Blue Ocean Strategy
•Descargar como PPTX, PDF•
2 recomendaciones•1,824 vistas
Blue Ocean Strategy with Example Compare and contrast Blue Ocean Strategy with Other Strategy.
Recomendados
Más contenido relacionado
La actualidad más candente
La actualidad más candente (20)
Similar a Blue Ocean Strategy
Similar a Blue Ocean Strategy (20)
Más de Mohammad Hye
Último
Último (20)
Blue Ocean Strategy
- 1. “ABOUT WINNING WITHOUT FIGHTING” BLUE OCEAN STRATEGY Faculty of Business & Information Systems Master of Science in Logistics Management GM522_BLUE OCEAN STRATEGY Group Presentation 1 1.Zumrad Rashidova (Sofi)_1001335416 2.Syeda Munazza_100143664 3.Yasin Absar_1001644581 4.Mati Ur Rehman_1001748258 5.Mohammad Nazmuzzaman Hye_1001748700 6. Musharat Hossain Toma_1001748800 7.Sayed Sulaiman Shah_1001749052
- 2. “To fight and conquer in all your battles is not supreme excellence; supreme excellence consists in breaking the enemy's resistance without fighting” Master Sun Tzu in ‘ Art of War’ 2
- 3. Companies often compete with one another to gain shares in crowded markets, but what if there was a more effective way? In this Presentation we look at a different approach: the Blue Ocean Strategy, which avoids competing and instead looks to create demand in untapped markets. Illustration Of Two Businessmen One Fishing In Red Ocean And The Other In Blue Ocean 3
- 4. OUTLINE PART A Strategy Framework Understanding Blue Ocean Strategy Importance to Business Eight Core Principles of Blue Ocean Strategy Key Concepts Underlying Blue Ocean Strategy Analytical tools and framework Formulating and Executing Blue Ocean Strategy -Over View Formulating and Executing Blue Ocean Strategy-Mind Map Successful Application of BOS PART B Compare and Contrast BOS Approach with Other Strategic Model Comparison Matrix Similarities of Blue Ocean Strategy and Porter’s Generic Strategy Limitations of Blue ocean Strategy and Porter's Generic Strategy Why are the approaches interesting? To what extent are the Blue Ocean Strategy is susceptible or immune to the common flaws in strategic thinking? Conclusion 4
- 5. 5 PART-A : Strategy Framework Understanding
- 6. Blue Ocean Strategy Importance to Business 6 Create Uncontested Market Space Invent and Carputer New Demand Customer Value + Low cost
- 7. Eight Core Principles of Blue Ocean Strategy 7 (1)Grounded in Data • 10 year study/150 strategic moves • 30 industries/100 years (2)Pursues Differentiation + Low Cost • “and-and” not “either-or” • Reduce competing factors/create new factors (3) Creates Uncontested Market Space • Make competition irrelevant • Look outside the boundaries (4) Tools and Frameworks • Underlying frameworks exist as a guide • Built on common strategic patterns of Blue Ocean Strategy (5)Provides Step-by-Step Process • Provides a stepped process for implementation • Gives management an alternative to traditional strategies (6) Maximizes Opportunity/Minimizes Risk • Mitigates risk • Increases odds of success (7) Builds Execution into Strategy • Ensures employee support • Process and tools are inclusive (8) Creates a Win-Win Outcome • Strategy aligns value, profit and people • Ensures acceptance, support, sustainability W. Chan Kim and Renée Mauborgne (2015) Blue Ocean Strategy, Expanded Edition: How to Create Uncontested Market Space and Make the Competition Irrelevant Hardcover – January 20, 2015, Harvard Business Review Press Website: https://www.blueoceanstrategy.com/
- 8. Key Concepts Underlying Blue Ocean Strategy In Red Oceans, our efforts are focused on the conventional logic that we must outplace the completing with a better solution to a given problem. Blue Ocean Strategy invites us to redefine the problem itself. It does so by breaking the value-cost Trade- off in view of creating new and uncontested Market places. Places where no one has been and where we would be the one defining the rules. The Difference Between Red and Blue Ocean Value Innovation: The Heart of Blue Ocean Strategy 8 The concept of Value Innovation is developed by W. Chan Kim and Renée Mauborgne W. Chan Kim and Renée Mauborgne (2015) Blue Ocean Strategy, Expanded Edition: How to Create Uncontested Market Space and Make the Competition Irrelevant Hardcover – January 20, 2015, Harvard Business Review Press Website: https://www.blueoceanstrategy.com/
