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Blue Ocean Strategy


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Blue Ocean Strategy

  1. 1. The Blue Ocean Strategy Presented by: Stephene Roy Cardines Condino
  2. 2. Outline of the ReportBlue Ocean and the Red oceanValue InnovationThree Compelling Taglines for a Blue Ocean StrategyThe Four GridsVisualizing Strategies in 4 StepsSequence of Blue Ocean StrategiesBuyer ExperienceProfit Model of Blue Ocean StrategyBlue Ocean Idea IndexAvoiding imitations of Blue Ocean Strategy
  3. 3. Blue Ocean and the Red Ocean Red Ocean Strategy Blue Ocean StrategyCompetition exist in the Market Place Making an uncontested market space.Players tries to beat and compete with Make the competition irrelevant.each otherExploit 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 firm’s activities Align the whole system of a firm’s activitieswith its strategic choice of differentiation or in pursuit of differentiation and low cost.low cost.
  4. 4. Value InnovationFor an organization to discover the Blue Ocean and leavethe Bloody red Ocean, An Organization should have the socalled “Value Innovation”Value Innovation is the cornerstone of the Blue OceanStrategy by making competition irrelevant and opening anuncontested market space.Value is referred as the “Value for both the Buyer andConsumer”Innovation (Product, service or delivery) that creates valuefor the marketValue Innovation is not the same as technology Innovationand Market Pioneering
  5. 5. Non Existent of Value and Innovation“Value without innovation tends to focus on ValueCreation Alone”“Innovation without Value tends to be technologydriven, market pioneering and even futuristic”
  6. 6. Three Compelling Tagline for a Blue Ocean Strategy Focused Divergent Compelling Tagline
  7. 7. Eliminate/Reduce/Raise/Create the Grid Reduce Which factors should be reduced well below industry standards? Eliminate CreateWhich of the factors that A Which factors should bethe industry takes for New created that the industrygranted should be Valueeliminated? has never offered? Curve Raise Which factors should be raised well above the industry’s standard? The four actions framework offers an technique that breaks the trade-off between differentiation and low cost and to create a new value curve. It answers the four key questions of what industry takes for granted and needs to be eliminated; what factors need to be reduced below industry standards; what factors need to be raised above industry standards; and what should be created that the industry has never offered.
  8. 8. Eliminate/Reduce/Raise/Create the Grid Eliminate Raise Enological terminology and distinctions Price versus budget wines Aging qualities Retail Store involvement Above-the-line marketing Reduce Create Wine complexity Easy drinking Wine range Ease of selection Vineyard prestige Fun and adventureThe eliminate-reduce-raise-create grid pushes companies not only to ask all four questions in the fouractions framework but also to act on all four to create a new value curve. By driving companies to fill in thegrid with the actions of eliminating, reducing, raising, and creating, the grid provides four immediatebenefits: it pushes them to simultaneously pursue differentiation and low costs; identifies companies whoare only raising and creating thereby raising costs; makes it easier for managers to understand and comply;and it drives companies to scrutinize every factor the industry competes on.
  9. 9. Visualizing Strategy in Four Steps The four steps include visual awakening, visual exploration, visual strategy fair, and visual communication. 1. Visual 2. Visual 3. Visual Strategy 4. Visual Awakening Exploration Fair Communicatio n •Compare your •Go into the field to •Draw your “to be” strategy •Distribute your before- business with your explore the six paths to canvas based on insights and-after strategic profiles competitors’ by creating blue oceans. from field observations. on one page for easy drawing your “as is” comparison. strategy canvas. •Observe the distinctive •Get feedback on advantages of alternative strategy •Support only those •See where your alternative products and canvases from customers, projects and operational strategy needs to services. competitors’ customers, moves that allow your change and noncustomers. company to close the •See which factors you gaps to actualize the new should eliminate, •Use feedback to build the strategy. create, or change. best “to be” future strategy.
  10. 10. Sequence of Blue Ocean Strategy Buyer utility Is there exceptional buyer utility in your business idea? No-- RethinkAn important part of blue ocean strategy is to Yes“get the strategic sequence right.” This Pricesequence fleshes out and validates blue ocean Is your price easily accessible to theideas to ensure their commercial viability. This mass of buyers?can then reduce business model risk. In this No-- Rethinkmodel, potential blue ocean ideas must pass Yesthrough a sequence of buyerutility, price, cost, and adoption. At each step Costthere are only two options: a “yes” answer, in Can you attain your cost target to profitwhich case the idea may pass to the next at your strategic price? No-- Rethinkstep, or “no”. If an idea receives a no at anypoint, the company can either park the idea or Yesrethink it until you get a yes. Adoption What are the adoption hurdles in actualizing your business idea? Are you addressing them up front? No-- Rethink Yes A Commercially Viable Blue Ocean Idea
  11. 11. Buyer Experience Six Stages of Buyer’s experience. The six stages of Buyer experience is running more or less sequentially from purchase to disposal. Each stage encompasses a wide variety of specific experiences. At each stage, managers can ask a set of questions to gauge the quality of buyer’s experience. Purchase Delivery Use Supplements Maintenance DisposalHow long does it How long does Does the product Do you need other Does the product Does use of thetake to find the it take to get require training or products and services require external product createproduct you the product expert assistance? to make this product maintenance? waste items?need? delivered? work? Is the product easy to How easy is it to How easy is it toIs the place of How difficult is store when not in use? If so, how costly are maintain and upgradedispose of thepurchase it to unpack and they? the product? product? How effective are theattractive and install the new product’s features and How much time do How costly is Are there legalaccessible? product? functions? they take? maintenance? or environmentalHow secure is the Do buyers have issues in Does the product or How easy are they totransaction to arrange disposing of the service deliver far obtain?environment? delivery product safely? more power or options themselves? IfHow rapidly can than required by the How costly is yes, how costlyyou make a average user? Is in disposal? and difficult ispurchase? overcharged with bells this? and whistles?
  12. 12. Blue Ocean Idea Index Utility Is there exceptional utility? Are there compelling reasons to buy your offering? Price Is your price easily accessible to the mass of buyers? Cost Does your cost structure meet the target cost?Adoption Have you addressed adoption hurdles up front?
  13. 13. Profit Model of Blue Ocean Strategy The profit model of blue ocean strategy shows how value innovation typically maximizes profit by using the three levers of strategic price, target cost, and pricing innovation. The Strategic Price The Target Profit The Target Cost Streamlining and Cost Partnering Innovations Pricing Innovation
  14. 14. Avoiding ImitationsA Value Innovation move does not make sense based onconventional strategic logicBrand Image conflict prevents companies from imitating a blueocean strategyNatural monopoly blocks imitation when the size of a marketcannot support another playerPatents or legal permits block imitationThe high volume generated by a value innovation leads to rapidcost advantages, placing potential imitators at an ongoing costdisadvantageNetwork externalities discourage imitationImitation often requires significant political, operational andcultural changes
  15. 15. ReferencesRetrieved November 8, November 8, 2011