This document provides an overview of blue ocean strategy concepts from the book Blue Ocean Strategy by W. Chan Kim and Renée Mauborgne. It includes definitions and descriptions of red ocean vs blue ocean strategy, with red ocean referring to competing in existing market space and blue ocean referring to creating new market space. The document also includes diagrams, frameworks and examples to illustrate blue ocean strategic approaches.
3. 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 firm’s
activities with its choice of
differentiation or low cost.
4. Blue Ocean Strategy
Create uncontested market space.
Make the competition irrelevant.
Create and capture new demand.
Break the value-cost trade-off.
Align the whole system of a firm’s
activities in pursuit of
differentiation and low cost.
76. Four Steps of Visualizing Strategy
1. Visual Awakening
2. Visual Exploration
3. Visual Strategy Fair
4. Visual Communication
78. Buyer utility Is there exceptional buyer
utility in your business idea?
No-- RethinkYes
Sequence of Blue Ocean Strategy
Price Is your price easily accessible
to the mass of buyers?
Cost Can you attain your cost target
to profit at your strategic price?
Adoption What are the adoption hurdles in
actualizing your business idea?
Are you addressing them up front?
No-- Rethink
Yes
No-- Rethink
Yes
No-- Rethink
Yes
79. A blue ocean strategic move is achieved by
developing and aligning the three strategy
propositions :
Value Proposition
Profit proposition
People proposition
83. Integrate Online, Mobile, and Social Media
Channels with your existing retail channels
to create value
Online shopping allowed stores to reduce their cost of acquiring customers and serving them and in return they were able to reduce their prices online and provide fast and convenient way for customers to buy large selection on products. All this is driven by the online sales and promotion technology and business models.
Value Innovation, the simultaneous pursuit of differentiation and low cost, is the cornerstone of blue ocean strategy. Value innovation focuses on making the competition irrelevant by creating a leap of value for buyers and for the company, thereby opening up new and uncontested market space. Because value to buyers comes from the offering’s utility minus its price, and because value to the company is generated from the offering’s price minus its cost, value innovation is achieved only when the whole system of utility, price and cost is aligned. In the blue ocean strategy methodology, the Four Actions framework and ERRC Grid assist managers in breaking the value-cost tradeoff by answering the following questions: What factors can be eliminated that the industry has taken for granted? What factors can be reduced well below the industry standard? What factors can be raised well above the industry standard? What factors can be created that the industry has never offered?create a leap in buyer value at a lower cost.
How attractive is your industry depends on many factors but it doesn’t matter so much …It is about how you see it. Some companies compete while other create Some of the companies who create succeed while other fail …Today we are here to discuss how companies can create rather than compete and how they can be successful in applying the blue ocean strategy
is not necessarily a key determinant of blue ocean strategy
With segmentation, companies look for differences among customers and try to maximize market share in existing markets by catering to customers’ differing needs.•BOS is about creating and capturing new demand through desegmentation. This is achieved by focusing on the commonalities valued by the mass of target buyers.