- 9. Analytical Tools and Framework The Strategy Canvas Is Both The Start And The End Point Of Blue Ocean Strategy Formulation. An Initial Value Curve Depicts Where The Industry Competes On And Invests In, It Is Then Transformed Via The Eliminate-Reduce-Raise-Create Actions Framework. The Resulting Value Curve shows a focused effort that diverges rom existing market offerings and can be easily translated into a compelling tagline. The Strategy Canvas - Graphical Representation of Strategy+ Big Picture View + Landscape Scanning+ Relative Positioning Vs. Competitors 9 Strategy Canvas developed by W. Chan Kim and Renée Mauborgne W. Chan Kim and Renée Mauborgne (2015) Blue Ocean Strategy, Expanded Edition: How to Create Uncontested Market Space and Make the Competition Irrelevant Hardcover – January 20, 2015, Harvard Business Review Press Website: https://www.blueoceanstrategy.com/
- 10. Analytical Tools and Framework The Four Actions Framework The four actions framework is used to reconstruct the buyer value elements that will define our future value curve. New Value Curve : Our new value curve will depict a viable strategy if it has three characteristics (3 Characteristics of a good Strategy) 1. FOCUS: it shows that we do not diffuse our efforts across all key factors of competition. 2. DIVERGENCE: the shape of our curve diverges from those of other players. 3. The curve can be easily translated into a clear, strong, truthful and compelling TAGLINE The Four Actions Framework developed by W. Chan Kim and Renée Mauborgne W. Chan Kim and Renée Mauborgne (2015) Blue Ocean Strategy, Expanded Edition: How to Create Uncontested Market Space and Make the Competition Irrelevant Hardcover – January 20, 2015, Harvard Business Review Press Website: https://www.blueoceanstrategy.com/
- 11. Formulating and Executing Blue Ocean Strategy- Over View The development of a BOS is based on six principles, four (4) related to the formulation of BOS and two (2) related to BOS implementation. Each of the six principles aims to reduce the different possible risks arising from BOS. 11 Developed by W. Chan Kim and Renée Mauborgne W. Chan Kim and Renée Mauborgne (2015) Blue Ocean Strategy, Expanded Edition: How to Create Uncontested Market Space and Make the Competition Irrelevant Hardcover – January 20, 2015, Harvard Business Review Press Website: https://www.blueoceanstrategy.com/
- 12. Successful Implementation of Blue Ocean Strategy 12 Strategic Questions before NetJets - How to enter into the Aviation Space when the market was dominated by the big airlines groups ? The RED Ocean - Over 20 Domestic and international Airlines Competing in the Space - All of the attracted Business Travelers, Holiday Travelers and Casual Travelers - Corporate Spent millions on executive travel every year - All travelers had to go through the long check ins, security checks , hectic flight transfers , congested airports, Baggage Claims ….. etc. - Business Travelers only have the option of business class/first class or corporate jet The Blue Ocean - Identified that Business Travelers are the most frequent and regular flyers - NETJETS offered Business Travelers “The Convenience of a Private Jet at the Price of a Airline Ticket” - NETJETS also provided factional 1/16 ownership of the aircraft – with no hassles Aircraft Maintenance - Private Aircraft Made Available to corporate at 4 hours notice (much less than flight booking) - No Hassles or responsibilities of Aircraft Maintenance. - Customized in flight services – only for the traveler Created a B2B industry when the entire industry was still B2C
- 13. Successful Implementation of Blue Ocean Strategy 13 The Story of INDOCHINO.COM - World’s first self service virtual suit company - Customer can choose the fabric , design , style and accessories – Online - Buttons lapels , linings, pockets , cuff signature –everything is customizable - Customer themselves and provide fitting details online with video tutorial - Delivery within 3 Weeks - If Order is less than perfect , INDOCHINO pays for local tailoring or remake the suit for free - Most Suits prices under US$ 500 ( Where cheap suits cost around US$2000 and the designer once around US$1500 Traditional Apparel / Suit Companies - Industry divided into five segments : Haute Couture, Luxury , Affordable Luxury Mainstream and Discount - The traditional companies competed among each other on the factor like : No. of stores , location of stores , premium stores , premium brand , range or no. of lines offered, Hi fashion Vs. customization Vs. Price Tradeoff - Marketing and brand reputation (Top Brand associated with Designer Labels) - High Customization Cost INDOCHINO - INDOCHINO.COM Does not compete in any of the segment - INDOCHINO.COM does not get affected by the industry factors - INDOCHINO.COM built its brand reputation by delivering value - INDOCHINO.COM outsources al suits to quality and reputed local and tailor network of Shanghai. Created and captured a new Market Demand by focusing on Buyer Utility
