Blue Ocean Strategy really opened my eyes to a new way of looking at strategy. Although each of the companies highlighted in the book were not new information for me, I had never thought about what Blue Ocean Strategy has sold over 4 million copies, is being published in a record-breaking 46 languages, and is a bestseller across five continents. In , Chan Kim and Renee Mauborgne were named the world's most influential business thinkers by Thinkers
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Here is a book summary of "Blue Ocean Strategy" compiled by Prof. Sameer Mathur. SlideShare Explore Search You. Submit Search. Successfully reported this slideshow. We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads.
You can change your ad preferences anytime. Blue Ocean Strategy by W. Chan Kim and Renee Mauborgne. Upcoming SlideShare. Like this presentation? Why not share! Embed Size px. Start on. Show related SlideShares at end. WordPress Shortcode. Sameer Mathur , Working Follow. Published in: Education. Full Name Comment goes here. Are you sure you want to Yes No. Sanu Thomas. Amy Teng at Gartner. Show More. No Downloads. Views Total views.
Actions Shares. Embeds 0 No embeds. No notes for slide. Chan Kim and Renee Mauborgne 1. Book Summary W. Chan Kim Renee Mauborgne 1 2. Reconstruct Market Boundaries 4. Focus on Big Picture, Not the numbers 5. Reach beyond Existing demand 3. Overcome key organizational hurdles 8. Build Execution into strategies 3 4.
Chapter 1: Creating Blue Oceans This chapter talks about the new market spaces which replaces red ocean strategy with blue oceans. It also talks about the imperative of making a new ocean besides analysing its impact on any industry. Red oceans represent all the industries in existence today. Blue oceans denote all the industries not in existence today. In RED oceans, industry boundaries are defined and accepted, and the competitive rules of the game are known BLUE oceans, in contrast, are defined by untapped market space, demand creation, and the opportunity for highly profitable growth 5 6.
Red Oceans vs. Blue Oceans Undefined market space, demand creation, opportunity for highly profitable growth Most are created from within red oceans by expanding existing industry boundaries Rules of game waiting to be set Blue ocean strategy is a market-creating strategy Industry boundaries defined and accepted Companies try to outperform rivals; cutthroat competition As market space gets crowded, prospects for profit and growth reduced Red ocean strategy is a market-competing strategy Blue Ocean Red Ocean 7 8.
Supply is exceeding demand in most industries global competition is intensifyingProblems: Accelerated communization of products and services Increasing price wars Shrinking profit margins Red oceans becoming bloodier, need to be concerned with creating blue oceans 8 The Rising Imperative of Creating Blue Oceans 9. The Impact of Creating Blue Oceans 9 We call it value innovation because instead of focusing on beating the competition, you focus on making the competition irrelevant by creating a leap in value for buyers and your company, thereby opening up new and uncontested market space Innovation without value tends to be technology- driven, market pioneering, or futuristic, often shooting beyond what buyers are ready to accept and pay for 10 Value Innovation 11 Premium wine drinkers trade down Industry criticizes them mercilessly at first 17 Casella Wines Supplier power of the star performer were high Alternative form of entertainment was available : Ranging from urban live entertainment to home entertainment Industry was suffering from steadily decreasing audiences and in turn, declining revenue and profit 18 The Circus Industry Cirque du Soleil achieved rapid growth in a declining industry with low profit potential Cirque du Soleil created uncontested new market space that made the competition irrelevant Because of this, Cirque du Soleil appealed to both circus customers and noncustomers 19 Cirque du Soleil Bargaining power of both the suppliers performers and the buyers the customers was high along with a negative sentiment against the use of animals.
Cirque du Soleil competed against the traditional players in the industry by creating a different form of entertainment all together. Six Principles of Blue Ocean Strategy Reconstruct market boundaries Focus on the big picture, not the numbers Reach beyond existing demand Get the strategic sequence right Overcome key organizational hurtles Build execution into strategy 21 Chapter 2: Analytical Tools and Frameworks 22 Effective blue ocean strategy should be about risk minimization and not risk taking.
