...a leap into the blue ocean W. Chan Kim is The Boston Consulting Group Bruce D. Henderson Chair Professor of Strategy and International Management at INSEAD. ´ Renee Mauborgne is The INSEAD Distinguished Fellow and a professor of strategy and management at INSEAD. This article is based on their book, Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant (Harvard Business School Press, 2005). orporate strategy is heavily influenced by its military roots. The very language of strategy is imbued with military references – chief executive ‘‘officers’’ in ‘‘headquarters’’, ‘‘troops’’ on the ‘‘front lines.’’ Described this way, strategy is about confronting an opponent and fighting over a given piece of land that is both limited and constant. Traditionally, strategy focused on beating the competition, and strategic plans are still couched in warlike terminology. They exhort companies to seize competitive advantage, battle for market share, and fight over price. Competition is a bloody battlefield. C The trouble is that if the opposing army is doing exactly same thing, such strategies often cancel each other out, or trigger immediate tit-for-tat retaliation. Strategy quickly reverts to tactical opportunism. So where should companies turn for a more innovative approach to strategy? The answer lies with something we call blue-ocean strategy. We argue that head-to-head competition results in nothing but a bloody red ocean as rivals fight over...
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...Buyer Utility Map Buyer Utility Map – Software Development Company The buyer utility map assists organizations in knowing how their customers experienced their products and services. According to Kim & Mauborgne, 2005, “a buyer’s experience can usually be broken into a cycle of six stages, running more or less sequentially from purchase to disposal. Each stage encompasses a wide variety of specific experiences”, (pg. 122). Also, “cutting across the stages of the buyer’s experience are what we call utility levers: the ways in which companies can unlock exceptional utility for buyers”. | |Purchase |Delivery | Use |Supplements | |Utility |Is there exceptional |Yes |No |Yes |Yes | | |utility? Are there | | | | | | |compelling reasons to buy| | | | | | |your offering? | | | | | |Price |Is your price easily |No |No |Yes ...
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...Review Blue Ocean Strategy: From Theory to Practice W. Chan Kim Renée Mauborgne © 2005 by The Regents of the University of California Blue Ocean Strategy: FROM THEORY TO PRACTICE W. Chan Kim Renée Mauborgne or twenty-five years, competition has been at the heart of corporate strategy. Today, one can hardly speak of strategy without involving the language of competition: competitive strategy, competitive benchmarking, building competitive advantages, and beating the competition. Such focus on the competition traces back to corporate strategy’s roots in military strategy. The very language of corporate strategy is deeply imbued with military references—chief executive “officers” in “headquarters,” “troops” on the “front lines,” and fighting over a defined battlefield.1 Industrial organization (IO) economics gave formal expression to the prominent importance of competition to firms’ success. IO economics suggests a causal flow from market structure to conduct and performance.2 Here, market structure, given by supply and demand conditions, shapes sellers’ and buyers’ conduct, which, in turn, determines end performance.3 The academics call this the structuralist view, or environmental determinism. Taking market structure as given, much as military strategy takes land as given, such a view drives companies to try to carve out a defensible position against the competition in the existing market space. To sustain themselves in the marketplace, practitioners of strategy focus on...
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...Visi Pramudia http://visipramudia.wordpress.com/ BLUE OCEAN STRATEGY Authors: W. Chan Kim – Renee Mauborgne How to Create Uncontested Market Space and Make the Competition Irrelevant Visi Pramudia http://visipramudia.wordpress.com/ I. THE STRATEGY Visi Pramudia http://visipramudia.wordpress.com/ New Market Space known market space RED OCEAN Represent all the industries in existence today BLUE OCEAN Denote all the industries not in existence today space Circus Industry Traditional Circus: • Target Market : Children • Dependent to : Star performance, animal shows • High fun & humor • High Thrills & dangers unknown market Cirque du Soleil: • Target Market : Adults • Not Dependent to Star performance & animal shows • Reduce fun & humor • Reduce Thrills & dangers • Unique Venue • Theme & Theater Low Cost, High Price High Cost, Low Price Visi Pramudia http://visipramudia.wordpress.com/ The Cornerstone of Blue Ocean Strategy • Value innovation is created in the region where a company’s actions favorably affect both its cost structure and its value proportion to buyers • Cost savings are made by eliminating and reducing the factors an industry competes on • Buyer values is lifted by raising & creating elements the industry has never offered • Over time, costs are reduced further as scale economies kick in due to the high sales volumes that superior value generates The Simultaneous Pursuit of Differentiation and Low Cost Visi...
