This document summarizes the key concepts of Blue Ocean Strategy (BOS) based on a book by W. Chan Kim and Renée Mauborgne. It provides an overview of BOS, including its definition as creating new market space without competition by raising and creating new factors. It discusses the six principles of BOS and tools like the strategy canvas. Two case studies are presented: the classical orchestra industry, where BOS helped Andre Rieu succeed, and Nintendo Wii, which used BOS to target non-gamers and become profitable with new demand. The document concludes by comparing traditional vs. innovative tutorials to illustrate how BOS allows businesses to avoid competition.

1. Presented by:
Nikhil Mhatre
Roshan Tupe
Jyothi Dharmarajan
Khusbhu Nakar
Sweety Singh
Making the Competition Irrelevant

2. Content
s History
 Explanation of BOS with self made story
 Introduction and Definition
 Types of Strategy
 Comparison between RED and BLUE
 Blue Ocean Strategy & Strategic Positioning
 Six Principles of Blue Ocean Strategy
 Strategy Canvas and Four Action Framework
 Case Study 1
 Case Study 2

3. Based on ‘Blue Ocean Strategy’, a book published in
2005 and written by W. Chan Kim and Renée
Mauborgne, Professors at INSEAD and Co-Directors of
the INSEAD Blue Ocean Strategy Institute
W. Chan Kim

4. Explanation of Blue
Ocean Strategy with
self made Story

12. Two months
later…….

19. 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.
• Blue oceans denote all industries NOT in
existence today
• The Unknown market space
• Untainted by competition
• In Blue Oceans, demand is created not
fought over
• In Blue Oceans, growth is profitable and
rapid

20. Always choose RIGHT side
for business

21. Types of
StrategyIn the red ocean, differentiation costs because firms compete with the
same best-practice principle. Here, the strategic choices for firms are to
pursue either differentiation or low cost. In the reconstructionist world,
however, the strategic aim is to create new best-practice rules by breaking
the existing value-cost trade-off and thereby creating blue ocean.

24. Comparison between
RED OCEAN and BLUE OCEAN

25. Blue Ocean Strategy
&
Strategic Positioning

26. Cost
Reduction
Value
Increase
• Increase of value
implies increase of cost
• Reduction of cost
implies decrease in
value

27. Cost
Reduction
Value
Increase
• Both cost reduction
and value increase are
possible…

28. Value Innovation
Value innovation is created in the region where a company’s actions
favorably affect both its cost structure and its value proposition to buyers.
Cost savings are made by eliminating and reducing the factors an industry
competes on. Buyer value is lifted by raising and creating elements the
industry has never offered. Over time, costs are reduced further as scale
economies kick in due to the high sales volumes that superior value
generates.
Costs
Buyer Value
Value
Innovation
Eliminate
Reduce
Raise
Create
Value
Innovation

30. • Reconstruct market boundaries
• Focus on the big picture, not the
numbers
• Reach beyond existing demand
• Get the strategic sequence right
Formulation
Principles
• Overcome key organisational
hurdles
• Build execution into strategyExecution
Principles

31. 1. Reconstruct Market Boundaries…

32. • Which factors
should be created
that the industry
never offered?
• Which factors
should be raised
well above the
industry
standard?
• Which factors
should be reduced
well below the
industry
standard?
• Which of the
factors that the
industry takes for
granted should be
eliminated?
Eliminate Reduce
CreateRaise
2. Focus on the Big Picture,
Not the Numbers…

33. A New
Value
Curve
Reduce
Create
Raise
Eliminate

34. 3. Reach Beyond Existing
Demand…

35. 4. Get the
Strategic
Sequence
Right…

36. 5. Overcome Key
Organisational Hurdles…

37. Explanation
Expectation Clarity
Engagement
6. Build Execution into
Strategy…

38. www.derekhendrikz.c
Working with other BOS Tools…

39. • Shows the strategic profile of an industry by depicting very clearly the
factors that affect competition among industry players, as well as those
that might in the future.
• Shows the strategic profile of current and potential competitors,
identifying which factors they invest in strategically.
• Draws the company’s strategic profile, or value curve, showing how it
invests in the factors of competition and how it might invest in them in the
future.
• The horizontal axis lists factors of competition for the industry.
• The vertical axis indicates the degree to which industry players and the
providers of alternative services invest in the competitive factors.
The Strategy Canvas:

40. Strategy Canvas for Cirque du Soleil

41. The PMS Grid:

42. PMS Grid Sample…

43. www.derekhendrikz.c
The Buyer Experience Cycle /
Buyer Utility Map (BEC / BUM)
Framework

44. www.derekhendrikz.c

45. Tipping Point Leadership…

47. Blue Ocean
Strategy Case
Example 1
CLASSICAL ORCHESTRA INDUSTRY

48. The Classical Orchestra
Industry

49. Intensifying competition
Shrinking Audiences
1993 2003
1993 2003
27000
37000 1137
749
No. of
Concerts
Avg. No. of Audience per concert

