Blue Ocean Strategy at Henkel

Dara Maisarah 29113135

Christian Hamonangan 29113035

Irsyad Ahmadi 29113072

Angga Ranggana 29113489

Overview

FOUNDED• By Fritz Henkel in 1876

HEADQUARTERS

• Dusseldorf, Germany

VISION• A Global Leader in Brands and Technology

BUSINESS AREA

• Laundry & Home Care

• Adhesive Technologies

• Beauty Care

PROBLEM

• Growth of market has slow down

MARKET

• raw material price increase

FINANCIAL CRISIS

• Competitor in adhesive technology decrease their price

COMPETITOR

What Henkel should do?

Create long term strategy for adhesive

technology

Analyze external environment and

internal environment

Analyze Blue

Ocean Strategy

SOLUTION

External Environment

General EnvironmentIndustry Environment

Competitor Environment

General Environment

Demographic SegmentLow birth rate

Economic SegmentGasoline and raw material has increased

Political SegmentTax incentive from East Germany Government

Sociocultural SegmentAge limit of doing DYI product just 50 yearsWomen preferred models and concrete samples

Technological SegmentUse technology for R&D product

Global SegmentReunion of East Germany and

West Germany

Physical SegmentProducing environment friendly

product

Continue

Industry Environment Threat of New Entrant

High barrier for new entrant

Bargaining Power of SupplierA few number of supplier, make supplier have strong position

Bargaining Power of BuyerIt's price sensitive

Threat of Substitute ProductA large number of product differentiation

Rivalry Among Competing of FirmsMany company in this industry try to reduce cost to give lowest price to customer

Competitor Environment

UHU

Adhesive segment for household and offices

PCI

Have strong position, market leader for tilersegment

Mapei

Acquired several local company

Internal Environment

RESOURCESTANGIBLE INTANGIBLE

Tangible Resources Valuable Rare Costly-to-imitate

Non-substitutable

Financial:1. Sales increase2. EBIT increase

Yes Yes No No

Organizational:1. Sub-brands build their own marketing

strategy2. Sales channel : do it yourself stores,

specialist shop, drugstores and food retailing shops

Yes Yes Yes Yes

Physical:1. Henkel relocated his company to

Diisseldorf by the Rhine2. Henkel took over the Adhesives and

Electronic Materials business from AkzoNobel

Yes Yes No No

Technological:1. External Thermal Insulation Composite

Systems2. Product Information

Yes No No No

Intangible Resources Valuable Rare Costly-to-imitate

Non-substitutable

Human:High frequency in Product innovation

Yes Yes Yes No

Innovation:1. Produced ‘low dust ‘ and ‘light

weight’ tile adhesive2. Adding new features to improve

the product

Yes Yes Difficult Difficult

Reputation:1. Direct contact between the

producer and client for support product enhancement, technical advise, addressing complaint and warranty support

2. Brand image

Yes Yes Yes Yes

Value Chain• Primary Activities

– Service• Installation• Repair

– Marketing and sales• Product,pricing,advertising, promotion and

distribution• Channels to market• Convenience• Communication

– Outbound logistics• Distribution expansion• Picking• Delivery• Shipment

– Operations• Packaging• Conversion• Maintenance

– Inbound logistics• Material handling• Warehousing

Value Chain

• Support Activities– Firm Infrastructure

• Finance• Accounting• General management

– Human Resource Management• Recruiting,hiring,training, developing

employee

– Technological Development• Resource and development• Process equipment• Product innovation

– Procurement • Purchasing raw material• Supplies

Strenght

- High innovation product

- Offer many product lines

- Huge distribution channel

- Each product has own marketing manager

Weakness

- Too Product Oriented

Opportunity

-German Market Saturated, enter to other countries

- Craftsmen is driven consumer’s buying decision

Threat

- High energy and raw material price

- Many competitors with low prices

Red Ocean Strategy vsBlue Ocean Strategy

Red Ocean Strategy Blue Ocean Strategy

Compete in existing market space Create uncontested market space

Beat the competition Market the competition irrelevant

Exploit existing demand Create and capture untapped demand

Make the value cost trade off Break the value cost trade off

Align the whole system of a firm’s

activities with its strategic choice of

differentiation or low cost

Align the whole system of a firm’s

activities in persuit of differentiation

and low cost

Focuses on adapting to external

trends as they occur

Participate in shaping external trends

over time

ELIMINATE

a number of sub-brands in adhesive

technology

REDUCE

harmful chemical

CREATE

eco-friendly safe product , DIY

segments easy to use for women

RAISE

the innovation of product, marketing strategy

Recommendation

Entry into developing countries to increase market share

Target market to high-end community

Product innovation (All in one)

Lesson Learned

Market demand is an important factor in

making business strategy

Action of competitors is

also a reference in determining a

strategy

To create Blue Ocean Strategy we should first

analyze external factor and

internal factor