Blue Ocean 97

8/9/2019 Blue Ocean 97

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BLUE OCEANS STRATEGYBLUE OCEANS STRATEGY

Strategic Management

Group #1


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Blue

Oceans

Red

Oceans

Compete in existing market spaceCompete in existing market space

Beat the competitionBeat the competition

Exploit existing demandExploit existing demand

Make the valueMake the value--cost trade offcost trade off

Align the whole system of a firms activities with itsAlign the whole system of a firms activities with its

strategic choice of differentiationstrategic choice of differentiation ororlow costlow cost

Create uncontested market spaceCreate uncontested market space

Make the competition irrelevantMake the competition irrelevant

Create and capture new demandCreate and capture new demand

Break the valueBreak the value-- cost trade offcost trade off

Align the whole system of a firms activities with itsAlign the whole system of a firms activities with its

strategic choice of differentiation and low coststrategic choice of differentiation and low cost


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We Reinvent the CircusWe Reinvent the Circus

Cirque does not compete withinCirque does not compete within

the industry & and does not stealthe industry & and does not steal

customers from other famouscustomers from other famous

circusescircuses

Attraction of new customersAttraction of new customers

adults & corporate clientsadults & corporate clients

Combination of circus andCombination of circus andtheatretheatre

No animalsNo animals


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Cost Reduction:

No animal shows

No star performers

No multiple show arenas

Cirque du Soleil reconstructedCirque du Soleil reconstructed

elements across theatre, circus,elements across theatre, circus,

Broadway shows, ballet and operaBroadway shows, ballet and opera

In the end it is simultaneously a littleIn the end it is simultaneously a little

of all of them and none of any ofof all of them and none of any of

them in their entiretythem in their entirety


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Four Action FrameworkFour Action Framework

EliminateEliminate

ReduceReduce

RaiseRaise

CreateCreate

Which of the factors that the industryWhich of the factors that the industry

takes for granted should betakes for granted should be eliminated?eliminated?

Which factors should beWhich factors should be reducedreduced

well belowwell below the industrys standard?the industrys standard?

Which factors should beWhich factors should be createdcreated

that the industry has never offered?that the industry has never offered?

Which factors should beWhich factors should be raised wellraised well

aboveabove the industrys standard?the industrys standard?


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Four ActionFrameworkFour ActionFramework

The CaseofCirquedu Soleil

ThemeTheme

RefinedenvironmentRefinedenvironment

MultipleproductionsMultipleproductions

ArtisticmusicanddanceArtisticmusicanddance

EliminateEliminate ReduceReduce

RaiseRaiseCreateCreate

StarperformersStarperformers

AnimalshowsAnimalshows

AisleconcessionsalesAisleconcessionsales Multipleshow arenasMultipleshow arenas

Funand humorFunand humor

ThrillanddangerThrillanddanger

UniquevenueUniquevenue


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BLUE OCEANS STRATEGYBLUE OCEANS STRATEGY

F

ORMULATION


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RECONSTRUCT MARKETRECONSTRUCT MARKET

BOUNDARIESBOUNDARIES

6 Basic Approaches6 Basic Approaches

1. Alternativeindustries

2. Strategicgroups withintheindustry

3. Chainofbuyers

4. Complimentaryproductsandserviceofferings

5. Functionalandemotionalappealto buyers

6. Trendsovertime


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1. LookAcross Alternative Industries

Two ChoicestoFly:Two ChoicestoFly:

1.1. BusinessorFirstclassonaBusinessorFirstclassona

commercialairlinecommercialairline

2.2. PurchasingitsownaircraftPurchasingitsownaircraft

toserveitscorporatetraveltoserveitscorporatetravel

needsneeds


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1. LookAcross Alternative Industries

NetJets offers1/16 ownershipofan

aircraftto beshared with

15othercustomers

Customersgettheconvenience &

speedofaprivate jet with alow

fixedcost & low variablecostof

commercialairlinetravel


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2.LookAcross Strategic Group withinthe Industry

For the price of the cup of

coffee a day you can obtain

the gift of heath through

proper exerciseCurves has eliminatedCurves has eliminated

all the aspects of theall the aspects of the

traditional health clubtraditional health club

that are oflittlethat are oflittle

interest to the broadinterest to the broad

mass of womenmass of women


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3. Lookacrossthe ChainofBuyers

No oNor iskdecided tofocusnoton

doctors utontheusers - patients

TheNo oPen contained aninsulincartridgethat

allowed patientstoeasilycarry,inoneself-contained

unitroughlya weeks worth ofinsulin

No oNordisks lueoceanstrategyshifted theindustrylandscape

transfor ed theco panyfro insulin

producertoa diabetescareco pany


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4. LookAcross Complementary

Thekeyistodefinethetotalsolution buyers

seekwhentheychooseaproductorservice

hillipselectronicsalonecame with atea

kettlethatturnedthe

redoceans blue

hillipsexperiencedastronggrowth as

people beganreplacingoldkettles with the

new filteredonce


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5.Functionalor Emotional Appeal

CemexCemex, created a blue ocean by shifting the, created a blue ocean by shifting theorientation of its industry from functional toorientation of its industry from functional to

emotional, by creating aemotional, by creating a

PatrimonioPatrimonio HoyHoyprogramprogram


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5.Functionalor Emotional Appeal

CemexCemex positioned cement as a loving giftpositioned cement as a loving gift

CemexCemex created a blue ocean ofcreated a blue ocean of

emotional cement that achievedemotional cement that achieved

differentiation at low costdifferentiation at low cost


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6. LookAcross Time

The key intoThe key intoBl

ue Oceans StrategyBl

ue Oceans Strategycomes from projectingcomes from projecting

the trend itselfthe trend itself

Cisco created breakthrough value forCisco created breakthrough value for

customers via offering designed products ascustomers via offering designed products asroutes, switchers & other devices,routes, switchers & other devices,

providing fast data exchanges in theproviding fast data exchanges in the

Internet environmentInternet environment

Today, more than 80% of all Internet

traffic goes through Ciscos products,

and its growth margins are in the range

of 60% in a new market space


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THREE STRATEGYTHREE STRATEGY

PROPOSITIONSPROPOSITIONS


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Three StrategyPropositionsThree StrategyPropositions

CityCity--StateofDubaiStateofDubai


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Dubais Value PropositionDubais Value Proposition


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Dubais Profit PropositionDubais Profit Proposition


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Dubais People PropositionDubais People Proposition


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StrategyStrategy

should beshould be

AlignedAligned

iTunes offered a compelling value proposition

Its online music store allowed buyers to browse

More than 200,000 songs

Listen to 30-second samples

Download individual song for 99 cents

Full album for $9.99

Apple created an attractive value proposition

for major music companies such as

BMG, Universal Music Group,WarnerBros etc

iTunes guaranteed high sound quality along with

navigation, search and browsing functions


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CompetinginovercrowdedindustriesCompetinginovercrowdedindustries

isno waytosustain high performanceisno waytosustain high performance

Therealopportunityistocreate blueoceansofTherealopportunityistocreate blueoceansof

uncontestedmarketspaceuncontestedmarketspace

W. Chan Kimand ReneeW. Chan Kimand ReneeMauborgneMauborgne (2004)(2004)

Blue Ocean StrategyBlue Ocean Strategy

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Blue Ocean 97