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...BLUE OCEAN STRATEGY by W Chan Kim & Renee Mauborgne “Large R & D Budgets are not the key to creating new market space. The key is making the right strategic moves.” The article “Blue Ocean Strategy” by W Chan Kim and Renee Mauborgne published in the year 2005 talks about creating an uncontested market space through intelligent strategic moves. By analyzing thirty different industries across a century the writers opined that sustaining high performance standards in an overcrowded industry might not be enough for being a leader or having the major chunk of the market pie. It is possible only by altering boundaries of the currently existing industries. Red ocean strategies as referred by the authors represent all the industries today where each and every company fights fiercely to gain the market space. The process of outperforming the competitors incurs huge cost and hence plummet the margins. The products turn into commodities leading to heavy competition and hence the market space turns bloody. On the other hand, Blue Ocean strategy demand is generated from boundaries outside the domain of the industry. Sometimes this might lead to generation of altogether new industry. The authors have lucidly explained in the article how Cirque Du Soleil was able to create its own market space in a dying Circus industry whose performances were marred by people’s concerns for animals. Cirque was able to tweak the boundaries of both theater and circus industry and rejuvenated the Circus...
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...Innovation versus Speed Strategy The approach companies take in making strategic decisions regarding such critical aspects including their business model and value chain have direct implications on their ability to sustain themselves over time. The accumulated research shown by Dr. W. Chan Kim and Dr. Renee Mauborgne in their best selling book Blue Ocean Strategy (Kim & Mauborgne, 2005) illustrate that new, uncontested markets are created by the decisions companies make over time rather than high levels of research and development (R&D) spending or intensive mergers and acquisitions (M&A) to acquire patents. The differences between companies who rely on innovation-based strategies relative to those that rely on speed-based ones are most prevalent during the decision of when and how to launch new products. This specific decision is in fact quantified as the single greatest and profit-generating event in the analysis completed (Kim, Mauborgne, 2004). Apple dominates innovation-based decisions and often looks to completely redefine a given marketplace through the sequence of product and service innovations developed. This mindset and resulting decisions within Apple to pursue a strategy of innovation and the development of an entire ecosystem for digital content including iTunes, iPods, and iPhones/iTouch devices has created a platform the company capitalizes on with each product introduction (Jonash, Koehler, & Onassis, 2007). The decision of which features within...
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...Blue Ocean Strategy Robert Lowe Principles of Marketing December 2, 2013 Abstract For a long time many businesses have use a military strategy in order to find profit in an existing market. Fighting for a competitive advantage and battling competitors over a piece of the profit. Taking this head-on approach only leads to an overcrowded market with a shrinking profit pool. This is what the book calls a “red ocean”. Blue Ocean on the other hand wants you to look outside the box and make the competition irrelevant. In the future companies will not succeed battling competitors, but instead finding uncontested market space ripe for growth. Swimming in an area that only has a few swimmers is a lot better than swimming with the sharks. This book shows you six principles that will help companies create a Blue Ocean Strategy. The authors use data collected from over thirty different industries, and have studied more than hundred different strategies from the last century. Creating Blue Oceans It is suggested that companies and organizations need to create demand in uncontested market space, rather than competing head-to-head with competitors in an existing market space. These two strategies are called “Blue oceans” and Red Oceans”. Red oceans are existing companies in the market. Their goal is to compete with competitors for a bigger slice of the pie. This strategy leads to overcrowded markets which make the profit shares shrink. Blue oceans is the opposite, demand is created...
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...Blue Ocean Strategy Executive Summary The Harvard Business Review “Blue Ocean Strategy” by W. Chan Kim and Renee describes the “business universe” and its two “distinct kinds of space,” the red ocean and the blue ocean. The article explains how the market space if divided by these two oceans. The red ocean symbolizes the industries that are currently in present in the market. These industries serve as models for current competitors as well as future ones. On the other side, blue oceans are industries that are “not in existence today.” These industries are unknown and could be developed from red oceans or from completely new industries. The main difference between these two types of markets is the customer demand. Red oceans have fixed demand and competitors constantly compete against each other for consumers’ acceptance and attention. Blue oceans create a demand that did not existed before, generating greater opportunities for growth. Although the concept of red and blue oceans might be new for many, it has existed since the moment industries were created. In summary, red oceans are existing industries and blue oceans are unknown industries. When we look back, we realize that all industries that seem essential for daily tasks were once unknown. Long time ago, the pool of industries that conformed the red ocean was not as immense as it is today. As blue industries were introduced, the red ocean became larger. As of today, the Standard Industrial Classification (SIC) has been...
