Blue Ocean Strategy

Blue Ocean StrategyBlue Ocean Strategy

How to create Uncontested Market Space andHow to create Uncontested Market Space andMake the competition irrelevantMake the competition irrelevant

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Competition

AttackBattlefield

Competitor

War

Defense

Commander


What is Strategy?What is Strategy?

• Strategy, art of employing all Strategy, art of employing all elements of the power of a nation or elements of the power of a nation or nations to accomplish the objectives nations to accomplish the objectives of a nation or an alliance in peace or of a nation or an alliance in peace or war; also war; also the art of military the art of military command in combatcommand in combat

(© MS Encarta 2000)(© MS Encarta 2000)


Our business world today is much Our business world today is much affected by military termsaffected by military terms; ; Chief Executive Chief Executive OfficerOfficer, , headquarterheadquarter, , front linefront line, , operationoperation, , missionmission, , marketing marketing warwar, , strategystrategy, , tactictactic, , competitorcompetitor

…..strategy as a tool to win over …..strategy as a tool to win over the competitionthe competition


Competition among Rivalry

Buyers(Buyer Power)

Suppliers(Suppliers

Power)

Threat of New Entrant

Substitutes

The famous – Porter’s Five The famous – Porter’s Five ForcesForces


• Competition has been resulting to other Competition has been resulting to other competitioncompetition

• Competitors come and goCompetitors come and go

• All of these end to bloody All of these end to bloody competition………… The Red Oceancompetition………… The Red Ocean


Blue Ocean StrategyBlue Ocean Strategy

•How to create uncontested How to create uncontested market spacemarket space

•Make the competition Make the competition irrelevantirrelevant


Red Ocean Vs Blue Ocean Red Ocean Vs Blue Ocean StrategyStrategy

Red ocean strategy

• Compete in existing market space

• Beat the competition

• Exploit existing demand

• Make the value-cost-trade-off

• Strategic 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

• Pursuit differentiation and low cost


Value Innovation: the Value Innovation: the cornerstone of Blue Ocean cornerstone of Blue Ocean StrategyStrategy

• Value innovation is created in the region where a company’s actions favorably affect both its cost structure and its value proportion to buyers



• Cost savings are made by eliminating and Cost savings are made by eliminating and reducing the factors an industry competes onreducing the factors an industry competes on



• Buyer value is lifted by raising and creating Buyer value is lifted by raising and creating elements the industry never offeredelements the industry never offered


The Four Actions FrameworkThe Four Actions FrameworkReduce

Which factors should be reduced well below the industry’s standard?

EliminateWhich of the factors that the industry takes for granted should be eleminated?

CreateWhich factors should be created that the industry has never offered?

RaiseWhich factors should be raised well above the industry’s standard?

A new value curve


Blue Ocean Strategy in Indonesia

Aqua is the market leader and pioneer of packaged mineral water since 1978. It has changed the traditional way of white water serving.


AQUA Case Study• Packaged Mineral Water. Early 80’s

beverage industry was dominated by soft drinks in can, tetrapak, and bottle pack (Coca cola, Teh botol, etc)

• Aqua created a new technology for packaged mineral water

• The tagline: packaged mineral water in plastic bottle.

• It changed the traditional white water serving


• Expanding beverage market, which was dominated by softdrinks.

• Creating new demand for natural/mineral water

• Associated as drink in a package

• Increase value as a healthy natural water (lifestyle)

AQUA Case StudyAQUA Case Study


FRAMEWORK FORMULATION

ELIMINATE :• Water must be boiled (cook)• Drink must be served

RAISE :• Value of mineral water• Easy to find

CREATE :•New market for packaging drink (mineral water)• New style of natural drink & healty• Simple to serve

REDUCE :• Package in glass and hard paper • Simple technology• Tech reuse


Thank you.Thank you.

Please visit my blog website:Please visit my blog website:

http://dannyonstrategy.blogspot.http://dannyonstrategy.blogspot.comcom

Blue Ocean Strategy

Business

value of mineral water

competition irrelevant

naturalmineral water

forces competition

value proportion

bloody competition

competition competitors

traditional white water