This chapter applies strategy canvas framework on US wine industry Strategy canvas captures the offering level that buyers receive across all key competing factors. A high score means that a company offers buyers more, and hence invests more. To fundamentally shift the strategy canvas of an industry, you must begin by reorienting your strategic focus from competitors to alternatives, and from customers to non-customers of the industry 23 The strategy canvas is both a diagnostic and an action framework for building a compelling blue ocean strategy.
It captures the current state of play in the known market space. This allows you to understand where the competition is currently investing, the factors the industry currently competes on in products, service, and delivery, and what customers receive from the existing competitive offerings on the market. The horizontal axis captures the range of factors the industry competes on an invests in.
The vertical axis captures the offering level that buyers receive across all these key competing factors. Strategy Canvas 25 The Strategy Canvas Yellow Tail 28 Strategy Canvas : Cirque du Soleil 29 Four Actions to create a Blue Ocean 30 Casella Wines created three new factors in the U.
These are areas where a company is offering a high level on one competing factor while ignoring others that support that factor 42 Are the competing factors stated in terms buyers can understand and value, or are they in operational jargon? Part 2: Formulating Blue Ocean Strategy 44 Chapter 3: Reconstruct Market Boundaries Challenge: Successfully identify, out of the possibilities that exist, commercially compelling blue ocean opportunities 45 Path 1: Look across alternative Industries Cinemas vs.
Restaurants — Completely different but solves the same purpose for the person i. PATH 1: HOME DEPOT Offer the expertise of professional home contractors at markedly lower prices than hardware stores By delivering the decisive advantages of both alternative industries, and eliminating or reducing everything else, they have transformed the ordinary homeowners into do-it-yourselfers 50 Path 2: Look Across Strategic Groups Within Industries Strategic Group: Group of companies within an industry that pursue a similar strategy Need to understand what factors drive the customers to trade up or down between strategic groups 52 Purchasers who pay for the product or service may differ from the actual users There are important influencers as well.
By shifting its focus upstream from purchasers to users, Bloomberg created a value curve that was radically different from anything the industry had seen before 56 In most cases, other products and services affect their value The key is to define the total solution buyers seek when they choose a product or service.
A simple way to do so is to think about what happens before, during, and after your product is used. Babysitting and parking the car are needed before people can go to the movies.
A simple way to do this is to think about what happens Before, During, After 60 The result: Philips created a kettle having a mouth filter that effectively captured the lime scale as the water was poured 61 But Designs outdated Delivery times were late Quality was low 62 Functionally Oriented Blend commodity products with life by adding emotion.
Shift from emotional to highly functional Eliminated the time and cost of getting a haircut Re-defined the Japanese barbershop industry 65 Path 6: Look Across Time Three principles are critical to assessing trends across time. To form the basis of a blue ocean strategy, these trends must be decisive to your business, they must be irreversible, and they must have a clear trajectory. Having identified a trend of this nature, you can then look across time and ask yourself what the market would look like if the trend were taken to its logical conclusion 67 Observe the distinctive advantage s of alternative products and services See which factors you should eliminate, create or change 77 American, Asia, and Australia 2 Teams: Value curve production and emerging online foreign exchange business The experience: Europe vs.
America EFS strategy vs. They had to interview ten people involved in corporate foreign exchange.
W. Chan Kim
Competing in overcrowded industries is no way to sustain high performance. The real opportunity is to create blue oceans of uncontested market space. Despite a long-term decline in the circus industry, Cirque du Soleil profitably increased revenue fold over the last ten years by reinventing the circus. Rather than competing within the confines of the existing industry or trying to steal customers from rivals, Cirque developed uncontested market space that made the competition irrelevant. Cirque created what the authors call a blue ocean, a previously unknown market space.
What is Blue Ocean Strategy?
About the Authors
Blue ocean strategy is the simultaneous pursuit of differentiation and low cost to open up a new market space and create new demand. It is about creating and capturing uncontested market space, thereby making the competition irrelevant. It is based on the view that market boundaries and industry structure are not a given and can be reconstructed by the actions and beliefs of industry players. Learn the basics of blue ocean strategy and shift created but the 1 Management Thinkers in the World. What are Red Oceans and Blue Oceans? Red oceans are all the industries in existence today — the known market space.