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...Blue Ocean Strategy Paper Roberta Willis Marketing/ MKT 421 Nick Okoro July 28, 2014 Today’s society is among one that is very competitive, and always trying to discover ways to beat out competition. This is typically done by advertising their products by celebrities so the consumers are more likely to buy. Due to the way products are promoted and advertised, it makes it harder for the consumer to make a decision on what to buy. Competing in over-crowded industries is not way to sustain high performance. The real opportunity is to create blue oceans of uncontested market space (Kim,W.,Mauborgne,R. 2004). Ten years ago A Harvard business article was written Blue Ocean Strategy by W. Chan Kim and Renee Mauborgne in 2005 a book was published which sold about 3.5 million copies around the world. The real opportunity is to create blue oceans of uncontested market space (Kim,W.,Mauborgne,R. 2004). The strategy behind the blue ocean is to create uncontested market space, make competition irrelevant and create and capture new demand (Kim,W.,Mauborgne,R. 2004). The book focuses not only n trying to beat your competition, but trying to focus on making competition irrelevant. This can be done by producing more value for the consumers which will allow you to move into other markets. When abiding by the blue ocean strategy there is hardly any competition to face. This makes it easy for the company and the consumers. In January 2010, the iPad was introduced to the world to make...
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...Blue Ocean Strategy Paper Roberta Willis Marketing/ MKT 421 Nick Okoro July 28, 2014 Today’s society is among one that is very competitive, and always trying to discover ways to beat out competition. This is typically done by advertising their products by celebrities so the consumers are more likely to buy. Due to the way products are promoted and advertised, it makes it harder for the consumer to make a decision on what to buy. Competing in over-crowded industries is not way to sustain high performance. The real opportunity is to create blue oceans of uncontested market space (Kim,W.,Mauborgne,R. 2004). Ten years ago A Harvard business article was written Blue Ocean Strategy by W. Chan Kim and Renee Mauborgne in 2005 a book was published which sold about 3.5 million copies around the world. The real opportunity is to create blue oceans of uncontested market space (Kim,W.,Mauborgne,R. 2004). The strategy behind the blue ocean is to create uncontested market space, make competition irrelevant and create and capture new demand (Kim,W.,Mauborgne,R. 2004). The book focuses not only n trying to beat your competition, but trying to focus on making competition irrelevant. This can be done by producing more value for the consumers which will allow you to move into other markets. When abiding by the blue ocean strategy there is hardly any competition to face. This makes it easy for the company and the consumers. In January 2010, the iPad was introduced to the world to make...
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...which they are competing against no one except themselves. This strategy is called the blue ocean strategy. The term describes how instead of working in settings known as the red ocean, where business are rigorously competing with each other for a percentage of the marketplace, businesses should try to find a place in the marketplace that is free of competition. The Blue Ocean Strategy argues that innovative companies will advance not by battling competitors, but by strategically creating “blue oceans” of uncontested market space ready for growth. Using the blue ocean strategy means pursuing low cost and differentiation at the same time. The theory behind is not to outperform the competition in the current industry, but to create a blue ocean or new market space, making the completion insignificant. In order to find the fleeting “blue ocean” a business or an individual must take into consideration the “Four Actions Framework”. According to the authors of the Blue Ocean Strategy, the “Four Actions Framework” is used to reconstruct buyer value elements in crafting a new value curve. To break the trade-off between low cost and differentiation and to make a new value curve the framework presents four vital questions. The first http://www.smartinsights.com/online-brand-strategy/brand-positioning/blue-ocean-strategy-digital-marketing/ http://www.businessnewsdaily.com/5647-blue-ocean-strategy.html Blue Ocean...
