Blue Ocean- Updated

7/31/2019 Blue Ocean- Updated

http://slidepdf.com/reader/full/blue-ocean-updated 1/19

Creating uncontested market spaceCreating uncontested market spaceand make the competition irrelevantand make the competition irrelevant

Presented By:

Muhammad Nasir

Hamid Bilal



About theAbout the : Chan & Renee: Chan & Renee

W. Chan Kim

• The Boston Consulting Group

Bruce D. Henderson Chair

Professor of Strategy andInternational Management

Renée Mauborgne

• The INSEAD DistinguishedFellow and Professor of Strategy

and International Management



Red Ocean

Compete in

crowded

markets

Blue Ocean

Create and

capture new

market space



Red Ocean Strategy Blue Ocean Strategy

Compete in existing marketspace.

Create uncontested marketspace.

Beat the competition. Make the competition irrelevant.

Exploit existing demand. Create and capture newdemand.

Make the value-cost trade-off. Break the value-cost trade-off.

Align the whole system of astrategic firm's activities with itschoice of differentiation or lowcost.

Align the whole system of afirm's activities in pursuit of differentiation and low cost.

VALUE INNOVATION



Creating Blue OceansCreating Blue Oceans

• Two types of markets:Two types of markets:

– Red Oceans – all industries in existenceRed Oceans – all industries in existencetoday (known market space)today (known market space)

– Blue Oceans – all industries not inBlue Oceans – all industries not inexistence today (unknown marketexistence today (unknown market

space)space)



The phraseThe phrase “Blue oceans” “Blue oceans” is new, but theis new, but theconcept is not. Think of what industriesconcept is not. Think of what industries

existed in 1900.existed in 1900.

ExampleExample

Ford T-modelFord T-model• Value pioneering Value pioneering

• Turning unattractive industry into an attractive oneTurning unattractive industry into an attractive one

• Use of existing technology – no R&D costs, just strategic thinkingUse of existing technology – no R&D costs, just strategic thinking



1.1. Create new IndustryCreate new Industry

2.2. Create from existing ‘Red Ocean’ Create from existing ‘Red Ocean’



The rising Imperative of Creating BlueThe rising Imperative of Creating Blue

OceansOceans

• Supply exceeds demandSupply exceeds demand

• Products turning into commoditiesProducts turning into commodities

• Increasing price warsIncreasing price wars

• Shrinking profit marginsShrinking profit margins

• Brands are becoming more similar Brands are becoming more similar



The Profit and GrowthThe Profit and Growth

Consequences of Blue OceansConsequences of Blue Oceans



is the “new” strategic logicis the “new” strategic logic

behindbehind Blue OceanBlue Ocean Strategy.Strategy.

Instead of focussing on beating the competition,Instead of focussing on beating the competition,

you focus onyou focus on making it irrelevant making it irrelevant by creating aby creating a

leap in value for buyers and creatingleap in value for buyers and creating

uncontested market space.uncontested market space.



• Differentiation and Low Cost Leadership isDifferentiation and Low Cost Leadership is

achieved simultaneouslyachieved simultaneously

• Safe barrier of imitation for 10 to 15 yearsSafe barrier of imitation for 10 to 15 years

2 Advantages of Blue Ocean2 Advantages of Blue Ocean

StrategyStrategy



Graph of Value InnovationGraph of Value Innovation



UtilityCreate new

buyer

utilities

PriceSet a price that

attracts a mass

of buyers

CostSet the structure

based on a

target

Value Innovation

Unlocking non-customer Unlocking non-customer

demanddemand



The Case of Cirque du SoleilThe Case of Cirque du Soleil

• Cirque was founded in 1884 and group of Cirque was founded in 1884 and group of

street performers and entertainers.street performers and entertainers.

achieved rapid growth in a decliningachieved rapid growth in a decliningindustry with low profit potential.industry with low profit potential.

• At decline due to alternate mode of At decline due to alternate mode of

entertainment, Video Games such as playentertainment, Video Games such as playstations, TV entertainment etcstations, TV entertainment etc

• Animal Rights Animal Rights



Cirque-ExampleCirque-Example

• Cirque created uncontested new marketCirque created uncontested new market

space that made the competitionspace that made the competition

irrelevantirrelevant• It created blue ocean from read ocean byIt created blue ocean from read ocean by

creating theater, opera and ballet forcreating theater, opera and ballet for

adults and corporate clients who wereadults and corporate clients who weretraditionally non customers.traditionally non customers.



Example: CirqueExample: Cirque

• Instead of simply trying to outpace theInstead of simply trying to outpace the

competition, Cirque offered people bothcompetition, Cirque offered people both

the fun and thrill of the circus and thethe fun and thrill of the circus and theintellectual sophistication of the theaterintellectual sophistication of the theater

• Because of this, Cirque du Soleil appealedBecause of this, Cirque du Soleil appealed

to both circus customers (Children) andto both circus customers (Children) andnoncustomers (Adults)noncustomers (Adults)




• Each show, like a theater production, hadEach show, like a theater production, had

its own unique theme and storylineits own unique theme and storyline

• This allowed customers to return to theThis allowed customers to return to theshow more frequentlyshow more frequently

• They also did away with the traditionalThey also did away with the traditional

high-priced concessions and vendorshigh-priced concessions and vendorsthereby cutting coststhereby cutting costs




• Cirque du Soleil effectively combined theCirque du Soleil effectively combined the

best of both the circus and the theaterbest of both the circus and the theater

while eliminating everything elsewhile eliminating everything else• This allowed them to achieve bothThis allowed them to achieve both

differentiation and low costdifferentiation and low cost



Thank you

Blue Ocean- Updated

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