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Blue Ocean Strategy

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Blue ocean strategy
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Blue Ocean Strategy

  1. 1. BLUE OCEAN STRATEGY STRATEGIC MANAGEMENT ASSIGNMENT INDIAN INSTITUTE OF FOREIGN TRADE, NEW DELHI
  2. 2. Indian Institute of Foreign Trade, New DelhiStrategic Management INTRODUCTION RED VS. BLUE PLAN OF ACTION SUCCESS STORIES SHORTCOMINGS BLUE OCEAN STRATEGYCreation of uncontested market space is the primary goal In the highly fragmented market space today, most companies are constrained by burgeoning competition and are struggling to break out of the clutter of bandwagon products/services Blue Ocean Strategy offers a viable alternative to this by enabling creation of uncontested market space by ideating points-of-distinction in their core competencies 1 Demand is created rather than fought over 2 Feasible opportunities for growth and profit 3 High chance of creation of brand equity 4 Could be created by differentiation from an existing market or creation of a new one 5 Could be driven by technology pioneering or value pioneering 5 Facets of Blue Ocean Strategy EstablishedMarketNewMarket Established Product New Product
  3. 3. Indian Institute of Foreign Trade, New DelhiStrategic Management INTRODUCTION RED VS. BLUE PLAN OF ACTION SUCCESS STORIES SHORTCOMINGS BLUE OCEAN STRATEGYRed and blue ocean are highly contrasting strategies RED OCEAN BLUE OCEAN Founded in 2011, Citruspay banked on the future lucrativeness of the mobile-wallet segment, irrespective of PayTM’s presence Founded in 2010, it availed first-mover advantage in the mobile-wallet segment and is presently the market leader Compete in existing market space Beat the competition Exploit existing demand Make the value-cost trade-off Align activities with strategic choice of differentiation or low cost 1 2 3 4 5 Create uncontested market space Make the competition irrelevant Create and capture new demand 1 2 3 Break the value-cost trade-off Align activities with both differentiation and low cost 4 5 Create uncontested market space Make the competition irrelevant Create and capture new demand 1 2 3
  4. 4. Indian Institute of Foreign Trade, New DelhiStrategic Management OVERVIEW RED VS. BLUE PLAN OF ACTION SUCCESS STORIES SHORTCOMINGS BLUE OCEAN STRATEGYStructured planning is needed to execute this strategy Evaluate which factors you should eliminate, create or changeIdentification Use Voice-of-Customer to identify the best possible strategyEvaluation Formulate your new product based on the identified strategyFormulation See where your strategy needs to changeExploration RED OCEAN Cost Price Utility Adoption BLUE OCEAN Utility Price Cost Adoption
  5. 5. Indian Institute of Foreign Trade, New DelhiStrategic Management OVERVIEW RED VS. BLUE PLAN OF ACTION SUCCESS STORIES SHORTCOMINGS BLUE OCEAN STRATEGYMany companies have created new opportunities DIFFERENTIATION Each show had an original music score with unique lighting and timing 4 Each creation represented a theater performance with theme and story Their clowns adopted a more sophisticated and enchanting style Eliminated traditional 3-ring shows for undivided attention 1 2 3 PROBLEMS People started preferring theater over circus 4 Circus business in long term decline due to competition Star performers demanding high fee Rising public concern about the treatment of animals in shows 1 2 3 BENEFITS Invented a new industry altogether Combined traditional circus with sophisticated theater elements In 20 years, generated revenues that leading circuses like Barnum & Bailey needed more than a century to attain 1 2 3 Case Study: Cirque du Soleil Through the successful application of blue ocean strategy, Cirque was able to create a niche for itself in a dying business segment • Cirque du Soleil is a company founded by a bunch of street performers in 1984. • It has staged dozens of productions that has entertained over 40 million people across 90 cities in the world
  6. 6. Indian Institute of Foreign Trade, New DelhiStrategic Management OVERVIEW RED VS. BLUE PLAN OF ACTION SUCCESS STORIES SHORTCOMINGS BLUE OCEAN STRATEGYCriticism primarily outlines superficiality of the strategy ? Argued that it is an extremely successful attempt to brand a set of already existing concepts and frameworks with a highly "sticky" idea. ? Construed as more descriptive, than prescriptive – it has been complained that the theory takes into account successful examples and fits itself around them as suited. ? Competition isn’t made irrelevant. In reality, it can’t be completely eliminated. A successful differentiating venture results in various copycat ones, which increases competition cyclically. ? Taking into account all its propositions and theoretical aspects, it can be summarized in the age-old fundamental of marketing – “differentiate your product to foster its appeal to customers.” ? Suggestions have been made that the strategy doesn’t delve much deep into understanding the customers’ actual needs – something, however, that it bases its theory on.
  7. 7. THANK YOU

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