principles of management blue ocean strategy

1. Presented by ,
Fasna

4. Blue Ocean Strategy
history
 A book published in 2005 and
written by W. Chan Kim and
Renée Mauborgne, Professors at
INSEAD and Co-Directors of the
INSEAD Blue Ocean Strategy
Institute.
 Based on a study of 150
strategic moves spanning more
than a hundred years and thirty
industries.

5.  In the book, the authors argue that leading companies will
succeed not by battling competitors, but by systematically
creating "blue oceans" of uncontested market space ripe for
growth.
 They assert that these strategic moves create a leap in value
for the company, its buyers, and its employees, while unlocking
new demand and making the competition irrelevant.
 The book presents analytical frameworks and tools to foster
organization's ability to systematically create and capture blue
oceans.

7. Blue ocean strategy
 Denote all the industries not in existence today – the
unknown market space, untainted by competition.
Demand is created rather than fought over.
 There is ample opportunity for growth that is both profitable
and rapid.
 Competition is irrelevant because the rules of the game are
waiting to be set.
 An analogy to describe the wider, deeper potential of
market space that is not yet explored.
 From a focus on competing to a focus on value innovation.

8. Vs. Blue Ocean StrategyRed Ocean Strategy

9. Features of Red Ocean Strategy and Blue Ocean
Strategy

12. Build execution into
strategy
Formulation principles Execution principles
Reconstruct market
boundaries
Focus on the big
picture
Reach beyond
existing demand
Get the strategic
sequence right
Six principles of blue ocean strategy
Overcome key organizational
hurdles

13. Reconstruct market Boundaries
Head-to-Head Strategy Blue Ocean Strategy
Focus on rivals within industry
Focuses on competitive
position within strategic group
Focuses on better serving the
buyer group
Looks across alternative
industries
Looks across strategic group
within industry
Redefines the industry buyer
group

14. Head-to-Head Strategy Blue Ocean Strategy
Focuses on maximizing the
value of product or service
offerings within the bounds of
its industry
Focuses on adapting to
external trends as they occur
Looks across to
complementary product and
service offerings
Participates in shaping
external trends over time
Reconstruct market Boundaries

15. Focus on the Big Picture, not the Numbers
Focus on the Big
Picture, not the
Numbers
The Four Stages of
Visualizing Strategy
 Visual Awakening
 Visual Exploration
 Visual Strategy Fair
 Visual Communication

16. Focus on the Big Picture, not the Numbers
Visual Awakening
 Compare your business with
your competitors by drawing
your “as is” strategy canvas
 See where your strategy
needs to change

17. Visual Exploration
Focus on the Big Picture, not the Numbers
 Go to the field to explore the
six paths to creating blue
oceans
 Observe the distinctive
advantages of alternative
products and services
 See which factors you
should eliminate, create, or
change

18. Focus on the Big Picture, not the Numbers
Visual Strategy Fair
 Draw your “to be” strategy
canvas based on insights from
field observations
 Get feedback on alternative
strategy canvas from customers,
competitors customers, and non
customers
 Use feedback to build the
best “to be” future strategy

19. Focus on the Big Picture, not the Numbers
Visual
Communication
 Distribute your before-and-
after strategic profiles on one
page for easy comparison
 Support only those projects
and operational moves that
allow your company to close
the gap to actualize the new
strategy

20. Reach Beyond Existing Demand
The Three
Tier Of
Non-customers
 First tier : “Soon to be” non-
customers who are the edge of your
market, waiting to jump ship
 Second tier : “ Refusing” non-
customers who consciously choose
against your market
 Third tier : “Unexplored” non-
customers who are in markets distant
from yours

21. Get The Strategic Sequence Right
Buyer utility
Is there exceptional buyer
utility in your business idea
Price
Is your price easily
accessible to the mass of
buyers?
Adoption
What are the adoption
hurdles in actualizing your
business idea?
Cost
Can you attain your cost
target to profit at your
strategic price?
A commercially viable blue ocean idea

22. Overcome Key Organizational Hurdles
Overcome
Key
Organizational
Hurdles
Cognitive
hurdle
Motivational
Hurdle
Resource
Hurdle
Political
Hurdle

23.  Apple
 Google.Com
 Amazon.Com
 Tata motors
 Micromax
 ICICI bank
 Fabindia
 Shaadi.Com
 Air deccan
 Shramik Sanitation India
The best example which are using blue ocean
strategy by doing value innovation :

24. Numerous companies from various branches
of industry have successfully created blue
oceans. Some of them are ;

26.  SOUTHWEST AIRLINES
 A US company, made history as the world's first low-cost
carrier.
 Analysed alternative industries and created new benefits
for their non-customers, cost-sensitive travellers who rather
drive.
 The low-cost carrier thus positioned itself as a competitor
to the car – not to other airlines – and adapted its strategy to
the new requirements.
 Reduced prices due to the elimination of additional
services.

27.  Improved check-in times
 Increased flight frequency
 This new combination created an offering that enabled the
customer to benefit from the high travelling speeds of an
airplane at low prices combined with the flexibility of
travelling by car.

29. CIRQUE DU SOLEIL
 Created a new, highly-profitable market within the ailing
circus industry.
 The company’s management eliminated the main cost
drivers of conventional circuses: the animals and the stars.
 They incorporated elements from opera, ballet and
concerts.
The result was a totally new entertainment concept
targeting former non-customers: adults happy to pay for
good entertainment.

31.  Nintendo
 The blue ocean strategy method has been implemented for
many years with the systematic development of innovations
such as nintendo DS or nintendo wii.
 With nintendo wii they departed from a red ocean
dominated by sony’s playstation and microsoft’s xbox by
creating a totally new video game concept.
 On one hand the wii created new benefits, such as
innovative, intuitive control with movement sensors.
 On the other hand it generated massive cost reductions
eliminating high end graphics and CPU power.

32.  Thus nintendo was able to sell the wii at a price that
appealed to the mass public.
 This new recipe for success made the wii extremely popular
and accessible for a new, unconventional target group,
ranging from women to senior citizens.

33. Profit and growth consequences of creating
blue oceans