Blue Ocean StrategyOverview

Group 4

OutlineWhat are Blue Oceans?

Internal Factors

External Factors

Strategies

Implementation and Sustainability

The MarketplaceRed Oceans

Blue Oceans

Industries continually evolve

Rising Demand for Blue Ocean

Impact of Blue Oceans

Internal Factors effecting Blue Ocean Strategy

The Four Action Framework

Reduce- Which Factors should be reduced well below the industry’s standard?

Eliminate- Which of the factors that the industry takes for granted should be eliminated?

Create- Which factors should be created that the industry has never offered?

Raise- Which factors should be raised well above the industry's standard?

All these factors create a new value curve

Focus on the Big Picture, Not the Numbers

Four Steps of Visualizing Strategy • Step 1: Visual Awakening

See where your strategy needs to change

• Step 2: Visual Exploration See which factors you should eliminate, create, or

change

• Step 3: Visual Strategy Fair Use feedback to build the best “to be” future strategy

• Step 4: Visual Communication Distribute your before-and-after strategic profiles on

one page for easy comparison

Overcoming Key Organizational Hurdles

The Four Organizational Hurdles to Strategy

1. Resource Hurdle Limited Resources

2. Motivational Hurdle Unmotivated Staff

3. Political Hurdle Opposition from Powerful vested Interests

4. Cognitive Hurdle An Organization wedded to the status quo

Blue Ocean’s External Factors

6 Path’s FrameworkAlternative IndustriesStrategic GroupsChain of BuyersComplementary

Product OfferingsFunctional/Emotional

AppealTime

First 3 PathsAlternative Industries – Competition outside of

your industry

Strategic Groups – Competition inside of you industry

Chain of buyers – Know who is the buyer

Last 3 Paths• Complementary Product Offerings – cost that tie in

with your company

• Functional/Emotional Appeal – Functional = Price Emotional = Feelings

• Time - Future

First-Tier Noncustomers“Soon-to-be” noncustomers who are on the edge

of your market, waiting to jump ship

Second-Tier Noncustomers

• “Refusing” noncustomers who consciously choose against

Third Tier“Unexplored” noncustomers who are in markets

distant from yours.

You shouldn’t focus on one tier you should focus across tiers, that way you can get the biggest catch!

Strategies The right strategic sequence

Buyer utilityPriceCostAdoption

If all of these occur you have a commercially viable Blue Ocean idea

Strategy Formulation Process

The three E principlesEngagement: Involvement in all sectorsExplanation: What we are doing and whyExpectation Clarity: Detailing expected outcomes

Build Execution into Strategy

Build execution into strategy from the start:Minimize risk

DistrustNoncooperationSabotage

Fair processKey variable

Implementation“Creating blue oceans is not a static

achievement, but a dynamic process.”

Barriers to ImitationNatural Monopoly (can’t support second player)Patents or Legal PermitsHigh volume = rapid cost advantageNetwork ExternalitiesRequires Change to enter market

Value InnovationWhen to rethink your current strategy and value

innovate again?Widen gap and swim as long as possible, change

before gap closes.Do not change if you have focus and diversion

from competition.As gap closes you need to create a new blue

ocean.