(Chapter 9: Conclusion) by Anastacio, Alyanna Lordan, Mara Vanessa
INTRODUCTION
In this concluding chapter, we address the issues of the sustainability and renewal of blue ocean strategy. Creating a blue ocean strategy is not a static achievement but a dynamic process -Blue Ocean Strategy: How to Create Uncontested Market Space and Make
the Competition Irrelevant, W. Chan Kim and Renee Mauborgne, 2005
Chapter 9
INTRODUCTION
After a company creates a BLUE OCEAN and its powerful performance consequences are known sooner or later imitators appear on the horizon.
Chapter 9
This raises a related question: When should a company reach out to create another BLUE OCEAN?
Chapter 9
BARRIERS TO IMMITATION
A blue ocean brings barriers to imitation; some being operation and others cognitive
BARRIERS TO IMITATION
A
value innovative move does not make sense based on conventional strategic logic
y
EX: CNN
Brand
image conflict prevents companies from imitating a blue ocean strategy.
y
EX: The Body Shop
BARRIERS TO IMITATION
Natural
monopoly blocks imitation when the size of a market cannot support another player y EX: Megaplex in Brussels Patents or legal permits block imitation
BARRIERS TO IMITATION
Politics and Culture: Imitation often requires companies to make changes to existing business practices and culture
Ex: Southwest (offers speed of travel with cost/flex. of driving) y Would mean major revisions in routing, training, marketing, and pricing
y
Brand Buzz: High leap in value leads to loyal followers
y
Ex: Apple products (Im a Mac campaign)
BARRIERS TO IMITATION
Cost Advantages: High volume by value innovation
y
Ex: Apple i products helped discourage imitation for awhile
Network externalities: the more customers, the more attractive a company looks
y
Ex: ebay many buyers/sellers; hard to get them to move to a potential imitator
APPLES OCEANS: THE TECHNOLOGY INDUSTRY
Drowning in a red ocean Moving to a blue ocean Blue oceans turn to red oceans
What is the next step?
y
Make another blue ocean (try to incorporate the barriers to imitation)
WHEN TO VALUE-INNOVATE AGAIN?
Eventually every blue ocean strategy will be imitated. In an effort to hold on to customer base a firm can become focused on the competition instead of the buyer.
Apple in late 80s.
Chapter 9
WHEN TO VALUE-INNOVATE AGAIN?
To avoid this trap a company needs to monitor their value curves. When a companys value curve still has focus, divergence and a compelling tagline you should focus on expanding it and not re-innovating.
Chapter 9
WHEN TO VALUE-INNOVATE AGAIN?
As long as value curve still good a company should focus on operation improvements, geographic expansion, economies of scale and market coverage. As more competitors enter the market and rivalry intensifies a blue ocean will turn red.
Chapter 9
WHEN TO VALUE-INNOVATE AGAIN?
This can be seen by plotting you and your competitions value curves on a strategy canvas. As they converge a company should start looking for a new blue ocean.
Chapter 9
BLUE and RED oceans
BLUE AND RED OCEANS
Long-run profitability growth is a result of valueinnovation Create a blue ocean when competitors aggressively imitate and credibly converge value curves Go beyond competing for market share and create blue oceans
BLUE AND RED OCEANS
Blue and Red oceans have always coexisted Great businesses can succeed in both oceans Good companies must master their strategies for both oceans to become Great companies To create a blue ocean a company must make competitors in the red ocean irrelevant
y
Via value-innovation
THE
SIX PRINCIPLES OF BLUE
OCEAN STRATEGY REMEMBER :
Formulation Principles 1. Reconstruct market boundaries > reduce search risk 2. Focus on the big picture, not the numbers > reduce planning risk 3. Reach beyond existing demand > reduce scales risk 4. Get the strategic sequence right > reduce business model risk Executive Principles 5. Overcome key organizational hurdles > reduce organizational risk 6. Build executive into strategy Chapter > reduce management risk
SWIM as far as to DOMINATE the BLUE OCEAN over your IMITATORS for as long as possible!
Chapter 9
