Blue Ocean Strategy

--Submitted by:

Priyanka Selukar

Ebiz Batch-I

Roll No: 37

In an established industry, companies compete with each other for every piece of available market share.

The competition is often so intense that some firms cannot sustain themselves and stop operating.

This type of industry describes a Red ocean, representing saturated market share, bloodied by competition. 

To avoid costly competition, firms can innovate or expand in the hope of finding A Blue ocean.

A blue ocean exists where no firms currently operate, leaving the company to expand without competition.

Blue Ocean Strategy is:

" a creative battle where the players of a particular segment don’t compete with each other remaining in the same market space; instead explore, create and acquire new market spaces by dealing with new demand through the principle of 'value innovation '."

While the Red Ocean Strategy is： " a head to head battle where the players of a particular

segment compete with each other remaining in the same market space i.e. within the boundaries of the same industry on the principle of 'competitive advantage'."

Value Innovation: The Cornerstone of Blue Ocean Strategy

"Value innovation is created in the region where a company's actions favorably affect both its cost structure and its value proposition to buyers. 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. Over time, costs are reduced further as scale economies kick in due to the high sales volumes that superior value generates."

Value Innovation: The Cornerstone of Blue Ocean Strategy Source: Kim & Mauborgne (2005), Blue Ocean Strategy.

Six principals of Execution at IKEA Blue Ocean Strategy

1) Reconstruct Market Boundaries Leisure activity

The IKEA restaurant

Wide range of products

Environment-friendly

2) Reach Beyond Existing Demand Well-designed furniture

Experience room

Freedom to touch

The IKEA restaurant

Six principals of Execution at IKEA Blue Ocean Strategy

3)Build Execution into Strategy

4)Overcome Key Organizational Hurdles

Engagement

Trust –bulit relationship

Togetherness and enthusiasm

Motivation

Desire for challenge

5) Get the Strategic Sequence Right

6)Focus on the Big Picture, not the Number

Strategic pricing making method

Focus on long-term development

Six principals of Execution at IKEA Blue Ocean Strategy

IKEA: Blue Ocean Strategy Implementation

IKEA’s competitive strategy is Blue Ocean strategy, which led IKEA create leading position in local furniture industry.

IKEA has been successful in Nanjing by implementing a Blue Ocean strategy that is crucially supported by good value innovation.