Blue Ocean Strategy

1
Blue Ocean Strategy

• Mayra Garcia
• Cory Logan
• Gary Taylor
• Nick Watkins
• Lindsey Pacatte
• Garrett Matthews
• David Hayward

2
Red Oceans vs. Blue Oceans

• What are Red Oceans?
• Industries that are already in existence
• Limited demand
• Firms compete to capture more market share
• Limited room for growth
• Limited outlook for profit growth
• Most strategy is developed to compete in Red
  Oceans

3
Red Oceans vs. Blue Oceans

• What are Blue Oceans?
• Are untapped market space
• Unlimited potential for growth in demand
• Room for highly profitable growth
• Largely uncharted
• Very little research into creating these markets

4
New Market Space

• Where are Blue Oceans found?
• Some are created well beyond existing industries
• Some are created within established red oceans by
  expanding industry boundaries
• Increasingly important for existing firms to
  create Blue Oceans

5
Continuous Creation of Blue Oceans

• Although the term Blue oceans is new

6
Continuous Creation of Blue Oceans

• Industries never stand still.
• Operations Improve, and markets expand.
• History states we have underestimated to create
  new industries
• Re-create existing ones.

7
Continuous Creation of Blue Oceans

• Flying to a new beat
• Cheeky ads, funky staff attitude
• Easy online booking has kept planes full
• 15 profit margin on 36 million in revenues

8
Continuous Creation of Blue Oceans

• Air Asia is an idea whose time has come.
• "I think the tyranny of traditional airlines is
  about to end. Tony Fernandez

9
Continuous Creation of Blue Oceans

• Positioning an organization to have a competitive
  advantage
• Military references
• Chief officers in the headquarters
• industry shows us the market has never been
  constant

10
Continuous Creation of Blue Oceans

• To focus on Red Oceans is accepting the key
  constraining factors of war
• The need to beat the enemy
• To deny the strength of the business world

11
Impact of Creating blue oceans

• The authors attempted to quantify the impact of
  creating blue oceans on a companies growth in
  pertaining to profits and revenues
• Study was done on business launches of 108
  various companies

12
The Profit and Growth Consequences of Creating
Blue Oceans
86
62
13
The Rising Imperative of Creating Blue Oceans

• 1.Accelerated Technology supply exceeds demand

14
Advances in Technology

• Transportation
• assembly lines
• Communication
• Wireless
• Finance
• 80 of transactions done by computer
• ATMs
• Agriculture
• Tractors and transponders
• Business
• Word processing
• Laptops

15
The Rising Imperative of Creating Blue Oceans

• 1.Accelerated Technology supply exceeds demand
• 2.Globalization niche markets disappear

16
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17
The Rising Imperative of Creating Blue Oceans

• 1.Accelerated Technology supply exceeds demand
• 2.Globalization niche markets disappear
• 3.Accelerated Commoditization of products and
  services brands become more similar

18
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19
The Rising Imperative of Creating Blue Oceans

• Accelerated Technology supply exceeds demand
• Globalization makes markets dissappear
• Accelerated Commoditization of products and
  services brands become more similar
• Increase in price wars selections based on price
• Shrinking profit margins

20
From Company and Industry toStrategic Move

• Is there a systematic approach to achieve and
• sustain high performance?
• Past Company Performance
• Growing Industries

21
In Search of Excellence

• Focused on 8 themes that led to Successful
  Companies
• Wang Labs-
• During the 1950s and 1960s was strong rival of a
  growing IBM

22
Built to Last

• Focused on the habits of successful visionary
  companies
• The companies that fit the criteria were in
  growing industries

23
Moving to Blue Oceans

• A Strategic Move-
• A set of managerial actions and decisions
  involved in making a major market-creating
  business offering.
• These strategic moves create and capture new
  market space

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VALUE INNOVATION

• The Cornerstone of Blue Ocean Strategy
• Blue Ocean
• Create uncontested market space
• Make the competition irrelevant
• Create and capture new demand
• Break the value-cost trade-off
• Red Ocean
• Compete in existing market space
• Beat the competition
• Exploit existing demand
• Make the value-cost trade-off

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VALUE INNOVATION

• Value without innovation
• Value creation
• Innovation without value
• Technology driven, market pioneering
• Defies one of the most commonly accepted dogmas
  of competition based strategy
• Value-cost trade-off

26
VALUE INNOVATION

• The Simultaneous Pursuit of Differentiation and
  Low Cost

27
VALUE INNOVATION

• Cirque du Soleil
• Is it circus, opera, theater, ballet, or a
  Broadway show?

28
Formulating and Executing

• Maximize Opportunity, Minimize Risk
• Unbalanced success in Red Ocean because of tools
  and frameworks already in motion
• Companies do not act seriously on creating blue
  oceans

29
Preview

• Ch. 2 analytical tools and framework
• Ch. 3 search risk, conventional boundaries
• Ch. 4 planning risk, four-step planning
• Ch. 5 maximize size, minimize scale risk

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Preview Contd

• Ch. 6 business model risk, design, sequence
• Ch. 7 tipping point leadership, organizational
  risk
• Ch. 8 fair process, management risk
• Ch. 9 sustainability and renewal issues

31
Six Principles of BOS

• Formulation Principles
• Reconstruct market boundaries
• Focus on the big picture, not numbers
• Reach beyond existing demand
• Get the strategy sequence right
• Execution Principles
• Overcome key organizational hurdles
• Build execution into strategy