ISLAMIC UNIVERSITY IN UGANDA

KAMPALA CAMPUS

FACULTY OF MANAGEMENT STUDY

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Question:

SUMMARY OF BLUE OCEAN STRATEGY BOOK BY KIM AND

MAUBORGENE OF HARVARD BUSINESS SCHOOL

COURSE Business Adminstration

COURSE UNIT Strategic management
NAME Adam Abdulle Awale
REG/NO 221-035053-23090
LECTURE

SUMMARY OF BLUE OCEAN STRATEGY

blue ocean strategy is the simultaneous pursuit of differentiation and low cost to open up a new
market space and create new demand. it is about creating and capturing uncontested market space,
thereby making the competition irrelevant. it is based on the view that market boundaries and
industry structure are not a given and can be reconstructed by the actions and beliefs of industry
players.
in blue ocean strategy, kim and mauborgne discuss how you can create such a market by focusing on your
product’s characteristics that customers really care about while discarding the characteristics they don’t.
this creates a new product offering that doesn’t currently exist, in a space without direct competitors.

BLUE OCEAN STRATEGY WILL SHOW YOU

what is distinctive about blue ocean strategy as a theory

how is blue ocean strategy different from a classic differentiation strategy or a low cost strategy

how to reconstruct market boundaries

why you need to focus on the big picture

how to reach beyond existing demand

how to overcome organizational hurdles

how to build execution into strategy

Blue ocean strategy vs red ocean strategy learns the key differences between red ocean and blue ocean
strategy:

Blue ocean strategy

RED OCEAN STRATEGY
create uncontested market space
compete in existing market space
make competition irrelevan
beat the competition
create and capture new demand
exploit existing demand
break the value-cost trade-off
make the value-cost trade-off

value innovation
value innovation is the simultaneous pursuit of differentiation and low cost, creating a leap in value
for both buyers and the company.
the concept of value innovation is developed by chan kim and renée mauborgne and is the
cornerstone of market-creating strategy. because value to buyers comes from the offering’s utility
minus its price, and because value to the company is generated from the offering’s price minus its
cost, value innovation is achieved only when the whole system of utility, price, and cost is aligned.
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.

FOUR ACTIONS FRAMEWORK

the four actions framework developed by chan kim and renée mauborgne is used to reconstruct buyer

value elements in crafting a new value curve or strategic profile. to break the trade-off between
 differentiation and low cost in creating a new value curve, the framework poses four key questions,

shown in the diagram, to challenge an industry’s strategic logic.

the four actions framework poses four key questions to translate insights into well-constructed

strategies:

 which factors that the industry takes for granted should be eliminated?

 which factors should be reduced well below the industry’s standard?

 which factors should be raised well above the industry’s standard?

 which factors that the industry has never offered should be created?

these questions help you to challenge an industry’s strategic logic and business model to arrive at

blue ocean moves that break the trade-off between differentiation and low cost.
examples of blue ocean strategy:

 uber: before uber was founded in 2009, customers looking to get from point a to point b
without their own vehicle had to rely primarily on taxis to obtain a private mode of
transportation. but the taxi industry hadn’t done much in the way of innovation since its
inception more than a century earlier. the founders of uber recognized the industry’s
shortcomings—including limited payment options, a lack of customer trust, and the absence
of location tracking—and decided to create a new type of mobility service that would
compete in a slightly different space. instead of trying to buy its own fleet of vehicles, uber
sought out drivers who were willing to use their own cars to provide on-demand rides
requested via mobile app. today, uber has annual revenues of over $11 billion, and more than
19,000 employees.

 meta (previously facebook): in october of 2021, ceo mark zuckerberg announced that facebook’s new
name would now be meta. when facebook started, it was at the forefront of its own blue ocean, known
as social networks. more than a decade later, social networking has become a red ocean. with the name
change, meta can steer its product offerings into something new, exciting, and unconquered: the
“metaverse.” in the metaverse, zuckerberg pictures holograms, virtual reality, and digital worlds that
feel like the physical world. although the strategy change is unproven, it’s clear that the idea of
jumping from the red ocean of social media to the blue ocean of the metaverse played a part in the
decision.