- 14. Successful Implementation of Blue Ocean Strategy 14 The Story of ZYNGA - Founded Zynga in April 2007 with a mission “Connect the World through games” - Has over 3000 Employees and 270 million customers , 60 Mn. Daily active users. - Largest Social games developer of Facebook - Now Provides games in multiple platforms like : Facebook , Myspace, Android , iPad, iPhone , Yahoo and Framvile.com Traditional Gaming Companies - Industry divided into four Segments : Console based Games, Online Games , Mobile Games and Flash Games - Console based games dominated the marketplace with 75% of the revenues - The big three of the gaming dominated 95% of the console market place (Sony, Nintendo , Xbox ) - The traditional gaming companies competed each other in the following factors : Consoles – type speed , Capabilities , No of title in each game , speed of the title release –weekly, monthly , High-end real time graphics , High- end accessors - Catered only to gamers- teenage boys to professional gamers - Addictive and had lot of side effect- Too much violence, addiction , lack of exercise , not mind simulating. - Parents Usually don’t recommend /buy. Zynga - Zynga did not compete in any of the segment or market player dominance - Zynga’s (Farm Vile) did not get affected by the industry factors - Zynga built it’s brand reputation by sharing and work of mouth connect - Zynga catered to all – children , parents , professional… - Zynga created a new genre of education/ simulation games. Created and captured a new Market Demand by focusing noncustomer
- 15. Successful Implementation of Blue Ocean Strategy 15 The Story of KHAN ACADEMY - A non-profit educational organization created in 2006 by Salman Khan – A MIT and Harvard Business School Alumni - Free Online Collection of more than 3,300 micro lectures - Most Viewed online courses and lectures in the world-over 172 million of total views. - Over 177 million lessons delivered till date - Close to quarter billion dollars in donation - Team size just 20 - Amongst the 100 most influential people of the world Traditional Education Companies - Industry divided into 2 segments : Brick and Mortar Learning – School / College , Online Learning - Learning was centered around students - The factors that the industry was completing: Student Teacher Ratio , Class room interaction, cost of Learning /Education , interactive learning - Smart kids get more attention than other kids - Focused Pedagogy – Teacher talks – Students Listen- Therefore Students learn - Teacher judge Student’s strength/weakness Created and captured a new Market Demand by focusing on functionality & emotional appeal KHAN ACADEMY - Khan Academy filled the gaps exist in traditional brick and mortar school learning : Videos and exercise to be used as a teaching aid and not replacement for teacher , Use analytics and technology to figure out the strengths and weakness of students. - Learning is centered around students , teacher and parents - Everybody gets equal opportunity/attention /leaning - Unique pedagogy- Stop , rewind , understand and then play - Analytics drive the understanding of each students strengths & weakness
- 16. 16 PART-B : Compare and Contrast BOS Approach with Other Strategic Model Comparison Matrix Similarities of Blue Ocean Strategy and Porter’s Generic Strategy Limitations of Blue ocean Strategy and Porter's Generic Strategy Why are the approaches interesting? To what extent are the Blue Ocean Strategy is susceptible or immune to the common flaws in strategic thinking? Conclusion
- 17. Comparison Matrix Management Gurus ANSOF (1979) PORTER (1980) HAX AND WILDE (1999) Kim and Mauborgne (2005) Strategy Product/Market Growth Matrix Generic Strategy Delta Model BLUE OCEAN Strategy OBJECTIVE New product has “commonality” with existing products Find best generic strategic position New sources of profitability Value innovation INTERNAL ANALYSIS SWOT Analysis Analysis of the five forces Costs x differentiation dilemma Rebuild market frontiers MACRO ENVIRONMENT SWOT Analysis Analysis of the five forces Align strategic option with firm activities Focus on broad panorama, not on numbers FUTURE SENARIOS Product/Market growth matrix Identification of opportunities Continually respond to an environment of uncertainties Create uncontested market space 17 References : Jussani, A. C., Krakauer, P. V., & Polo, E. F. (2010). REFLECTIONS ON BLUE OCEAN STRATEGY: A COMPARISON WITH ANSOFF’S, PORTER’S, AND HAX AND WILDE’S STRATEGIES. Future Studies Research Journal : Trends and Strategies, 17-35.
