Blue ocean strategy
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This document provides an introduction to Blue Ocean Strategy, which involves creating new market space and making competition irrelevant through strategic innovation. It outlines key concepts such as red oceans representing crowded markets and blue oceans representing new market space. The six principles of Blue Ocean Strategy are described, which involve reconstructing industry boundaries, focusing on the big picture rather than numbers, reaching beyond existing demand, getting the strategic sequence right, overcoming organizational hurdles, and building execution into strategy. The document also briefly discusses the related concept of Green Ocean Strategy and concludes that while red ocean strategies are necessary, blue ocean strategies are needed to sustain high performance through new opportunities.
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Blue ocean strategy
- 1. Introduction to Blue Ocean Strategy Musfiqur Rahman
- 2. The Book and the Authors Prof Renee Mauborgne © JOHN ABBOTT Prof Chan Kim © JOHN ABBOTT
- 3. BOS defined… The avoidance of costly competition through innovation with the aim to create a market where no firms currently operate, leaving the company to expand without competition. Musfiqur Rahman
- 4. Red Ocean Compete in crowded markets Blue Ocean Create and capture new market spaceMusfiqur Rahman
- 6. Red Oceans •Red oceans refers to –Industry boundaries defined and accepted –Competitive rules of game known –Companies try to outperform rivals; cutthroat competition –As market space gets crowded, prospects for profit and growth reduced –Products become commodities –Red ocean strategy is a market-competing strategy Musfiqur Rahman
- 8. Blue Oceans •Blue oceans refers to –Undefined market space, demand creation, opportunity for highly profitable growth –Most are created from within red oceans by expanding existing industry boundaries –Rules of game waiting to be set –Competition irrelevant –Blue ocean strategy is a market-creating strategy Musfiqur Rahman
- 9. The Rising Imperative of Creating Blue Oceans • Supply is exceeding demand in most industries • global competition is intensifying • Problems: – Accelerated commodization of products and services – Increasing price wars – Shrinking profit margins • Red oceans becoming bloodier, need to be concerned with creating blue oceans Musfiqur Rahman
- 10. The Impact of Creating Blue Oceans Musfiqur Rahman
- 11. Red Ocean Vs. Blue Ocean • Compete in existing market space • Beat the competition • Exploit existing demand • Make the value-cost trade-off • Align the whole system of a firm’s activities with its strategic choice of differentiation or low cost • Create uncontested market space • Make the competition irrelevant • Create and capture new demand • Break the value-cost trade- off • Align the whole system of a firm’s activities in pursuit of differentiation and low cost Musfiqur Rahman
- 12. Six Principles of BOS Musfiqur Rahman
- 13. 1. Reconstruct Market Boundaries…1. Reconstruct Market Boundaries… Musfiqur Rahman
- 14. What factors should be eliminated that the industry has taken for granted? Eliminate What factors should be reduced well below the industry standard? Reduce What factors should be created that the industry has never offered? Create What factors should be raised well beyond the industry standard? Raise Four Actions to create a Blue Ocean 2. Focus on the Big Picture, Not the Numbers… 2. Focus on the Big Picture, Not the Numbers… Musfiqur Rahman
- 16. Viewing the Cost / Value Relationship as Inverse… Cost Reduction Value Increase • Increase of value implies increase of cost • Reduction of cost implies decrease in value Musfiqur Rahman
- 17. 3. Reach Beyond Existing Demand…3. Reach Beyond Existing Demand… Musfiqur Rahman
- 19. 5. Overcome Key Organisational Hurdles… 5. Overcome Key Organisational Hurdles… Musfiqur Rahman
- 20. 6. Build Execution into Strategy…6. Build Execution into Strategy… Musfiqur Rahman
- 22. Musfiqur Rahman
- 23. Green Ocean Strategy • Green Ocean Strategy is not about greening or saving the environment. • Discipline of strategy that concentrates on how to maximize both fixed, internal and human resources. • Instead of copying or benchmarking against the competition, the focus is to be more realistic in relation to what the business can actually commit or deliver. Musfiqur Rahman
- 24. Green Ocean Strategy • Using the analogy of beach and ocean, before one reaches the blue part of the ocean, there is the green. • So it makes more sense that if a business can stay within the Green Ocean, where the water is clearer and nearer the shore, then this would be less risky, more practical, and eminently more desirable. Musfiqur Rahman
- 25. Musfiqur Rahman
- 26. Conclusion While traditional competition-based strategies (red ocean strategies) are necessary, they are not sufficient to sustain high performance. Companies need to go beyond competing to seize new profit and growth opportunities. Musfiqur Rahman
Editor's Notes
- To win in the future New Market Space, companies must stop competing with each other. Because the only way to beat the competition is to stop trying to beat the competition. To understand this idea, imagine a market universe composed to two sorts of oceans: -red oceans and -blue oceans.