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...Blue Ocean Strategy MARKETING Individual assessment: Blue ocean strategy Do you think that the blue ocean strategy is a relevant tool to generate innovation, value and new customer? Summarize the benefits and the limitation of this strategy. What can corporate do to minimize the impact of this unavoidable imitation/competition? 1. Blue Ocean Strategy (BOS): Benefits, limitations and risks Blue Ocean Strategy signifies all the industries which are not in existence today. In this kind of strategy, the market spaces are unfamiliar, unpolluted by competition. In this strategy, the demand is created rather than fought over. There is sufficient chance for growth which is swift and profitable. Competition is inappropriate because the rules of the game are waiting to be set. 1.1. Benefits of Blue Ocean Strategy The Blue Ocean Strategy is appropriate tool to generate innovation, value and new customers. Considering the condition of CLV it is suitable for this organization to go for it to generate value and innovation. This strategy encourages organizations to attain new ways of thinking which are different than the competitors. With the help of this strategy, organizations can create a new area of demand namely a Blue Ocean and get rid of an intensely competitive market namely a Red Ocean. When any organization successfully creates new markets without competitors they can have a clear Blue Ocean. According to this strategy the organizations must not only focus on...
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...Blue Ocean Strategy Paper Anthony Dobson MKT/421 July, 2014 Nickolas Skelton Blue Ocean Strategy Paper A blue ocean strategy can be described as the ability to create uncontested market space and render the competition obsolete. This strategy provides a systematic way to unlock the ocean of unrealized talent, opportunities, and energy within an organization quickly and at a low cost. It can achieve all of this from a management standpoint while preserving time and efficiency. The aim of a blue ocean strategy is not to out-perform the competition in the existing industry, but to create new market space or a blue ocean, thereby making the competition irrelevant. While innovation has been seen as a random/experimental process where entrepreneurs and spin-offs are the primary drivers this strategy offers systematic and reproducible methodologies and processes in pursuit of blue oceans by both new and existing firms. Frameworks and tools within blue ocean strategies are designed to be visual in order to not only effectively build the collective wisdom of a business but also to allow for effective strategy execution through easy communication. Blue ocean strategies cover both strategy formulation and strategy execution. The three key conceptual building blocks of blue ocean strategy are: value innovation, tipping point leadership, and fair process. While competitive strategy is a structuralism theory of strategy where structure shapes strategy, blue ocean strategy is a Reconstructionist...
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...Blue Ocean Strategy Eric Montoya MKT/421 February 12, 2015 William Gay Blue Ocean Strategy The Blue Ocean Strategy focuses on three big industries that touch thousands of people’s lives. The areas in which they look at are Autos, Movies and Computers. What companies in those fields are doing into managing their profit and growth through times? Creation of blue ocean strategy placed its focus on very good strategic moves in order to place their brand in a position which long past its rise to fame. Blue ocean strategy gears to forecasting innovations and products to make oceans of uncontested market space. (W. Kim, 2004). The blue ocean strategy takes a look at the host of companies in the more than thirty plus industries and the key players within them. The blue ocean strategy is the process of analyzing and studying the successful players and the unsuccessful ones and failing in their competition. Looking for most distinct and more common differences between those groups, as well as commonalities to discover the most common factors leading to the successful growth of those and failings of the other. The common practice is within the market place the competition style strategy has little advantages to it. (W. Kim, 2004). The unrelated old school theory that is out doing the competitors was most obvious road to take that leads when it comes to profit and success. Placing a value in innovation and creation can give itself to a new demand achieving a value that has enormously...
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...BLUE OCEAN STRATEGY With Supply outpacing Demand in more and more industries each day, today companies find themselves competing for a share of the contracting markets. The question looming large is whether businesses ought to address competition as their main issue or direct their focus elsewhere? While the “five forces” analysis lays emphasis on outperforming competition in order to capture greater share of the existing demand, Blue Ocean Strategy belies competition and believes in creating uncontested market space. The recent pace of innovation and change has only paved way for a strategy that is more dynamic than the classical theories of five forces. Porter’s five forces aimed at beating the existing competition, denoted as Red Ocean, in a known market space where the rules of the game are known and boundaries are defined and accepted. But as the market gets crowded, profits and growth take a dive, and competition turns cutthroat making the red ocean bloody. Contrarily, Blue oceans denote uncharted, untapped and unknown market space, demanding innovation and providing opportunity for highly profitable growth. Though some blue oceans are created beyond existing industry boundaries, most blue oceans take shape from within red oceans by expanding existing boundaries. Looking at businesses, past and present, we find that blue oceans have always existed, only the term is new. A hundred years ago, many industries that are quintessential today, such as, health care, automobiles...
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