- 18. Limitations of Blue Ocean Strategies 18 Limitations Description Example Arriving too early Entering a market too early is a clear risk. Customers might not understand what you are trying to sell. The technology might not be fully developed. The Amiga computer was a decade ahead of PCs and Macs, it was a technological marvel, and it died because the World was not ready for it. Being too new, too different. 1. Some blue oceans are free of predators, but also free of fish. Many companies come up with great ideas but the market is not ready. 2. Consumers don’t like too much change. 1. When P&G introduced their improved concentrated laundry detergents, it failed because consumers could not conceive how a few drops could clean as well as a cap-full of Tide. 2. QWERTY keyboard layout, designed in the early mechanical typewriter era (1873) to slow typing down. The DVORAK keyboard, designed in 1936, is clearly superior for this age, yet we don’t want to change. Defensibility The moment you find a new ocean, other sharks from your former red ocean and other adjacent oceans will be attracted to your new market. Eventually become red ocean , Example : 1. Air Asia mode of operations is copied form Virgin Atlantic international Airline 2. MYDIN Hyper Market --- concept copied from Best Buy.
- 19. Limitations of Porters Generic Strategies 19 Limitations Description Consequences Heavy reliance on modern equipment Porter states that “heavy up-front capital investment in the state-of the-art equipment” is required (Porter, 1998, p. 40). Investing a big fortune in state-of the-art equipment when one is not clear about its advantage for sure would lead to investing a majority of money in something that may not be profitable at all (Datta, 2009, p. 6). Requirement of High Market Shares Porter stated that: “low overall cost position often requires a high relative market share or other advantages, such as favourable access to raw materials” (Porter, 1998, p. 36). But how one can achieve high market share in the first place? Scholars are arguing that market share leaders are actually coming to that point through differentiation strategy let it be of higher quality or attractive packaging, rather than through cost leadership (Datta, 2009, p. 22).
- 20. Similarities of Blue Ocean and Porter’s Generic Strategy 20 • Through Differentiation Strategy, the company invests heavily in image, technology, technical assistance, distribution, research and development, human resources, market research, and quality in order to differentiate its products for its clients. • On the other hand Through Strategy Canvas, the company clearly see the factors that the industry competes and based on that and Reorienting their focus from competitors to alternatives and from customers to noncustomers
- 21. Why Blue Ocean and Porter’s Generic Strategy is Interesting ? 21 BLUE OCEAN STRATEGY A Rising Call for Creative Solutions There is a rising need for organisations of every stripe to simultaneously pursue differentiation at low cost to stand out in the market. That’s what we call value innovation’, the cornerstone of blue ocean strategy. Read more at PORTER’S GENERIC STRATEGY Parameters of choice According to Porter’s companies have option to choose any of the three Strategy -DIFFERENTIATION SRATEGY, COST LEADERSHIP STRATEGY , FOCUS STRATEGY
- 22. To what extent Blue Ocean Strategies is susceptible or immune to the common flaws in strategic thinking? Theme Factors Extent of Flaws Blue Ocean Strategy Assessment - Realistic Execution Capabilities - Ccompetitors Reactions - Demand Forecasting - Evaluation of Specific Decisions Less Biased STRATEGY CANVAS 1. To clearly see the factors that the industry competes 2. Reorienting their focus from competitors to alternatives and from customers to noncustomers Process - Reviewing the business case - Innovative Idea reached to top Management Availability of Critical Information to decision Maker SEQUENCE OF BLUE OCEAN STRATEGY 1. Is there exceptional buyer utility in your business idea? 2. Is your price easily accessible to the mass of buyers? 3. Can you attain your cost target to profit at your strategic price? 4. What are the adoption hurdles in actualizing your business idea? Are you addressing them upfront? Focus on Targets - Financial and Strategic targets - Short terms and Long terms Target Well aligned incentives with strategic objectives New Value Curve depict – 1. Strong Focus 2. Stands apart from competitors 3. Clear-cut and easy to communicate tagline 22 References: Dye, Renee; Sibony, Olivier and Truong, Vincent (2009) “Flaws in strategic decision making: McKinsey Global Survey results,” January 2009, McKinsey & Company
