Red and blue Ocean Strategies: Value Innovation

1. What is the role of “Value Innovation” for small and medium size
enterprises(MSME)?
Every business and services needs to be innovative during their business lifecycle to stay
competitive in the market. Value innovation was a new type of strategy recognized as “Blue Ocean
Strategy”. Strategy challenges companies to break out of their current market space. It means
theory defines new ways to develop previously un identified market space. For MSME to survive in
competitive market, which can be neutralize by this strategy.
This process is initiated by hypothesis of a group of customers with in the market is need a another
level of goods & services with level of cost and quality. Process may be described as breaking the
status quo.
Market/ Business Strategy – Generic Strategies Business strategy inspects the question how a
business (unit) competes successfully in a It describes the strategic decisions about meeting the
needs of customers , gaining the advantage over competitors and the choice of products .
1. Ansoff Matrix.
2. Porter’s Generic Strategies
3. Porter’s Five Forces Porter’s model
4. Value Chain Model.
5. Hamel’s Core Competency and Innovation.

2. Types of innovation which follows these strategies:
1. Business Innovation: Changing the way of the business is done.
2. Product Innovation: Introduction of New Goods or Services with technical or functional
abilities.
3. Process Innovation: Implementation of new improved production process.
4. Marketing Innovation: Deployment of New Marketing methods.
5. Service Innovation: Service related Technological advancement.
The intention of listed innovation is to Improve quality, Creation of new market, Extension of
product range, Cost reduction, Production process improvement, and replacement of product or
services.
Reference:
Development of a consulting approach, Diplomica Verlag, 2008. ProQuest Ebook Central,
http://ebookcentral.proquest.com/lib/globalnxt-ebooks/detail.action?docID=594363.

3. 1. Ansoff Matrix Igor Ansoff presented a matrix that focused on the
company’s present and potential future products or areas of
engagement. The resulting matrix provides four different growth
strategies (as shown in figure 2-2), to grow via existing products and
new products and in existing markets and new markets.
The matrix illustrates that the element of risk increases the further
strategy moves away from known issues - the existing product and
the existing market. Thus, product development (requiring, in effect,
new product) and market extension (a new market) typically involve
greater risk than market penetration (existing product and existing
market); and diversification (new product and new market) generally
faced with the greatest risk of all.

4. 2. Porter’s Generic Strategies Michael Porter has argued that the strengths of a
firm can be described by one of two variables: cost advantage and
By applying these strengths in view of either market differentiation or niche and
market, focus. The three generic strategy strategies could be result: split into
overall cost based leadership, focus differentiation based focus. The following
figure illustrates Porter’s generic strategies: and Porter argued in order to be
successful in the long-run, a firm must select only one of these three generic
strategies. Otherwise, with more than one generic strategy the firm will be ‘stuck
the middle’ and will not achieve a competitive advantage. By using the generic
strategy the firm could be positioned to leverage its strengths and to defend its
position against the effects of the five forces (see next chapter).
3. Porter’s Five Forces Porter’s model (see figure 2-4) can be used as a model
for industry analysis. He provided a framework that expresses an industry as
being influenced by five forces: • • • Supplier Power • Buyer Power
Competitive Rivalry Threat of Substitution Threat of New Entry Manager can
use the model company operates. It helps to understand the industry context
in which their position, and the strength of the position the company is trying
to reach in the future. own to understand both the strength of the current
competitive Beside this obvious reason, it can equally be used as an instrument
to identify whether new products or services have a potential to be successful
in a competitive situation.