Strategy Tools BOS Strategy Tools Strategy Canvas
blue ocean strategy Blue Ocean Strategy Tools BOS Strategy Tools The Strategy Canvas of Cirque du Soleilhi Ringling Brothers Cirque du Soleiloffering level Smaller Regional Circuslo Multiple Animal Shows Multiple Show Thrills & Danger Theme Price Productions Arenas Star Performers Aisle Concessions Fun & Humor Unique Venue Refined Viewing Artistic Music Environment & Dance
blue ocean strategy Blue Ocean Strategy Tools BOS Strategy Tools Four Action Framework REDUCE Which factors should be reduced well below the industry’s standards? ELIMINATE A New CREATE Which of the factors that Which factors should be the industry take for granted Value created that the industry has never offered? should be eliminated? Curve RAISE Which factors should be raised well above the industry’s standard?
blue ocean strategy Blue Ocean Strategy Tools Four Action Framework The Case of Cirque de Soleil (A Circus Company) ELIMINATE REDUCE • Star performers • Fun and humor • Animal shows • Thrill and danger • Aisle concession sales • Multiple show arenas CREATE RAISE • Theme • Unique venue • Refined environment • Multiple productions • Artistic music and dance
blue ocean strategy Blue Ocean Strategy Tools BOS Strategy Tools Six Principles of Blue Ocean Formulation Principles Formulation Risk • Reconstruct market conditions • Search Risk ‘ • Focus on the big picture, not the numbers • Planning Risk ‘ • Reach beyond existing demand • Scale Risk ‘ • Get the strategic sequence right • Business Model Risk ‘ Formulation Principles Execution Risk • Overcome key organizational hurdles • Organizational Risk ‘ • Build execution into strategy • Management Risk ‘
blue ocean strategy Blue Ocean Strategy Tools BOS Strategy Tools Six Principles of Blue Ocean Formulating Blue Ocean Strategy The principles that drive the successful formulation are reconstruct market boundaries, focus on the big picture, not numbers, reach beyond existing Reconstruct market Focus on the big demand, and get the strategic sequence boundaries picture, not the right. numbers It identifies the paths by which you systematically create uncontested market space. Shows how to design a company’s strategic planning process go beyond incremental improvements. Shows to maximize the size of the blue ocean and lays out the design of a Reach beyond Get the strategic strategy. existing demand sequence right
blue ocean strategy Six Principles of BOS Formulating Blue Ocean Strategy Sequence of BOS
blue ocean strategy Blue Ocean Strategy Tools Executing Blue Ocean Strategy Overcome Key Organizational Hurdles COGNITIVE POLITICAL MOTIVATIONAL RESOURCE
blue ocean strategy Six Principles of Blue Ocean Strategy Executing Blue Ocean Strategy Tipping Point Leadership What factors or acts exercise a disproportionately positive influence on breaking the status quo? On getting the maximum bang our of each buck of resource? On motivating key players to aggressively move forward with change? And on knocking down political roadblocks that often trip up even the best strategies?
blue ocean strategy Six Principles of Blue Ocean Strategy Executing Blue Ocean Strategy Build Execution into Strategy Fair Process of Strategy Strategy Formulation Process (3Es) Fair Process – Engagement, Explanation, Expectation clarity Attitudes Trust and Commitment – “I feel my opinions counts” Behavior Voluntary Cooperation – “I’ll go beyond the call of duty” Strategy Execution Exceeds Expectation – self initiated
blue ocean strategy Conclusion Conclusion Advantages Advantages Sets standards High profit margin in a new market A blue ocean strategic move can create brand equity that could last for decades
blue ocean strategy Conclusion Conclusion Disadvantages Disadvantages Intermediate strategy Eventually becomes red ocean If frameworks are not properly executed, it promotes market complacency
blue ocean strategy References • W. Chan Kim, Renée Mauborgne, Blue Ocean Strategy, 2005, Havard Business School Press. • http://www.blueoceanstrategy.com •www.nasscom.in, Blue Ocean Strategy Presentation •www.studyMARKETING.org, Blue Ocean Strategy
The EndSpecial thanks to Jenn Garces and Kristin Gonzales
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