50. Revenue breakdown of a
typical orchestra
Source % of total revenue
Live Performance <60%
Royalties from
Recordings
<2%
Government Funds [31% ~ 9%]
Private Philanthropy [11% ~ 40%]

51. Unsustainable cost
structure
 Half of orchestra’s costs go to salaries
and superstar guest soloists and
conductors.
 Minimum salaries in the Big 5 over
US$100K with 8 to 9 week vacation for
over one hundred members.
 Conductors earning over US$2M
 Higher marketing costs as
orchestras complete for shrinking
audience and public and private
funding.
High Fixed
Cost
Variable costs
on the rise

52. Strategy Canvas Traditional
Orchestra Experience
Offeringlevel
Factors of Competition
High
Low

53. A difficult environment
even for “The Big Five”
 Boston Symphony,Chicago Symphony,Cleveland
Orchestra,New York Philharmonic and
Philadelphia Orchestra
 Despite all subsidies. Brand name and quality
of performance, all 5 orchestras, whose
endowments together amount to US$800
million. Are running deficits that go into the
millions.

54. Strategy Canvas Andre Rieu vs.
Traditional Orchestra Experience
Offeringlevel
Factors of Competition
Eliminate Reduce Raise Create
Andre Rieu

55. CASE STUDY 2 :
To the rescue of
Analysis and Strategy for survival in the
consoles video game industry

56. Nintendo Wii
Profitable Growth with New
Demand Creation
 “We are not competing against SONY or MICROSOFT. We are battling
the indifference of people who have no interest in videogames. We
want to appeal to mothers who don’t want consoles in their living
rooms, and to the elderly and to young women’
 Satoru Iwata (Nintendo President) Fortune Magazine 06/11/07
 Inside Nintendo, we call our strategy “blue Ocean". yes those who’ve
always played games are still playing, but we’ve got people who’ve
never played to start loving it.
Perrin Kaplan, Forbes Interview

58. Nintendo Wii :Results
 Has been selling at the rate of one unit per second since
its launch on 19th November 2006
 Zipped past SONY in market value in June 2007 and
became one of Japan’s top 10 companies for the first
time.
 While SONY loses $240~$300 on each PlayStation 3 sold.
Nintendo makes $50 on every unit.
 Profits reached almost $1.5 billion. or $442.000 per
employee in 2007. Compared with MICROSOFT’s
$177.000 and Google’s $288.000.

59. Strategic approach
Strategy
Nintendo Wii U
launch
New Targets
New marketing
communications
New services

60. Strategy 1
 Big momentum for launch of
 Large marketing communication campaign:
 PR
 Advertising
 Events
 Activation/trade activities
 Highlight differentiators
 Offer new services
 Strategic alliances with top brands

61. Strategy 2
Attack new target audiences:
 Schools
 Parents
 Special services
 Different channel
 Different positioning
 Alliance with government
 New marketing communications and PR campaign

62.  Wii for senior citizens:
 Population ageing – longer life
 Retired people have a lot of time and money
 Activities and services through the Wii
 Use the abilities of the Wii for this target
 Develop health and exercise capabilities
 Advertising of products and alliance with pharmacy
companies
 Marketing communications and alliances
campaigns for this target
Strategy 3

63.  Wii woman:
 Increase usability of women
 Shopping
 Beauty apps and advise
 Alliances with brands
 Large marketing, branding and
 communications campaign targeted
at women, mostly focused on social networks
Strategy 4

64. Strategy 5
 Transform Wii into
an entertainment hub:
 Online resources
 Targeted at families
 Alliance with Disney and other networks
 Activities for the family
 Advertising and sponsorship trade with family
products.

65. Strategy Canvas for
Nintendo Wii
0
2
4
6
8
10
Offeringlevel
Factors of Competition
High Eliminate Reduce Raise Create
Low
Nintendo Wii
Other Gaming
Companies

67. After 12
months…

68. comparison between
Manoj tutorials vs Mayur Tutorials
Manoj was
following
the same
pattern as
others did..
So due to
that he was
facing lot of
competition
as he was
new in this
field
On other
side,
Mayur took
advantag
e of BOS
and
implement
ed some
innovative
ideas &
change
the entire
pattern of
business

69. Following patterns used by
both
Manoj & Others
• Started classes in the prime
• location
• Attractive classrooms with
• comforts & good ambience
• Best & high qualified faculties
• Dedicated libraries for each
batch
• Extra curricular activities
• Providing additional
stationery
Mayur
• Web based learning
• environment
• Virtual classes
• Online lectures
• Online ebooks of all high
• ended authors
• Online consultation & job
• placement support
• Online examinations
• Globalised access for
• classes enrolment

70. Innovation wins………

71. Thank You!!!
ITM DOMBIVLI – Batch 20