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A Report on
Blue Ocean strategy, the business
application. How could use this strategy in
Bangladesh.
UNITED INTERNATIONAL UNIVERSITY
Strategic Management (MGT4356)
Report on
Blue Ocean strategy, the business application. Ho...
i | P a g e
Letter of Transmittal
29th April, 2015
Dr. Abu Saleh Md.Sohel-Uz-Zaman
Professor
School of Business & Economic...
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  1. 1. A Report on Blue Ocean strategy, the business application. How could use this strategy in Bangladesh.
  2. 2. UNITED INTERNATIONAL UNIVERSITY Strategic Management (MGT4356) Report on Blue Ocean strategy, the business application. How could use this strategy in Bangladesh. Submitted To: Dr. Abu Saleh Md. Sohel-Uz-Zaman Professor School of Business & Economics United International University Submitted By: Name ID Md.Shahaid Jurain Alam 111 121 645 Jony Saha 114 122 026 Tasnia Parvin 114 122 040 Date of submission: 29th April, 2015
  3. 3. i | P a g e Letter of Transmittal 29th April, 2015 Dr. Abu Saleh Md.Sohel-Uz-Zaman Professor School of Business & Economics United International University Subject: Letter of transmittal for term paper. Sir, With due honor, We wish to inform you that it was a matter of great pleasure as well as learning to prepare report on “Blue Ocean strategy, the business application. How could use this strategy in Bangladesh.” under the course of Strategic Management. To prepare the paper, we collected and studied materials in due time and analyzed these and eventually finalize the term paper. Actually we have enjoyed more in preparing this term paper and develop new business. We have worked hard to prepare this report. So we would highly oblige if the content of the report have been acceptable to you. Though we have put our best efforts yet it is very likely that the report may have some mistakes and omissions that are unintentional. So, we hope that the report will worthy of your consideration. Yours obediently, Md.Shahaid Jurain Alam On behalf of the group ……………………...
  4. 4. ii | P a g e ACKNOWLEDGEMENT At the very beginning we would like to express our deepest gratitude to Almighty Allah for giving us the strength and the composure to finish the task within the schedule time. Our sincere gratitude goes to our honorable teacher Professor Dr.Abu Saleh Md.Sohel-Uz-Zaman, instructor of Strategic Management in United international University. The opportunity that Professor Dr.Abu Saleh Md.Sohel-Uz-Zaman sir has given us was really help full to get much informative. Therefore, we consider us as a very lucky individuals as we were provided with an opportunity to be a part of it. We are also grateful for having a chance to explore so many knowledge for making this report. Without his support and encouragement this assignment would not possible such an endeavor to enhance our practical knowledge about the real situation. Thanks all from core of our hearts.
  5. 5. iii |P a g e Table of Content Table of Contents 1.0 Introduction..................................................................................................................................1 2.0 Blue Ocean Strategy......................................................................................................................2 3.0 Implementing Blue Ocean Strategy ................................................................................................3 3.1 Implementation ........................................................................................................................4 4.0 Six Path Framework.......................................................................................................................7 5.0 Three Tires of Non Customers......................................................................................................11 6.0 Four Actions under Blue Ocean Strategy.......................................................................................13 7.0 Companies Using Blue Ocean Strategy..........................................................................................14 8.0 In Asia: Blue Ocean Strategy forNational Development.................................................................16 9.0 In Bangladesh: How could Use the Blue Ocean Strategy ................................................................19 9.1 Developing a Blue Ocean Strategy............................................................................................21 9.2 The BusinessApplication .........................................................................................................22 9.3 Some examples in Bangladesh..................................................................................................25 CONCLUSION....................................................................................................................................27 BIBLIOGRAPHY/ WEBLIOGRAPHY.......................................................................................................28
  6. 6. iv| P a g e Executive Summary This report is about the Blue Ocean Strategy and its business application in Bangladesh. As a developing country, Bangladesh should concentrate in Blue Ocean strategy. Blue Ocean Strategy seeks to make the creation and capturing oceans as systematic and actionable as competing in the red waters of known market space. For although blue ocean strategists have always existed, for the most part their strategies have been largely unconscious. Blue ocean strategy seeks to remedy this by not only decoding the pattern and principles behind the successful creation of blue oceans, but also providing the analytical frameworks and tools to act on this insight. Blue and red oceans have always coexisted. Practical reality, therefore, demands that companies understand the strategic logic of both types of oceans. At present, however, competing in red oceans dominates the field of strategy in theory and in practice. Part of the reason traces back to the historical foundation of business strategy—war—where territory is defined and limited and opponents compete to protect and enlarge their share of limited and existing terrain. A blue ocean is created in the region where a company's actions favorably affect both its cost structure and it value proposition to buyers. Cost savings are made from 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. There are certain companies in Bangladesh who practices Blue Ocean strategy such as Walton, Bkash, Beximco Pharma, Bangladesh Premier League, Ekhanei.com, Bikroy.com, Rokomary.com, Software firms and many more. The strategy outlines the premise, research, success examples and the so-called ‘Value Innovation’ framework, which allows companies to create Blue Ocean Strategies and in the process achieve such as high-impact, customer-based innovations, significant increase in speed to market, from idea formation to market introduction, significant decrease in development and operational costs, an innovation-focused and duly motivated organization. .
