Blue ocean strategy
Post on 29-Oct-2014
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- 1. ENTREPRENEURSHIPPROF. Jorge Saguinsin
ANGELICA O. HIZON
2. What Is Blue Ocean Strategy?
Provides a systematic approach in making the competition
irrelevant
Growing the demand and breaking-away from competition
Maximize opportunity and minimize risk
Go where profits and growth are and where the competition
isnt
- Kim and Mauborgne-
3. CIRQUE DU SOLEIL
4. PRINCIPLES of BLUE OCEAN
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 companys activities with its strategic
choice of differentiation OR low cost
BLUE OCEAN STRATEGY
INNOVATION
Create unknown market space
Make the competition irrelevant
Create and capture new demand
Breakthe value-cost trade-off
Align the whole system of a companys activities in pursuit of
differentiation AND low cost
Ringling Brothers vs Cirque de Soleil
5. ANALYTICAL TOOLS and FRAMEWORKS
6. SIX PATHS TO BLUE OCEAN STRATEGY
Focusing on competing within an industry
Looking across alternative industries
A company confining itself to established strategic groups
Looking across strategic groups within industries
To Creating
Across
Focusing on the same buyer group as the rest of the industry
From competing within
Looking across the chain of buyers
A company limiting itself to the scope of an industry's products
and services
Looking across complementary products and services
Accepting an industry's functional or emotional orientation
Looking across functional or emotional appeal to buyers
Focusing on the same point in time as the rest of the
industry
Looking across time
7. VALUE INNOVATION
Cornerstone of Blue Ocean Strategy
Focuses on making competition irrelevant by creating a leap in
value for buyers and the organization, thus opening new and
uncontested market place
Defies the most commonly accepted dogmas in competition; the
value-cost trade-off (high value = high cost & vice-versa). It
pursues differentiation and cost simultaneously. Ex: Cirque adult
vs children
8. Value Innovation
Costs
Value innovation is created when the organizations strategy results
to a favorable effect to both its cost and its value proposition
for its customers.
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.
Eliminate
Reduce
Value
Innovation
Raise
Create
Buyer Value
9. Four Actions Framework-how to create new value curve
Reduce
Factors that should be reduced well below the industrys
standard
New
Value
Curve
Create
Eliminate
Factors that should be created, which the industry has never
offered
Elimination of the animals in the circus
Raise
Factors that should be raised well above the industrys
standards
10. STRATEGY CANVASS
The strategy canvas is the central diagnostic and action framework
for building a compelling blue ocean strategy. The horizontal axis
captures the range of factors that the industry competes on and
invests in, and the vertical axis captures the offering level that
buyers receive across all these key competing factors.
Objectives:
Captures the current state of play
Gears an organizations focus from customers to non-customers
11. ERRC GRID cirque du soleil
ERRC GRID Pampangas Best TOCINO
Kapampangan market only
12. Minimizing Risks and Maximizing Opportunities in Formulating
and Executing Blue Ocean Strategy
Formulation Principles
Formulation Risks
Search Risk
Reconstruct market boundaries
Planning Risk
Focus on the big picture, not the numbers
Scale Risk
Reach beyond existing demand
Get the strategic sequence right
Business Model Risk
Execution Principles
Execution Risks
Organizational Risk
Overcome key organizational hurdles
Build execution into strategy
Management Risk
13. Is BLUE OCEAN STRATEGY NEW?
Although the term blue oceans is new, their existence is not. They
are a feature of business life, past and present. Look back one
hundred years and ask yourself, How many of today's industries were
then unknown? The answer: Many industries as basic as automobiles,
music recording, aviation, petrochemicals, health care, and
management consulting were unheard of or had just begun to emerge
at the time. Now turn the clock back only thirty years. Again, a
plethora of multibillion-dollar industries jumps out - mutual
funds, cell phones, gas-fired electricity plants, biotechnology,
discount retail, express delivery, minivans, snowboards, coffee
bars, and home videos to name a few. Just three decades ago, none
of these industries existed in a meaningful way.
14. How durable is the advantage associated with a blue ocean
strategy and what is the process for defending it?
Creating blue oceans is not a static achievement but a dynamic
process. Once a company creates a blue ocean and its powerful
performance consequences are known, sooner or later imitators
appear on the horizon. However, a blue ocean strategy brings with
it considerable barriers to imitation. Some of these are cognitive,
and others are operational.
The first barrier is often cognitive. Competitors are often blocked
from imitating because of brand image conflicts, or the blue ocean
strategy just does not fit conventional strategic logic. For many
years CNN, for example, was ridiculed by the industry as chicken
noodle news by established players. The second barrier is
organizational. Because imitation often requires companies to make
substantial changes to their existing business practices, politics
often kick in, delaying for years a company's commitment to imitate
a blue ocean strategy. The third level includes the economic forces
of blue oceans. The high volume generated by a value innovation
leads to rapid cost advantages, placing potential imitators at an
ongoing cost disadvantage.
By heightening these barriers to imitation, companies can defend
the blue oceans they created for some time. However, it should be
noted that creating a blue ocean is not a static strategy process,
but a dynamic one.
By: Authors - Kim & Mauborgne
15. References
www.blueoceanstrategy.com
Some Images were copied from the website of Blue Ocean
Strategy
File video of Cirque du Soleil is from Youtube
FAQs are from the authors
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