blue ocean
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BLUE OCEAN STRATEGYGROUP 5:
1. VŨ THỊ PHƯƠNG THANH2. KIỀU THỊ THU TRANG3. NGUYỄN THỊ THU TRANG4. MAI THỊ HOÀ
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Contents
Background Knowledge
World’s Cases
Vietnam’s Cases
Misconceptions
Conclusion
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What is the BLUE OCEAN?Blue oceans denote all industries NOT in existence today
The Unknown market space
Untainted by competition
In Blue Oceans, demand is created not fought overIn Blue Oceans, growth is profitable and rapid
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Red Ocean vs. Blue Ocean
• Compete in existing market space
• Beat the competition
• Exploit existing demand
• Make the value/cost trade-off
• Align the whole system of company’s activities with its strategic choice of differentiation OR low cost
• Create uncontested market space
• Make the competition irrelevant
• Create and capture new demand
• Break the value/cost trade-off
• Align the whole system of a company’s activities in pursuit of differentiation AND low cost
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Two ways to create a BLUE OCEAN
Give rise to complete new
industries
EBAY(online auction
industry)
Create WITHIN a Red Ocean when a
company alters the boundaries of an existing company
Cirque du Soleil
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Automobile industry
Chrysler’s Minivan (1984)
Japanese Car (1970s)
GM (1924)
Ford Model T (1908)
Presenter: Vũ Thị Phương Thanh
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Historical Situation (1890s)
The horse and buggy was the primary means of US transportation
Auto manufacturers built custom-made automobiles
Autos were an unreliable and luxury novelty
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FORD MODEL T
Horseless carriage
Reliable
Highly affordable
Durable
Highly standardized
Easy to be fixed
FORD MODEL T
“Watch the Ford Go By, High Priced Quality in a Low Priced Car.”
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Results
1Ford’s market share surged from 9 percent in 1908 to 61 percent in 1921
2By 1923, a majority of American households owned an automobile
3Model T replaced the horse-drawn carriage as the primary means of transport in the United States
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General Motors
Comfortable
Fun
Fashionable
Exciting
“A car for every purse and purpose”
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Results1
From 1926 to 1950, the total number of cars sold in theUS increased from 2 million to 7 million a year
2
General Motors increased its overall market share from 20% to 50%
3
GM became one of three biggest automobile companies, together with Ford and Chrysler, accounted for 90% market share
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SMALL AND FUEL-EFFICIENT JAPANESE CARS
RUTHLESS QUALITY
SMALL SIZE
NEW UTILITY OF HIGHLY GAS-EFFICIENT
BLUE OCEAN
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Results
Almost overnight the Japanese became heroes in consumers’ minds
Making BIG THREE to loss 4b dollars in 1980
US manufacturers captured only 60% market shares
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CHRYSLER’S MINIVANBreaking the boundary between car and van: Smaller than the traditional van and yet more spacious than the station wagon
Built on the Chrysler K car chassis, the minivan drove like a car but provided more interior room and could still fit in the family garage
Within three years, Chrysler gained $1.5 billion from the minivan’s introduction alone
By 1998, total sales of new light trucks (minivans, SUVs, and pickups) reached 7.5 million, nearly matching the 8.2 million new car sales
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Case: Bloomberg
Industry: Business information provider
Strategy: Reconstruct market boundaries
Approach: Look across the chain of customer
Presenter: Kiều Thị Thu Trang
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Look across the chain of customer
- Shifting focus upstream from purchasers (IT managers) to users (traders and analysts)
- Designing system to offer users better value with a easy-to-use, broker-friendly computer system
- Adding information and purchasing services to enhance users’ personal lives
the traders & analysts exert their powers within the firm to drive IT managers to purchase from Bloomberg
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Results & Lessons
One of the largest and most profitable businessinformation providers in the world.
Look Across the Chain of Buyers… Challenging an industry’s conventional understanding about which buyer
group to target can lead to the discovery of new blue ocean. By looking across buyer groups, companies can gain new insights into how
to redesign their value curves to focus on a previously overlooked set of buyers.
Should ask:• What is the chain of buyers in your industry?• Which buyer group does your industry typically focus on? • If you shifted the buyer group of your industry, how could you unlock new
value?
RESULT
LESSONS
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Cases in Vietnam
Pho 24
Bedded coach
Shampoo for men
Soft drink with fresh tea favor
Presenter: Mai Thị Hoà
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Nam An Group
RAISE Food safety standards, customer services
ELIMINATEChemical seasoning
not good for health
CREATEAttractive restaurant
space design
REDUCESalt, sugar
VALUE
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How far has Pho24 been swimming?After finding its blue ocean, the company quickly franchised the brand Pho24 and raised market share.
Pho24 plans to open more stores in all major cities of Vietnam as well as in overseas markets, where there are extensive Asian populations.
By June 2010, Pho24 has opened 77 outlets in:
Big Cities in Vietnam: Ho Chi Minh City, Ha Noi, Da Nang, Vung Tau, Nha Trang, Binh Duong
Asia Countries: Jakarta (Indonesia), Manila (Philippines), Seoul (Korea), Phnom Penh (Cambodia), Sydney (Australia) and Hong Kong.
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Ladies, do you want your man to be more confident, manlier and everything that a real man should be?
Guys, have you been searching for that special type of personal care products that are created just for you?
The real man
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Values created by X-men
RAISE Men’s
confidence and style
ELIMINATEMen’s habit of
using the same
shampoo with women
CREATEConsumer behaviour, customer
awareness
REDUCENeedless chemicals
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How can X-men swim in the men’s shampoo market?
Strategy of product
diversification
X-men for boss
Teen-XX-men sport
Although there are many other products like X-men Facial Foam, deodorant, perfume, it still focuses on marketing campaigns for shampoo, esp. the X-Mission
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Key factsMarketing budget for X-men is only 599.000USD in 2006
X-men accounts for 7% of the shampoo market share in Vietnam => Top 5 shampoos in Vietnam
The leading men’s personal care brand since Dec 2003 (over 60% of market share in this segmentation)
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BLUE OCEAN STRATEGY MISCONCEPTIONS
Presenter: Nguyễn Thị Thu Trang
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Misconception 1: Blue Ocean is about new products, new technologies
or diversification beyond a company’s core business. Not about extension of existing product lines, nor about technology innovations per se.
Failure Case: Motorola
Exceptional value creation to capture new demand, with or without new technology.
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Misconception 2: Blue Ocean Strategy asks companies to evade the
competition
• Together with red oceans form a continuum
• Equally important in business practice
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Misconception 3: Blue Ocean is only wishful thinking, as any blue
ocean created usually turns red rapidly
• a process rather than a market outcome• Excellent utilities => strategic price => cost driven down => imitation
barrier
Eg: Swatch $80 -> $40 => mass market buyers
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Misconception 4: Blue Ocean Strategy is like an old wine in a new
bottle, as it is just a modified version of differentiation strategy
Not about a trade-off between differentiation and low cost, but breaking it.
Leverages existing resources to achieve breakthroughs in value.
Case: Southwest Airlines
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CONCLUSIONBalance blue ocean and red ocean.
Achieve sustainability
Need not only enthusiasm and passion but also a systematic analytical approach and an effective process of strategy formulation and execution.
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