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1www.study Marketing.org

Blue OceanStrategy

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Contents

1. Blue Ocean Vs. Red Ocean Strategy

2. Blue Ocean Strategy Tools

3. Strategy Canvas and Four Action Framework

4. Six Principles of Blue Ocean Strategy

5. Formulating Blue Ocean Strategy

6. Executing Blue Ocean Strategy

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Blue Ocean Vs. Red Ocean

Strategy

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Blue Ocean vs. Red Ocean Strategy

Create uncontested

market space

Make the competition

irrelevant

Create and capture

new demand

Compete in existing

market space

Beat the competition

Exploit existing

demand

Blue Ocean Strategy Red Ocean Strategy

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Blue Ocean vs. Red Ocean Strategy

Break the value- cost

trade off

Align the whole systemof a firms activities with

its strategic choice of

differentiation andlowcost

Make the value-cost

trade off

Align the whole systemof a firms activities with

its strategic choice of

differentiation or low

cost

Blue Ocean Strategy Red Ocean Strategy

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Blue Ocean Strategy Tools

Strategy

Canvas

A diagnostic toolfor building acompelling blue ocean strategy

It captures the current state of playin

the known market space

Allow you to understand :

where the competition is currently

investing

the factors the industry currently

competes on in product, service and

delivery

what customers receive from existing

competitive offerings on the market

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Four Action Framework

Eliminate

Reduce

Raise

Create

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Eliminate

Reduce

Raise

Create

Which of the factors that the industrytakes for granted should be eliminated?

Which factors should be reduced well

belowthe industrys standard?

Which factors should be createdthat

the industry has never offered?

Which factors should be raised well

abovethe industrys standard?

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The Case of Cirque du Soleil (A Circus Company)

Theme

Refined environment

Multiple productions

Artistic music and dance

Eliminate Reduce

RaiseCreate

Star performers

Animal shows

Aisle concession sales Multiple show arenas

Fun and humor

Thrill and danger

Unique venue

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Six Principles of Blue Ocean Strategy

1. Reconstruct market

boundaries

2. Focus on the big picture,

not the numbers

3. Reach beyond existing

demand

4. Get the strategic

sequence right

5. Overcome key

organizational

hurdles

6. Build execution into

strategy

Formulation Principles Execution Principles

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Formulating

Blue Ocean Strategy

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1. Reconstruct Market Boundaries

Focus on rivals within

industry

Focuses on competitive

position within strategic

group

Focuses on better

serving the buyer group

Head-to-Head Strategy Blue Ocean Strategy

Looks across alternative

industries

Looks across strategic

group within industry

Redefines the industry

buyer group

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1. Reconstruct Market Boundaries

Focuses on maximizing

the value of product orservice offerings within

the bounds of its

industry

Focuses on adapting to

external trends as they

occur

Head-to-Head Strategy Blue Ocean Strategy

Looks across to

complementary productand service offerings

Participates in shaping

external trends over time

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2. Focus on the Big Picture, not the Numbers

Focus on the

Big Picture, not

the Numbers

The Four Steps of

Visualizing Strategy

Visual Awakening

Visual Exploration

Visual Strategy Fair

Visual Communication

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Visual

Awakening

Compare your business with yourcompetitors by drawing your as is

strategy canvas

See where your strategy needs to

change

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Visual

Exploration

Go to the field to explore the six

paths to creating blue oceans

Observe the distinctive advantages

of alternative products and services

See which factors you should

eliminate, create, or change

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Visual

Strategy

Fair

Draw your to be strategy canvasbased on insights from field

observations

Get feedback on alternative

strategy canvases from

customers, competitors

customers, and noncustomers

Use feedback to build the best to

be future strategy

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Visual

Communication

Distribute your before-and-afterstrategic profiles on one page for

easy comparison

Support only those projects and

operational moves that allow your

company to close the gap to

actualize the new strategy

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3. Reach Beyond Existing Demand

The Three

Tier of Non-

customers

First tier: Soon to be non-

customerswho are the edge of

your market, waiting to jump ship

Second tier: Refusing non-

customerswho consciously

choose against your market

Third tier: Unexplored non-customerswho are in markets

distant from yours

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4. Get The Strategic Sequence Right

The Sequence of Blue Ocean Strategy

Buyer utility

Is there exceptional buyer

utility in your business idea?

