Ch. 9-Conclusion: The Sustainability and Renewal of Blue Ocean Strategy

1. Ch. 9-Conclusion: The Sustainability and Renewal of Blue Ocean Strategy Team 1 Patrick Morales, Will Turner, Chris Mathis, Jared Stowe, Becky Alvarado

2. “Creating blue oceans is not a static achievement, but a dynamic process.” • How easy or difficult is blue ocean strategy to imitate? • When should a company reach out to create another blue ocean?

3. Barriers to Imitation • Value innovation does not make sense to a company’s logic • CNN ridiculed by competitors when introduced • Blue ocean strategy my conflict with other companies’ brand image • The Body Shop’s business model in beauty industry

4. Barriers to Imitation • Natural monopoly: The market often cannot support a second player • Kinepolis’ megaplex theatre in Brussels, Belguim • Patents or legal permits block imitation

5. Barriers to Imitation • High volume leads to rapid cost advantage for the value innovator, discouraging followers from entering market • Wal-Mart’s huge economies of scale when purchasing products • Network externalities discourage imitation • Ebay’s size and popularity online –discourages competitors

6. Barriers to Imitation • Imitation often requires significant political, operational, and cultural changes • Southwest airlines’ model meant major revisions and training for competitors • Companies that value-innovate earn brand buzz and loyal customer following that tends to shun imitators • Microsoft trying to dislodge Intuit’s value-innovation Quicken

7. When to Value-Innovate Again • You need to monitor value curves on the strategy canvas • Aim to widen gap and swim in blue ocean as far as possible • Look to value-innovate and seek new blue oceans as gap closes

8. When to Value-Innovate Again • When a company’s value curve still has focus and divergence from competition: • Resist temptation to value-innovate again • Improve operations and geographical expansion to achieve max economies of scale and market coverage • Make yourself a moving target • Dominate the blue ocean for as long as possible

9. When to Value-Innovate Again • As competitor’s value curves converge towards yours: • Reach for another value innovation to create a new blue ocean • Creating new blue oceans will help in an overcrowded market

10. American Apparel: Future of Blue Ocean Strategy • Strengthen and expand blue ocean strategy of domestic production and vertical integration • Increase number of factories in the U.S. • Focus on improving operations at wholesale and retail levels

11. Conclusion • Companies already know how to compete in red oceans • Use tools learned in this book to make blue ocean strategy as systematic and actionable as red ocean strategy