Blue Ocean Strategy

1. Blue Ocean Strategy Mayra Garcia Cory Logan Gary Taylor Nick Watkins Lindsey Pacatte Garrett Matthews David Hayward

2. Red Oceans vs. Blue Oceans What are Red Oceans? Industries that are already in existence Limited demand Firms compete to capture more market share Limited room for growth Limited outlook for profit growth Most strategy is developed to compete in Red Oceans

3. Red Oceans vs. Blue Oceans What are Blue Oceans? Are untapped market space Unlimited potential for growth in demand Room for highly profitable growth Largely uncharted Very little research into creating these markets

4. New Market Space Where are Blue Oceans found? Some are created well beyond existing industries Some are created within established red oceans by expanding industry boundaries Increasingly important for existing firms to create Blue Oceans

5. Continuous Creation of Blue Oceans Although the term Blue oceans is new

6. Continuous Creation of Blue Oceans • Industries never stand still. • Operations Improve, and markets expand. • History states we have underestimated to create new industries • Re-create existing ones.

7. Continuous Creation of Blue Oceans • Flying to a new beat • Cheeky ads, funky staff attitude • Easy online booking has kept planes full • 15 % profit margin on 36 million in revenues

8. Continuous Creation of Blue Oceans • Air Asia is an idea whose time has come. • "I think the tyranny of traditional airlines is about to end.“ Tony Fernandez

9. Continuous Creation of Blue Oceans Positioning an organization to have a competitive advantage Military references Chief “officers” in the “headquarters” industry shows us the market has never been constant

10. Continuous Creation of Blue Oceans • To focus on Red Oceans is accepting the key constraining factors of war • The need to beat the enemy • To deny the strength of the business world

11. Impact of Creating blue oceans The authors attempted to quantify the impact of creating blue oceans on a companies growth in pertaining to profits and revenues Study was done on business launches of 108 various companies

12. The Profit and Growth Consequences of Creating Blue Oceans 86% 62%

13. The Rising Imperative of Creating Blue Oceans 1.Accelerated Technology; supply exceeds demand

14. Advances in Technology • Transportation • assembly lines • Communication • Wireless • Finance • 80% of transactions done by computer • ATMs • Agriculture • Tractors and transponders • Business • Word processing • Laptops

15. The Rising Imperative of Creating Blue Oceans 1.Accelerated Technology; supply exceeds demand 2.Globalization; niche markets disappear

16. Aldi Looks to U.S for Growth “Incredible Values Everyday” • quality merchandise • the lowest possible prices • guaranteed satisfaction • Pledge highest quality for the lowest price. • satisfaction are always DOUBLE guaranteed

17. The Rising Imperative of Creating Blue Oceans 1.Accelerated Technology; supply exceeds demand 2.Globalization; niche markets disappear 3.Accelerated Commoditization of products and services; brands become more similar

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19. The Rising Imperative of Creating Blue Oceans • Accelerated Technology; supply exceeds demand • Globalization makes markets dissappear • Accelerated Commoditization of products and services; brands become more similar • Increase in price wars; selections based on price • Shrinking profit margins

20. Is there a systematic approach to achieve and sustain high performance? Past Company Performance Growing Industries From Company and Industry toStrategic Move

21. In Search of Excellence • Focused on 8 themes that led to Successful Companies • Wang Labs- • During the 1950s and 1960s was strong rival of a growing IBM

22. Built to Last Focused on the habits of successful visionary companies The companies that fit the criteria were in growing industries

23. Moving to Blue Oceans • A Strategic Move- • A set of managerial actions and decisions involved in making a major market-creating business offering. • These strategic moves create and capture new market space

24. VALUE INNOVATION “The Cornerstone of Blue Ocean Strategy” • Blue Ocean • Create uncontested market space • Make the competition irrelevant • Create and capture new demand • Break the value-cost trade-off • Red Ocean • Compete in existing market space • Beat the competition • Exploit existing demand • Make the value-cost trade-off

25. VALUE INNOVATION • Value without innovation • Value creation • Innovation without value • Technology driven, market pioneering • Defies one of the most commonly accepted dogmas of competition based strategy • Value-cost trade-off

26. VALUE INNOVATION “The Simultaneous Pursuit of Differentiation and Low Cost”

27. VALUE INNOVATION “Cirque du Soleil” • Is it circus, opera, theater, ballet, or a Broadway show?

28. Formulating and Executing • Maximize Opportunity, Minimize Risk • Unbalanced success in Red Ocean because of tools and frameworks already in motion • Companies do not act seriously on creating blue oceans

29. Preview Ch. 2: analytical tools and framework Ch. 3: search risk, conventional boundaries Ch. 4: planning risk, four-step planning Ch. 5: maximize size, minimize scale risk

30. Preview Cont’d Ch. 6: business model risk, design, sequence Ch. 7: tipping point leadership, organizational risk Ch. 8: fair process, management risk Ch. 9: sustainability and renewal issues

31. Six Principles of BOS Formulation Principles • Reconstruct market boundaries • Focus on the big picture, not numbers • Reach beyond existing demand • Get the strategy sequence right Execution Principles • Overcome key organizational hurdles • Build execution into strategy