Creating New Oceans

1. Creating New Oceans Blue Ocean Strategy W. Chan Kim Renee Mauborne

2. New Market Space • Cirque du Soleil Red Oceans vs. Blue Oceans Red Oceans- represent all the industries in existence today Blue Oceans- represent the industries NOT in existence today.

3. Red Oceans • Have a defined set of rules and practices • Competition tries to outperform one another. • The market space gets crowded and profit and margins decrease. • Production becomes a commodity, “cutthroat competitions turn the red ocean bloody.”

4. Blue Oceans • “untapped market space” • Creates its own demand with higher margins and higher risk • Higher growth rates • NO RULES because they are the only player. • “Most are created from and within red ocean by expanding existing industry boundaries.” • Uncharted oceans, instead of competing in less risky red oceans.

5. Cirque du Soleil • http://www.cirquedusoleil.com/ • http://www.youtube.com/watch?v=qGjPrvomDP0

6. The Continuing Creation of Blue Oceans • New Industries emerge because of new technologies and further education of red ocean dynamics. • Examples- telegraph to telephone to smart cell phones. • Standard Industrial Classification system was replaced by North America Industry Classification Standard system.

7. The Continuing Creation of Blue Oceans • STRATEGIC THINKING with Red Oceans • Find the factors of constraints in order to succeed, for example, benchmarking, or specialization in a particular field. • Gaining high ground • Price wars decrease profits

8. The Impact of Creating Blue Oceans

9. The Impact of Creating Blue Oceans

10. The Impact of Creating Blue Oceans

11. The Rising Imperative of Creating Blue Oceans • Technological Advances • Increase supply and decrease demand • Mature Markets, decrease world population in Developed Markets • Globalization • Trade Barriers • Communications

12. The Rising Imperative of Creating Blue Oceans • Substitution, brands becoming more similar and selection is based on price. • Differentiating products is more difficult. • Management is increasingly changing focus to Blue Ocean Strategy.

13. From Company and Industry to Strategic Move • The Fairytale of Industry Leaders does not always have a happy ending. • Example • GM Industry Leader in the 70-80’s and loss in market share has created a gruesome ending. • Circuit City

14. From Company and Industry to Strategic Move • Strategic Move is the best unit of analysis in studying the roots of profitable growth, not by company nor the industry. • The creation and capturing of blue oceans were achieved by diverse industries, organizations, firms, and managers.

15. Value Innovation: The Cornerstone of Blue Ocean Strategy • The creation of value or the perception of value has encouraged profit growth • Low cost strategy, competition based strategy, or value based strategy • Economies of scale.

16. Red Ocean VS Blue Ocean Strategy

17. Formulation and Executing Blue Ocean Strategy