Blue Ocean Strategy

--Submitted by:
Priyanka Selukar
Ebiz Batch-I
Roll No: 37
 In an established industry, companies compete with each
other for every piece of available market share.
 The competition is often so intense that some firms
cannot sustain themselves and stop operating.
 This type of industry describes a Red ocean,
representing saturated market share, bloodied by
competition.
 To avoid costly competition, firms can innovate or
expand in the hope of finding A Blue ocean.
 A blue ocean exists where no firms currently operate,
leaving the company to expand without competition.
 Blue Ocean Strategy is:
" a creative battle where the players of a particular
segment don’t compete with each other remaining in the
same market space; instead explore, create and acquire
new market spaces by dealing with new demand through
the principle of 'value innovation '."
 While the Red Ocean Strategy is：
" a head to head battle where the players of a particular
segment compete with each other remaining in the same
market space i.e. within the boundaries of the same
industry on the principle of 'competitive advantage'."
Value Innovation:
The Cornerstone of Blue Ocean Strategy

 "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."
Value Innovation: The Cornerstone of Blue Ocean Strategy
Source: Kim & Mauborgne (2005), Blue Ocean Strategy.
 Six principals of Execution at IKEA
Blue Ocean Strategy

1) Reconstruct Market Boundaries Leisure activity

The IKEA restaurant
Wide range of products
Environment-friendly

2) Reach Beyond Existing Demand Well-designed furniture

Experience room
Freedom to touch
The IKEA restaurant
Six principals of Execution at IKEA
Blue Ocean Strategy

3)Build Execution into

Strategy Engagement
Trust –bulit relationship
Togetherness and enthusiasm

4)Overcome Key Motivation

Organizational Hurdles Desire for challenge
Six principals of Execution at IKEA
Blue Ocean Strategy

5) Get the Strategic Strategic pricing making

Sequence Right method

6)Focus on the Big Focus on long-term

Picture, not the development
Number
IKEA: Blue Ocean Strategy Implementation
 IKEA’s competitive strategy is Blue Ocean
strategy, which led IKEA create leading
position in local furniture industry.
 IKEA has been successful in Nanjing by
implementing a Blue Ocean strategy that is
crucially supported by good value innovation.