Blue Ocean Strategy Overview Group 4

Outline What are Blue Oceans? Internal Factors External Factors Strategies Implementation and Sustainability

The Marketplace Red Oceans Blue Oceans Industries continually evolve Rising Demand for Blue Ocean

Impact of Blue Oceans

Internal Factors effecting Blue Ocean Strategy The Four Action Framework Reduce- Which Factors should be reduced well below the industry’s standard? Eliminate- Which of the factors that the industry takes for granted should be eliminated? Create- Which factors should be created that the industry has never offered? Raise- Which factors should be raised well above the industry's standard? All these factors create a new value curve

Focus on the Big Picture, Not the Numbers Four Steps of Visualizing Strategy Step 1: Visual Awakening See where your strategy needs to change Step 2: Visual Exploration See which factors you should eliminate, create, or change Step 3: Visual Strategy Fair Use feedback to build the best “to be” future strategy Step 4: Visual Communication Distribute your before-and-after strategic profiles on one page for easy comparison

Overcoming Key Organizational Hurdles The Four Organizational Hurdles to Strategy 1. Resource Hurdle Limited Resources 2. Motivational Hurdle Unmotivated Staff 3. Political Hurdle Opposition from Powerful vested Interests 4. Cognitive Hurdle An Organization wedded to the status quo

Blue Ocean’s External Factors 6 Path’s Framework Alternative Industries Strategic Groups Chain of Buyers Complementary Product Offerings Functional/Emotional Appeal Time

First 3 Paths Alternative Industries – Competition outside of your industry Strategic Groups – Competition inside of you industry Chain of buyers – Know who is the buyer

Last 3 Paths Complementary Product Offerings – cost that tie in with your company Functional/Emotional Appeal – Functional = Price Emotional = Feelings Time - Future

First-Tier Noncustomers “Soon-to-be” noncustomers who are on the edge of your market, waiting to jump ship Second-Tier Noncustomers “Refusing” noncustomers who consciously choose against

Third Tier “Unexplored” noncustomers who are in markets distant from yours. You shouldn’t focus on one tier you should focus across tiers, that way you can get the biggest catch!

Strategies The right strategic sequence Buyer utility Price Cost Adoption If all of these occur you have a commercially viable Blue Ocean idea

Strategy Formulation Process The three E principles Engagement: Involvement in all sectors Explanation: What we are doing and why Expectation Clarity: Detailing expected outcomes

Build Execution into Strategy Build execution into strategy from the start: Minimize risk Distrust Noncooperation Sabotage Fair process Key variable

Implementation “Creating blue oceans is not a static achievement, but a dynamic process.” Barriers to Imitation Natural Monopoly (can’t support second player) Patents or Legal Permits High volume = rapid cost advantage Network Externalities Requires Change to enter market

Value Innovation When to rethink your current strategy and value innovate again? Widen gap and swim as long as possible, change before gap closes. Do not change if you have focus and diversion from competition. As gap closes you need to create a new blue ocean.