Blue ocean strategy

• 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