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Blue Ocean Strategy
- 1. The Blue OceanStrategy Presented by: Stephene Roy Cardines Condino
- 2. Outline of theReport Blue Ocean and the Red ocean Value Innovation Three Compelling Taglines for a Blue Ocean Strategy The Four Grids Visualizing Strategies in 4 Steps Sequence of Blue Ocean Strategies Buyer Experience Profit Model of Blue Ocean Strategy Blue Ocean Idea Index Avoiding imitations of Blue Ocean Strategy
- 3. Blue Ocean andthe Red Ocean Red Ocean Strategy Blue Ocean Strategy Competition exist in the Market Place Making an uncontested market space. Players tries to beat and compete with Make the competition irrelevant. each other 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 firm’s activities Align the whole system of a firm’s activities with its strategic choice of differentiation or in pursuit of differentiation and low cost. low cost.
- 4. Value Innovation For anorganization to discover the Blue Ocean and leave the Bloody red Ocean, An Organization should have the so called “Value Innovation” Value Innovation is the cornerstone of the Blue Ocean Strategy by making competition irrelevant and opening an uncontested market space. Value is referred as the “Value for both the Buyer and Consumer” Innovation (Product, service or delivery) that creates value for the market Value Innovation is not the same as technology Innovation and Market Pioneering
- 5. Non Existent ofValue and Innovation “Value without innovation tends to focus on Value Creation Alone” “Innovation without Value tends to be technology driven, market pioneering and even futuristic”
- 6. Three Compelling Taglinefor a Blue Ocean Strategy Focused Divergent Compelling Tagline
- 7. Eliminate/Reduce/Raise/Create the Grid Reduce Which factors should be reduced well below industry standards? Eliminate Create Which of the factors that A Which factors should be the industry takes for New created that the industry granted should be Value eliminated? 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. 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 adventure The eliminate-reduce-raise-create grid pushes companies not only to ask all four questions in the four actions framework but also to act on all four to create a new value curve. By driving companies to fill in the grid with the actions of eliminating, reducing, raising, and creating, the grid provides four immediate benefits: it pushes them to simultaneously pursue differentiation and low costs; identifies companies who are 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. Visualizing Strategy inFour 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. Sequence of BlueOcean Strategy Buyer utility Is there exceptional buyer utility in your business idea? No-- Rethink An important part of blue ocean strategy is to Yes “get the strategic sequence right.” This Price sequence fleshes out and validates blue ocean Is your price easily accessible to the ideas to ensure their commercial viability. This mass of buyers? can then reduce business model risk. In this No-- Rethink model, potential blue ocean ideas must pass Yes through a sequence of buyer utility, price, cost, and adoption. At each step Cost there are only two options: a “yes” answer, in Can you attain your cost target to profit which case the idea may pass to the next at your strategic price? No-- Rethink step, or “no”. If an idea receives a no at any point, the company can either park the idea or Yes rethink 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. 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 Disposal How long does it How long does Does the product Do you need other Does the product Does use of the take to find the it take to get require training or products and services require external product create product 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 to Is the place of How difficult is store when not in use? If so, how costly are maintain and upgradedispose of the purchase it to unpack and they? the product? product? How effective are the attractive and install the new product’s features and How much time do How costly is Are there legal accessible? product? functions? they take? maintenance? or environmental How secure is the Do buyers have issues in Does the product or How easy are they to transaction to arrange disposing of the service deliver far obtain? environment? delivery product safely? more power or options themselves? If How rapidly can than required by the How costly is yes, how costly you make a average user? Is in disposal? and difficult is purchase? overcharged with bells this? and whistles?
- 12. Blue Ocean IdeaIndex 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. Profit Model ofBlue 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. Avoiding Imitations A ValueInnovation move does not make sense based on conventional strategic logic Brand Image conflict prevents companies from imitating a blue ocean strategy Natural monopoly blocks imitation when the size of a market cannot support another player Patents or legal permits block imitation The high volume generated by a value innovation leads to rapid cost advantages, placing potential imitators at an ongoing cost disadvantage Network externalities discourage imitation Imitation often requires significant political, operational and cultural changes
- 15. References Retrieved November 8,2011 www.slideshare.net/jessestarmer/blue-ocean- strategy-summary-61974 Retrieved November 8, 2011 from www.ribbonfarm.com/2007/08/06/book-review-blue- ocean-strategy/