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Summer Team

Mayela Victoria Adame Garca


Luis Guillermo Acosta
Diana Paloma Flores del Fierro
Vianca Carolina Pars Salazar
Diana Carolina Perales Castro

* Blue

ocean vs
Competiti
ve

Andrew Burke
Holds the Bettany Chair and is the founding Director of the
Bettany Centre for Entrepreneurship
He is a Visiting Professor at the Anderson School of
Management, UCLA, USA. He was a Research Professor at the
Max Planck Institute for Economics,

Andr Van Stel


Senior Researcher at EIM Business and Policy Research
Affiliated to the Max Planck Institute of Economics, the
Erasmus University Rotterdam, and the University of
Amsterdam.

*About the

Roy Thurik
Professor of economics and entrepreneurship,Erasmus School of
Economics, Erasmus University Rotterdam
Professor of entrepreneurship and small firms,Faculty of Economics
and Business Administration, Free University Amsterdam
Directeur de la recherche,Montpellier Business School, France

Sixthlargest
economy
in the
eurozone

Stable industry
relations
Moderate
unemployment
Important European
transportation hub.

Industrail
Activity

Food procesing
Chemicals
Petroleum refining
Electrical machinery

* Netherlands economic

Source
http://www.indexmundi.com/netherlands/economy_profile.html

profile

*Retailing in

Netherlands

After 2008 crisis

Internet retailing
industry
continues to grow
developing a very
healthy
performance.
Internet retailing continues
to have major impact

Retail industry struggles

Slow recovery of
the economy
therefore the
consumers
remain hesitant
to spend.
This has negative
influence on the
retail industry
and in some
cases decided to
postpone major
purchases.

Source:
http://www.euromonitor.com/retailing-inthe-netherlands/report

Small
independent
retailers are
often pushed out
by the major
chains, as these
chains have
more resources
to fund
innovation and
are better able
to weather the
economic storm.
Major chains dominate retailing
at expense of independents

Grocery retailing more resilient


than non-grocery

Durable goods in
particular are
easy to ship, and
it is also very
easy for
consumers to
compare prices
online before
making a
purchase.

*Which are the


trends?

Figure 1: One beach and three ice


cream sellers

Figure 3: Unlimited untapped beaches with


a mix of competitive and blue ocean
strategies

Figure 2: Three beaches with a mix of


competitive and blue ocean
strategies

The question then is why does blue


ocean emphasize a long-run positive
relationship between the number of
firms and average profits while
competitive
strategy views it negatively?

*Theory

Theorem
1

Theorem
2

In the long term a negative


relationship between average
profits in an industry and the
number of firms is consistent
with the dominance of
competitive strategy over blue
ocean strategy
In the long term a positive
relationship between average
profits in an industry and the
number of firms is consistent
with the dominance of blue
ocean over competitive strategy

*Theorems

Theorem
3

A rapid adjustment process of


the number of firms and excessive
profit levels back to sustainable
levels (high speed of adjustment) is
consistent with the dominance
of competitive strategy over
blue ocean strategy

Theorem
4

A slow adjustment process of


the number of firms and
excessive profit levels back to
sustainable levels (low speed of
adjustment) is consistent with
the dominance of blue ocean
strategy over competitive strategy

*Theorems 1 & 2
*Control variables.
*Long range relationship between average
profits and the number of firms.

*Model

Specification

*Theorem 3 & 4
*Correction variables.
*Existence and speed of an adjustment
process.

Accounts for differing casualty directions between


the variables by defining two equations with
average profits and number of firms as dependent
variables.

Endogenous
Variable
-Growth of
average profit per
firm and growth of
number of firms.

Exogenous
Variable
- Can be shown in
results.

Main interest: long-term relationship


between the number of firms and profit
levels.

*The Netherlands
*41 shop types
*1980 2000
*Combines variables from two major sources:
*Dutch Central Registration Office (CRK)
*Bedrijfssignaleringssystem (panel of independet
Dutch retailers)

*Data of the Dutch


Retail Industry

*Paloma

*Victoria

*Discussion
Managers choose between
BOS & CS
Depending the results and
funding
TESTABLE ASSUMPTIONS
1. Prediction that the
competition can be made
irrelevant
2. Belief that there are
sufficient Blue Oceans

Blue oceans are rarely purely


blue, there is always some
RED water.

*Schumpeter

* Innovation is the primary driver for firm performance

recast
* Firms are less concerned about price competition and
more focused on innovation as a way to create
advantages in terms of products features, valued by
consumers.
* One can have innovation without the competitive
battled associated with creative destruction.
* Innovative managers can ignore competitors.

*Regarding

Innovation

Innovating to find and


exploit new
markets/beaches/oceans
Alert to new market
opportunities
The main energy is
focused on the future,
main goal is to develop
innovation.

*Different types

Value of
Innovation
is the
primary
goal

Exploit
untapped
markets*

Certain
amount of
imitation

COEXISTANCE
short with
long terms

*Conclusion

*Surviving short-term competition, to aim long-term


innovation in a blue ocean market.

*Final QUOTE