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?

A commercially viable

blue ocean idea

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Executing

Blue Ocean Strategy

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5. Overcome Key Organizational Hurdles

Overcome KeyOrganizational

Hurdles

Cognitive

Hurdle

Motivational

Hurdle

Resource

Hurdle

Political

Hurdle

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Cognitive

Hurdle

(status quo)

Resource

Hurdle

Ride the Electric Sewer

Meet with Disgruntled Customers

Redistribute resources to your hot

spots

Redirect resources from your cold

spots

Engage in horse trading

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Motivational

Hurdle

Political

Hurdle

Zoom in on Kingpins (key influencers)

Place kingpins on a fishbowl

Atomize to get the organization to

change itself

Secure a consigliere on your top

management team

Leverage your angels and silence

your devils

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5. Build Execution Into Strategy

Fair Process of Strategy

Strategy Formulation Process

Fair ProcessEngagement, Explanation, Expectation clarity

Attitudes

Trust and CommitmentI feel my opinion counts

Behavior

Voluntary CooperationIll go beyond the call of duty

Strategy Execution

Exceeds Expectationself initiated

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Source of Reference

W. Chan Kim and Rene Mauborgne, B lue Ocean Strategy,HBS Publication.

You can obtain this excellent book at this link: http://www.amazon.com/Blue-Ocean-Strategy-Uncontested-

Competition/dp/1591396190/ref=pd_bbs_sr_1?ie=UTF8&s=books&qid=1219801926&sr=1-1
http://www.amazon.com/Blue-Ocean-Strategy-Uncontested-Competition/dp/1591396190/ref=pd_bbs_sr_1?ie=UTF8&s=books&qid=1219801926&sr=1-1http://www.amazon.com/Blue-Ocean-Strategy-Uncontested-Competition/dp/1591396190/ref=pd_bbs_sr_1?ie=UTF8&s=books&qid=1219801926&sr=1-1http://www.amazon.com/Blue-Ocean-Strategy-Uncontested-Competition/dp/1591396190/ref=pd_bbs_sr_1?ie=UTF8&s=books&qid=1219801926&sr=1-1http://www.amazon.com/Blue-Ocean-Strategy-Uncontested-Competition/dp/1591396190/ref=pd_bbs_sr_1?ie=UTF8&s=books&qid=1219801926&sr=1-1http://www.amazon.com/Blue-Ocean-Strategy-Uncontested-Competition/dp/1591396190/ref=pd_bbs_sr_1?ie=UTF8&s=books&qid=1219801926&sr=1-1http://www.amazon.com/Blue-Ocean-Strategy-Uncontested-Competition/dp/1591396190/ref=pd_bbs_sr_1?ie=UTF8&s=books&qid=1219801926&sr=1-1http://www.amazon.com/Blue-Ocean-Strategy-Uncontested-Competition/dp/1591396190/ref=pd_bbs_sr_1?ie=UTF8&s=books&qid=1219801926&sr=1-1http://www.amazon.com/Blue-Ocean-Strategy-Uncontested-Competition/dp/1591396190/ref=pd_bbs_sr_1?ie=UTF8&s=books&qid=1219801926&sr=1-1http://www.amazon.com/Blue-Ocean-Strategy-Uncontested-Competition/dp/1591396190/ref=pd_bbs_sr_1?ie=UTF8&s=books&qid=1219801926&sr=1-1http://www.amazon.com/Blue-Ocean-Strategy-Uncontested-Competition/dp/1591396190/ref=pd_bbs_sr_1?ie=UTF8&s=books&qid=1219801926&sr=1-1http://www.amazon.com/Blue-Ocean-Strategy-Uncontested-Competition/dp/1591396190/ref=pd_bbs_sr_1?ie=UTF8&s=books&qid=1219801926&sr=1-1http://www.amazon.com/Blue-Ocean-Strategy-Uncontested-Competition/dp/1591396190/ref=pd_bbs_sr_1?ie=UTF8&s=books&qid=1219801926&sr=1-1http://www.amazon.com/Blue-Ocean-Strategy-Uncontested-Competition/dp/1591396190/ref=pd_bbs_sr_1?ie=UTF8&s=books&qid=1219801926&sr=1-1

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