This document summarizes the key concepts from the book "Blue Ocean Strategy" by W. Chan Kim and Renee Mauborgne. It discusses how companies typically compete in "red oceans" where competition is fierce and profits are declining, while "blue oceans" represent untapped market space with opportunities for growth. The authors propose that companies can create blue oceans and make competition irrelevant by applying the principles of value innovation - raising value through differentiation and lowering costs simultaneously. Analytical tools like the four actions framework and strategy canvas are introduced to help systematically create blue ocean strategies.
This document summarizes the key concepts from the book "Blue Ocean Strategy" by W. Chan Kim and Renee Mauborgne. It discusses how companies typically compete in "red oceans" where competition is fierce and profits are declining, while "blue oceans" represent untapped market space with opportunities for growth. The authors propose that companies can create blue oceans and make competition irrelevant by applying the principles of value innovation - raising value through differentiation and lowering costs simultaneously. Analytical tools like the four actions framework and strategy canvas are introduced to help systematically create blue ocean strategies.
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This document summarizes the key concepts from the book "Blue Ocean Strategy" by W. Chan Kim and Renee Mauborgne. It discusses how companies typically compete in "red oceans" where competition is fierce and profits are declining, while "blue oceans" represent untapped market space with opportunities for growth. The authors propose that companies can create blue oceans and make competition irrelevant by applying the principles of value innovation - raising value through differentiation and lowering costs simultaneously. Analytical tools like the four actions framework and strategy canvas are introduced to help systematically create blue ocean strategies.
Copyright:
Attribution Non-Commercial (BY-NC)
Available Formats
Download as PPT, PDF, TXT or read online from Scribd
Mauborgne Notes by Prof A K Mitra • Companies have long engaged in head-to-head competition in search of sustained, profitable growth. They have fought for competitive advantage, battled over market share, and struggled for differentiation. • In red oceans--that is, in all the industries already existing--companies compete by grabbing for a greater share of limited demand in the known market space . As the market space gets more crowded, prospects for profits and growth decline. Products turn into commodities, and increasing competition turns the water bloody. • Blue Ocean Strategy challenges companies to break out of Red ocean of bloody competition by creating uncontested market space that makes competition irrelevant. "Don’t Compete with Rivals—Make Them Irrelevant" • In Blue Ocean, demand is created rather than fought over, by breaking away from the competition. • Blue Ocean denotes all the industries not in existence today. It is thus defined by untapped or unknown market space, demand creation , and the opportunity for highly profitable growth. • Although some blue oceans are created well beyond existing industry boundaries, most are created from within red oceans by expanding existing industry boundaries. • In blue oceans, competition is irrelevant because the rules of the game are waiting to be set. • It will always be important to swim successfully in the red ocean by outcompeting the rivals. But this will not be sufficient to sustain high performance. • To seize new profit and growth opportunities, they also need to create blue oceans. • Unfortunately , blue oceans are largely uncharted. The dominant focus of strategy over the past 25 years have been on competition based red ocean strategies • The authors elaborate the principles that define and separate blue ocean strategy from competition based strategic thoughts. • They introduce a set of analytical tools and frameworks that show how to systematically proceed to create blue oceans. • According to book "Blue Ocean Strategy,"' the metaphor blue ocean elegantly summarizes the vision of the kind of expanding, competitor-free markets that innovative companies can navigate. • This is the opposite of "red oceans," which are well explored and crowded with competitors, "blue oceans" represent "untapped market space" and the "opportunity for highly profitable growth." • Author’s hypothesis is that since markets are constantly changing in their levels of favorability and companies, over time, vary in their levels of performance, it is the particular strategic move of the company and not the company itself or the industry, which is the correct criterion for evaluating the difference between Red and Blue Ocean strategies. • This strikes at the heart of Michael Porter’s competitive framework. • Impact of Creating Blue Oceans • Strategic Moves • Value Innovation : the corner Stone of Blue Ocean strategy • Analytical Tools & frame Works – Strategy Canvas – Value Curve – The Four Actions Frame Work • Value innovation is a strategic move that allows a company to create a blue ocean. Typically, companies in the red ocean pursue incremental improvements for customers through either low cost or differentiation. • Value innovation helps companies make giant leaps in the value provided to customers through the simultaneous pursuit of differentiation and low cost. • It shouldn’t be a trade off between the two; exceptional value and innovation should be inseparable. • Offer buyers a huge leap in value, and that will give rise to new markets. That’s how you make the competition irrelevant. The Four Actions Framework
• The four Actions Framework offers an
technique that breaks the trade-off between differentiation and low cost and to to create a new value curve. The authors recommend four different means to do this: • Eliminate :eliminating what is not valued, • Reduce: reducing what is valued less, • Raise : raising what is valued more, and • Create :creating what no one else has. Six paths to open blue ocean…………..
• Look Across alternate industries
• Look across strategic groups within Industries • Look Across chain of buyers • Look across complementary products & services • Look across functional or emotional appeal to buyers • Look across time