1. Blue Ocean Strategy Analytical Tools and Frameworks
Jessica Sorey, Vincent Conder, Miguel Valencia, Kylar Ferguson

2. Overview US Wine Industry The Strategy Canvas Four Action Framework
Eliminate-Reduce-Raise-Create Grid
Three Characteristics of Good Strategy
Reading the Value Curves
Types of Tools and Frameworks

3. US Wine Industry US has third largest consumption of wine before 2000
US was ranked 31st in per capita consumption worldwide
Estimated $20 billion in sales
California wines were ⅔ of all US wine sales
US wines were competing with other countries and domestics
Eight companies produced 75 percent of US wine
In 2000 the US wine industry faced
Mounting price pressure
Increasing bargaining power on the part of retail and distribution channels
Flat demand despite overwhelming choices

4. The Strategy Canvas
Horizontal Axis: Captures the current state of play in the known market space
Understand where the current competition is investing
Factors the industry currently competes on in products, services, and delivery
The consumer benefits of the existing competitive offerings
Vertical Axis: Captures the offering level that buyers receive across key competing factors

6. The Strategic Canvas The Value Curve
A graphic description of a company’s relative performance across its industry’s factors of competition
To shift the strategy canvas a company must turn focus from customers to non customers and from competitors to alternatives

7. The Four Action Frameworks
To create a new value curve companies have four key questions:

8. The Eliminate-Reduce-Raise-Create Grid [yellow tail]
Enological terminology and distinctions
Aging qualities
Above-the-line marketing
Reduce
Wine complexity
Wine range
Vineyard prestige
Raise
Price versus budget wines
Retail store involvement
Create
Easy drinking
Ease of selection
Fun adventure

9. The Eliminate-Reduce-Raise-Create Grid [Cirque du Soleil]
Star performers
Animal shows
Aisle concession sales
Multiple show arenas
Reduce
Fun and humor
Thrill and danger
Raise
Unique venue
Create
Theme
Refined environment
Multiple productions
Artistic music and dance

10. Three Characteristics of a Good Strategy
Focus- commitment to a uniformed organization-wide strategy
Divergence- a particular thing(s) sets your company apart from your competitors
Compelling tagline- something that attracts customers because it pops
“The speed of a plane at the cost of a car whenever you need it”

11. Examples of Good Strategy
Yellowtail Wine
They were focused organization-wide
Their value curve diverged away from competitors which ultimately created a blue ocean
Their tagline was clear, “a fun and simple wine to be enjoyed everyday”
Southwest Airlines
Frequent and flexible departures mixed with attractive prices allowed Southwest to create their own blue ocean
They diverged from the industry by offering flights to mid-sized cities

12. Reading the Value Curves
When a company meets the 3 characteristics they are on the right track.
Does a business deserve to be a winner?
Lacks Focus- Cost structures will be high & their business model will be complex in implementation and execution.
Lacks Divergence- Companies business strategy is not different from their competitors.
Lacks Compelling tagline- no natural takeoff capability.

13. Types of Tools and Frameworks
Companies Caught in the Red Ocean
Overdelivery without Payback
Companies that are oversupplying customers, can lead to low market share and profitability
An Incoherent Strategy
Strategic Contradictions
A factor competes at a high level but its supporting factors are lacking
An Internally Driven Company
Are the company’s factors presented in a way that customers can understand? (Jargon)