The Five Competitive Forces That Shape Strategy - a comparison between Strategy Models by porter and the blue ocean strategy

1. Strategy Models
The Five Competitive Forces That Shape Strategy – Porter Model
VS
Blue Ocean Model
By: Ammar Ali
Prof. Dr. Aliaa Soliman

2. Table of Content
▪ what is Strategy
▪ Five Competitive Forces
▪ Characteristics of Porter Model
▪ Blue Ocean Model
▪ Characteristics of Blue Ocean Model
▪ Differences between the two models

3. Strategy an action that managers take to attain one or
more of the organization’s goals
Levels of Strategy
• Corporate Strategy
• Business Strategy
• Operations Strategy

4. The Five Competitive Forces That Shape Strategy
Porter Model
WHY Porter
Porter's Five Forces analysis is a framework that
attempts to assess the level of competition within an
industry
Awareness of the five forces can help a company
understand the structure of its industry and stake out a
position that is more profitable and lower Risk

5. Characteristics of Porter Model
• Existing industries
• Defined industries boundaries and defined Market Space
• Competitive advantage must be exists
• Differentiation or low cost strategy must be there
• Focus on Existing Customer
Advantages Disadvantages
Market is already Established One or more market leaders
Clear Customers Requirements and
segments
Aggressive competition
Much data Available High Risk and High Cost of
acquiring customers

6. The Blue Ocean Strategy
more 20 years later, W. Chan Kim and Renee Mauborgne argue in their 2005 book “Blue Ocean
Strategy,” that the competitive approach of strategy is pretty flawed
Firms can create a blue ocean
markets with a strategy of
maximizing opportunity and
minimizing risk.
Hence,
to compete successfully, the
value of innovation is a
necessity to escape the red
ocean trap

7. Characteristics of blue ocean strategy
• Used with non existing industries
• No competitive rules
• Innovation and creativity
• Develop your own future demand
• Undefined market space or industry boundaries
Advantages Disadvantages
Establish your own market and
standards
Eventually become red ocean
High profit margin with no
competition
Can create brand equity that lasts
for decades

8. Differences between the two models
Blue Ocean Five Forces
approach Creativity and innovation Low cost and differentiation
Customer Focus Creating New customers Existing customers and segments
Profit in initiation High Low
Competition No competition, High competition,
Goal Create a new Demand Make Value cost Trade off
Examples Nintendo WII, Itunes, Uber … Playstation, Careem , …

9. Q & A

10. Thank You