BOS Final

BLUE OCEAN STRATEGYy Priyanka Abhyankar y Rahul Gohil y Vishal Jirange y Sandeep Patil y Saloni Thakkar

By The Way

Its My Way

Red Oceansy It is the known market space y Industry boundaries are

defined and accepted y The competitive rules of the game are known y Companies try to outperform their rivals to grab a greater share of existing demand y As the market space gets crowded, prospects for profits and growth are reduced

Blue Oceansy It is the unknown market

space y Industry boundaries are created by expanding existing industry boundaries y Competition is irrelevant because the rules of the game are waiting to be set y Defined by untapped market space, demand creation, and the opportunity for highly profitable growth

Value Innovation: The Cornerstoneof Blue Ocean Strategyy Emphasis on value and

innovation y Occurs only when companies align innovation with utility, price, and cost positions y Value innovation defies competition-based strategy: the value-cost trade-off y Align the whole system of a firm s activities in pursuit of differentiation and low cost

y 2009

Global economic slowdown

y The Big Three and Toyota, implemented creative marketing strategies y A classic red ocean battle for a shrinking pool of profits in a zerogrowth market space y But one U.S. car company navigated into blue ocean waters y This company is called Tesla Motors Inc.

y Started in 2003 y Based in California s Silicon Valley y Tesla Motors designs and manufactures electric vehicles

(EV) suitable for city and highway driving

y Tesla Motors, first automobile company to combine the

attributes of the green vehicle with those of the premium sports vehicle

y The Tesla Roadster - a sports car with high mileage

capabilities , high acceleration, high torque, high safety, low emissions and low maintenance

y Tesla s unique driver benefits include: a) 244 miles per charge b) Never need to visit a gas station c) No oil changes d) No sales, luxury or use taxes e) Commuter lane privileges f) Free parking g) Free battery charging y Company s second car, the Model S sedan, is anticipated to begin production in late 2011 with a base price of around $45,000 y In June 2009, Tesla Motors was award $465 million loan from the U.S. Energy Department to manufacture EVs

Michael Jacksony First appeared on stage at age 11 as part of

the Jackson 5.

y From 1966 to 1976, the Jackson 5 were the

first act in recorded history to have their first four major label singles reach the top of the American charts

y The Jacksons Show first network

television variety show hosted by an African American family

y Thriller set all-time record for global

sales, estimated at around 60 million albums sold

y Featured in Guinness Book of World

Records as the world s best-selling album

y Michael s key strengths a) an extraordinary singer b) songwriter c) chorographer and dancer, d) Demonstrated artistic novelty (child

performer, moonwalk, the sparkle glove, Thriller)y As a performer, Michael s differentiation

was that his Value Curve was higher than Lennon and Presley s Value Curves; he possessed a multitude of talents with what extraordinary work ethic

y Michael Jackson as a performer was not blue ocean, but

Michael s use of video as a promotional tool was, indeed, blue ocean. y Michael transformed the medium of music video by using it as not only an art form featuring complex story lines, dance routines, special effects and cameo appearances of well-known personalities, but also as a short-film promotional tool, gaining access to MTV and other key venues previously off limits to African American artists

The Six Principles of Blue Ocean StrategyFormulation principles I. Reconstruct Market Boundaries II. Focus on the Big Picture, Not the Numbers III. Reach Beyond Existing Demand IV. Get the Strategic Sequence Right Execution principles I. Overcome Key Organizational Hurdles II. Build Execution into Strategy

Formulating Blue Ocean StrategyReconstruct Market Boundaries a) Look Across Alternative Industries b) Look Across Strategic Groups Within Industries c) Look Across the Chain of Buyers d) Look Across Complementary Product and Service Offerings e) Look Across Functional or Emotional Appeal to Buyers f) Look Across Time

Formulating Blue Ocean StrategyFocus on the Big Picture, Not the Numbers a) Visual Awakening b) Visual Exploration c) Visual Strategy Fair d) Visual Communication

Formulating Blue Ocean StrategyReach Beyond Existing Demand There are three tiers of non-customers, and the companies need to find the ways to reach these customers

Formulating Blue Ocean StrategyGet the Strategic Sequence Righty The companies need to build their blue ocean strategy in the sequence of buyer utility, price, cost, and adoption y BOI (Blue Ocean Idea) index is an index to examine the blue ocean ideas in the four dimensions: a) Utility: Is there exceptional utility? Are there compelling reasons to buy your offering? b) Price: Is your price easily accessible to the mass of buyers? c) Cost: Does your cost structure meet the target cost? d) Adoption: Have you addressed adoption hurdles up front?

