Blue Ocean Strategy

How to Create Uncontested Market Space and Make the Competition Irrelevant

BY M .SHANTI REDDY( 23) P.M. VAMSI VARMA (27) R. KRISHNA CHAITANYA (31) T. SWATHI (38)

Two worlds

Two worlds Red Ocean Strategy
Compete in existing market space. Beat the competition. Exploit existing demand. Make the value-cost trade-off. Align the whole system of a strategic firm's activities with its choice of differentiation or low cost.

Blue Ocean Strategy
Create uncontested market space. Make the competition irrelevant. Create and capture new demand. Break the value-cost trade-off. Align the whole system of a firm's activities in pursuit of differentiation and low cost. VALUE INNOVATION

The rising Imperative of Creating Blue Oceans

‡ supply exceeds demand ‡ globalization ‡ accelerated commoditization of products and services ‡ increasing price wars ‡ shrinking profit margins ‡ brands are becoming more similar select based on price ‡ ...

BOS Logic: The Core Principles
Reconstruct Market Boundaries « overcome believes.
Reach beyond existing Demand « go for uncontested space. Get the strategic sequence right « value [innovation] first.

COST
VI

VALUE

BOS Logic: Reconstruct market boundaries
Boundaries of Competition
Industry

Head-to-Head Competition

Creating New Market Space
Looks across alternative industries Looks across strategic groups within its industry Redefines the buyer group of the industry Looks across to complementary product and service offerings that go beyond the bounds of its industry Rethinks the functional-emotional orientation of its industry

Focuses on rivals within its industry Focuses on competitive position within strategic group Focuses on better serving the buyer group

Strategic Group

Buyer Group

Focuses on maximizing the value Scope of Product and of product and service offerings Service Offerings within the bounds of its industry Functional-emotional Orientation of an Industry Time/Trends Focuses on improving priceperformance with the functionalemotional orientation of this industry Focuses on adapting to external trends as they occur

Participation in shaping external trends over time

BOS Logic: The Core Principles
Reconstruct Market Boundaries « overcome believes.

Reach beyond existing Demand « go for uncontested space.
Get the strategic sequence right « value [innovation] first.

COST
VI

VALUE

BOS Logic: Reach beyond existing demand

Core Customer

Noncostumer

Soon-to-be-NC Refusing Customer

BOS Logic: The Core Principles
Reconstruct Market Boundaries « overcome believes. Reach beyond existing Demand « go for uncontested space.

COST
VI

Get the strategic sequence right « value [innovation] first.

VALUE

BOS Logic: Get the Strategic Sequence right
Buyer utility Is there exceptional buyer utility in your business idea?

No YES
Price Is your price easily accessible to the mass of buyers?

Rethink

No YES
Cost Can you attain your cost target to profit at your strategic price?

Rethink

No

Rethink

YES
Adoption What are the adoption hurdles in actualizing your business idea? Are you addressing them up front?

No

Rethink

YES

A commercially viable Blue Ocean Strategy

New Market Space
Creating Blue Oceans Is Consistent Across Time Regardless of Industry

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Continuing Creation of Blue Oceans

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Impact of Creating Blue Oceans

Formulating and Executing Blue Oceans

From Company and Industry to Strategic Move
Value Innovation, Blue Oceans Cornerstone

Summary of Blue Ocean Strategy 

New Market Space  Continuing Creation of Blue Oceans  Impact of Creating Blue Oceans  Rising Imperative of Creating Blue Oceans  From Company and Industry to Strategic Move  Value Innovation  Formulating and Executing Blue Oceans

3 Things I¶ve Learned
1. Blue Oceans aren¶t always accepted at first 2. Blue Oceans can be profitable

What I Disagree With
That there exists a strategic framework for Blue Oceans. By nature they do not conform to one framework

Examples of blue Ocean Strategy
y Air Asia in Malaysia. y LG.

Air Asia in Malaysia.
Eliminate: * Over the counter booking system * Free Food/Beverage on the plane * Seating Class booking system Reduce : * "luxury" facilities provided by Airport Lounge * No of attendance service on the plane * Seat Quality

Raise: * Focus on several key destination * Increase frequency of flight Create : * Online Booking system * Point to point travel system The successful implementation of this Blue Ocean, Air Asia have venture into other businesses such as Tune Hotel and Tune Money.

y 'Chocolate' (LG KG800). y LG plans to double its sales volume and profit

LG

by 2010, with 30% of sales and 50% of its profit being derived through "innovative, category-creating Blue Ocean Products³. y The way LG understands it, Blue Ocean strategy is "about an epoch-making move to strengthen business capabilities and streamline business structure in the five arenas of products, business models, work, systems and human resources."

y In Korea, where LG Chocolate was launched last

November, sales have exceeded 400,000 units. It was also a sellout in Europe when it was launched on May 3. In Malaysia, 3,500 units have gone out to the retail channels during the pre-launch where the target was only 5,000 units.

y y

y

y

y

y

Blue Ocean Strategy up-and-comers. B2C (Business-to-Consumer) Examples  Crocs, Inc.  ING Direct  Commerce Bank  More Coming Soon B2B (Business-to-Business) Examples  Boeing's 787 Dreamliner  RIM's BlackBerry  VistaPrint  More Coming Soon Non-Profit & Public Sector Examples  Kiva.org  LAPD Historical Blue Ocean Strategic Move Examples  Muzak  More Coming Soon Blue Ocean Strategy Up-And-Comers  Tesla Motors  Bunkspeed's HyperShot

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