- 23. Conclusion A company must master its traditional markets using conventional strategic planning tools. It will always be important to swim successfully in the red ocean by out competing rivals. Red oceans will always matter and will always be a fact of business life. But to focus on the red ocean is therefore to accept the key constraining factors of war- limited terrain and the need to beat an enemy to succeed – and to deny the distinctive strength of the business world: the capacity to create new market space that is uncontested. But to sustain high performance, companies must create their own blue oceans, and make the competition irrelevant! 23
Notas del editor
- The Blue Ocean Strategy (BOS) is the strategic organizational approach that is based on the principle that companies should not engage in a competitive struggle but that they should focus more on uncontested markets. Blue Ocean Strategy has been developed by W. Chan Kim and Renée Mauborgne and is based on a study of 150 strategic moves in the course of one hundred years and over thirty industries like Apple, Cirque Du Soleil, Yellow Tail and Air Asia. W. Chan Kim and Renée Mauborgne contend that future leading companies are likely to succeed by targeting uncontested markets that are ready for growth and development. They call these markets ‘blue oceans’.
- Apparently there are two types of oceans in which companies used to compete. The red ocean is one where there are a lot of companies competing together to rise one step higher then the other. Companies try to beat the competition by making a value-cost trade-off. They usually exploit the systems of existing market place. On the other hand Blue ocean is totally different. Here the companies creates a new market of success, innovate things and try to create such market place which is not discovered by others. They make the competition irrelevant by breaking the value-cost trade-off. The companies here, align the whole system of company’s activities in pursuit of differentiation and low cost
- The authors, Kim and Mauborgne, introduced an innovative way of thinking on how to survive when the competition in the market gets bloody. They argued that “to beat the competition is to stop trying to beat the competition.” Therefore, making the competition irrelevant. How to do it? The authors provided several frameworks leading to the paradigm shift—from red to blue ocean thinking.
- It’s grounded in data All the aspects of blue ocean strategy are revolving around the data and the analytics on the basis of which companies used the predicts future circumstances analysing the pas business trends. The data represents a company’s value and can be the main source of it’s sustainability. It pursues differentiation and low cost The companies dive into the blue ocean to create differentiation, a market that is totally different from existing market place. They tends to provide value to customer in low affordable cost It creates uncontested market space It aims to make the competition irrelevant by reconstructing industry boundaries. Instead of looking within the boundaries, companies systematically look across them to create blue oceans. New and uncontested market space of new demand and high profitable growth It empowers you through tools & framework The blue ocean strategy systematically link innovation to value and reconstruct industry boundaries. Through different data driven tools it provides road map and visual guidance to companies for systematically pursuing value innovation. It provides a step-by-step process It presents an alternative to the existing strategic planning process, which is often criticized as a number-crunching exercise that keeps companies locked into making incremental improvements. It maximizes opportunity while minimizing risks The blue ocean index of ideas lets you test the commercial viability of your blue ocean ideas and shows you how to refine your ideas to maximize your upside while minimizing downside risks. It builds execution into strategy Blue ocean strategy builds execution into strategy from the start through the practice of fair process in the making and rolling out of strategy. Commitment, trust and cooperation are intangible capital that allows companies to stand apart in speed, quality and consistency of their execution. It shows you how to create a win-win outcome The win-win situation in blue ocean strategy created by aligning three strategy propositions value, profit and people. Good strategy content depends upon compelling value proposition for buyers and robust profit proposition for the organization. While strategy execution is based largely on a motivating people proposition