Executing Blue Ocean StrategyOvercome Key Organizational Hurdlesy There are four hurdles in executing the blue ocean

strategy: Cognitive, limited resources, motivation, and politics y These organizational behaviors may hamper the success of Blue Ocean Strategy y By clearly addressing the hurdles to strategy execution and focusing on factors of disproportionate influence, the companies can either win them over or neutralize them to actualize strategic shifts

Executing Blue Ocean StrategyBuild Execution into Strategyy By organizing the strategy formulation process around the

principles of fair process, the companies can build execution into strategy-making from the start y With fair process, people tend to be committed to support the resulting strategy even when it is viewed as not favorable or at odds with their perception of what is strategically correct for their units. y Blue oceans will turn into red oceans eventually; however, there are some ways to set up the barriers to block the imitators, such as patent protection, network externality, and the economy of scale. y But these ways cannot stop competitors forever and it may cost a lot of money and effort to build these entry barriers, so the companies have to keep searching for new blue oceans.

Microfinancey Microfinance institutions

working among the poor y As per traditional wisdom, bankers should not lend to the rural poor in under developed and developing countries y Business of extending microfinance not a profitable activity y Therefore large proportion of population without access to finance

y Enter Grameen bank y Created the rural poor

as a customer instead of competing with other financial institutions for customers y Showed that providing capital to the rural poor can be equally profitable y Thus creating as blue ocean for itself

y As per the strategy,

the existing market boundaries were changed. The poor who were earlier excluded now came under its cover. y Also the main focus is on helping the small entrepreneurs and expanding the reach of the bank y Creating demand for themselves

y Online auctions were an unheard concept prior to ebay s arrivals y IT created an entirely new industry of online auctions with his launch

y Allowed users to buy and sells products online as well as provision of various facilities y This enabled them to capture the whole market

y The emergence of e commerce has made the world a small place y Gave rise to a distinct set of net savvy consumers who were willing to trade online, irrespective of the part of the world where they lived.

y Created a whole market for itself y Continuous innovation helped it to reach beyond existing demand y Overcoming key organizational hurdles

SECOND HOME OR HOLIDAY HOMEVacation property is a niche in the real estate market dealing with residences used for holiday vacations (e.g. beach house) In the United kingdom this type of property is usually termed a holiday home In Australia, a holiday house/home, or weekender In New Zealand, a bach or crib In the United states the most common designation is second homeTypes of vacation property Beach House Villa holiday Cottage

Holidayhangouts.comHolidayHangouts.com introduces the second home or holiday home concept in India for the first time. HolidyayHangouts.com is the first and only exclusive player targeting consumers in this segment and we are the most economical among all, said Namitha Ranjith, director of HolidayHangouts.comy South India especially Kerala have some great

landscapes ideally suited for your holiday homes or escape homes. y This is the primary reason HolidayHangouts zeroed in on Kerala with its unending coastlines, zero pollution, scenic landscapes and mysterious mountains.

Tax Benefits of second house in many countriesSecond home and holiday home owners used to be able to claim discounts in their council tax in the United kingdom, as the property is vacant for much of the year. In Cornwall, since 2004 second home owners can claim a 10% discount in their council tax. Prior to 2004, they could claim a 50% discount in Cornwall, they are still able to claim 50% in many other areas in England. Homes in Scotland, those who went on holiday to Scotland spent an average of 57 a day, in comparison to just 32 a day spent by those visiting their holiday or second homes. Under Section 80 C, Principal repayments made towards the second home loan can be deducted from your taxable income

y In 1960s and 1970s, the domestic detergent market had

only premium segment, with very few players and was dominated by MNCs. eg. HLL y Cheapest available brand in the market was Rs. 13 per kg. y Focused on High end customer and Urban market y Introduction of Nirma Washing Powder

Strategies for creating Blue OceanFounder of Nirma Dr. Karsanbhai Patel states a new strategy for their producty Focus on rural and low end customer y Priced at cheapest rate of Rs. 3 per kg y polythene bag packaging (for low cost) y door-to-door selling. y regional brand.

Four Action Frame WorkEliminateHigh Packaging Expenses Mass Media Advt. Conventional Distribution Channel

RaiseProduct Robustness Village promotion

ReducePrice Quality

CreateCustomized formula Focus on Rural Market New way of selling (Door to door)

In a short span of time, with indigenous process, packaging and low-profiled marketing, Nirma created an entirely new market segment in domestic marketplace. Starting as a one-man operation in 1969, today, Nirma has about 14, 000 employee-base and annual turnover of more than Rs. 2500 crores.

Future Blue Oceans

Solar powered battery charger with 29 different adapters to power up you devices

Turanor - The largest solar powered yacht to circumnavigate the world

Team Polyjule s car completes 4,414km on a single liter of fuel, a record breaker