- W. Chan Kim & Renée Mauborgne coined the terms red and blue oceans to denote the market universe. Red oceans are all the industries in existence today – the known market space, where industry boundaries are defined and companies try to outperform their rivals to grab a greater share of the existing market. Cutthroat competition turns the ocean bloody red. Hence, the term ‘red’ oceans. Blue oceans denote all the industries not in existence today – the unknown market space, unexplored and untainted by competition. Like the ‘blue’ ocean, it is vast, deep and powerful –in terms of opportunity and profitable growth. The chart above summarizes the distinct characteristics of competing in red oceans (Red Ocean Strategy) versus creating a blue ocean (Blue Ocean Strategy). Value Innovation is the simultaneous pursuit of differentiation and low cost, creating a leap in value for both buyers and the company. The concept of Value Innovation is developed by W. Chan Kim and Renée Mauborgne and is the cornerstone of market-creating strategy. Because value to buyers comes from the offering’s utility minus its price, and because value to the company is generated from the offering’s price minus its cost, value innovation is achieved only when the whole system of utility, price, and cost is aligned. Cost savings are made by eliminating and reducing the factors an industry competes on. Buyer value is lifted by raising and creating elements the industry has never offered. Break the value-cost trade-off by answering the following questions: Which of the factors that the industry takes for granted should be eliminated? Which factors should be reduced well below the industry’s standard? What factors should be raised well above the industry’s standard? What factors should be created that the industry has never offered?
- The strategy canvas is a central diagnostic tool and an action framework developed by W. Chan Kim and Renée Mauborgne for getting clear on the current state of play and making your blue ocean move. It graphically captures, in one simple picture, the current strategic landscape and the future prospects for an organization. The strategy canvas serves two purposes: To capture the current state of play in the known market space, which allows users to clearly see the factors that the industry competes on and where the competition currently invests To propel users to action by reorienting their focus from competitors to alternatives and from customers to noncustomers of the industry. It visually plots a value curve that allows us to understand where the competition is currently investing, the factors the industry currently competes on, and what customers receive from the existing competitive offerings in the market. The horizontal axis on the strategy canvas captures the range of factors that an industry competes on and invests in, while the vertical axis captures the offering level that buyers receive across all of these key competing factors. The value curve or strategic profile is the basic component of the strategy canvas. It is a graphic depiction of a company’s relative performance across its industry’s factors of competition. A strong value curve has focus, divergence as well as a compelling tagline.
- The Four Actions Framework developed by W. Chan Kim and Renée Mauborgne is used to reconstruct buyer value elements in crafting a new value curve or strategic profile. To break the trade-off between differentiation and low cost in creating a new value curve, the framework poses four key questions, shown in the diagram, to challenge an industry’s strategic logic. Eliminate : First, we should ask ourselves which factors our company should eliminate. Often, these are factors the industry has long competed on. They are based on implicit assumptions that have been taken for granted even though they no longer have value, or may even reduce value. (Which factors that the industry has long competed on should be eliminated ?) Reduce : Then we look at whether products or services have been overdesigned in the race to match and beat the competition. This forces us to reduce those elements that over-serve customers, and that increase our cost structure for no gain. (Which factors should be reduced well below the industry’s standard?) Raise: At the same time, we should look at factors that are based on a “compromise” within the industry and potentially raise them for greater customer appeal and satisfaction. (Which factors should be raised well above the industry’s standard?) Create: Finally, we can discover entirely new sources of value for buyers and create new factors that generate demand and change the strategic pricing of the industry (Which factors should be created that the industry has never offered?)
- Six principles of the Blue Ocean Strategy This strategy targets six principles that can be used in every organization so that they can arrive at a successful development and fulfilment of new markets. A distinction is made between preliminary/Formulating and executive/Execution principles. Preliminary/Formulating principles reconstruct market boundaries focus on the big picture, not the numbers in the here and now reach beyond the existing supply and demand approach the right strategic sequence Executive/Execution principles overcome the main organizational hurdles build in victory into the organizational strategy
- What are the strengths and limitations of the approaches? Why are they interesting? To what extent are the various approaches susceptible or immune to the common flaws in strategic thinking?