  7. 7. 1 | P a g e 1.0 Introduction The objective of the report “Blue Ocean Strategy, the business application. How could use this strategy in Bangladesh” is to understand real meaning behind the Blue Ocean, how it is different from red ocean strategy, the application and how this could use in our country. This report describe about various steps taken to implement this strategy. Blue Ocean Strategy describe rather than competing within the confines of existing industry or trying to steal customers from rivals (Red Ocean strategy), uncontested market space should be developed that makes competition irrelevant. Thus project also gives us an idea about creating new market space. Red oceans are all the industries in existence today—the known market space. In the red oceans, industry boundaries are defined and accepted, and the competitive rules of the game are known. Here companies try to outperform their rivals to grab a greater share of existing demand. As the market space gets crowded, prospects for profits and growth are reduced. Products become commodities, and cutthroat competition turns the red ocean bloody. Blue oceans, in contrast, denote all the industries not in existence today—the unknown market space, untainted by competition. In blue oceans, demand is created rather than fought over. There is ample opportunity for growth that is both profitable and rapid. In blue oceans, competition is irrelevant because the rules of the game are waiting to be set. Blue Ocean is an analogy to describe the wider, deeper potential of market space that is not yet explored. Like the “blue” ocean, it is vast, deep, powerful, in terms of profitable growth and infinite. There are several ways to use this blue ocean strategy in Bangladesh. There are many sectors to implement this strategy. In Blue Oceans, demand is created rather than fought over. There is ample Opportunity for both growth and profit .......................W. Chan Kim
  8. 8. 2 | P a g e 2.0 Blue Ocean Strategy The metaphor of Red and Blue oceans describes the market universe. Red oceans are all the industries in existence today—the known market space. In the red oceans, industry boundaries are defined and accepted, and the competitive rules of the game are known. Here companies try to outperform their rivals to grab a greater share of product or service demand. As the market space gets crowded, prospects for profits and growth are reduced. Products become commodities or niche, and cutthroat competition turns the red ocean bloody. Hence, the term red ocean is used. Blue oceans, in contrast, denote all the industries not in existence today—the unknown market space, untainted by competition. In blue oceans, demand is created rather than fought over. There is ample opportunity for growth that is both profitable and rapid. In blue oceans, competition is irrelevant because the rules of the game are waiting to be set. Blue Ocean is an analogy to describe the wider, deeper potential of market space that is not yet explored. The corner-stone of Blue Ocean Strategy is 'Value Innovation'. A blue ocean is created when a company achieves value innovation that creates value simultaneously for both the buyer and the company. The innovation(in product, service, or delivery) must raise and create value for the market, while simultaneously reducing or eliminating features or services that are less valued by the current or future market. The author’s critique Michael Porter's idea that successful businesses are either low-cost providers or niche-players. Instead, they propose finding value that crosses conventional market segmentation and offering value and lower cost. This idea was originally proposed by Prof. Charles W. L. Hill from Michigan State University in 1988. Prof. Hill claimed that Porter's model was flawed because differentiation can be a means for firms to achieve low cost. Prof. Hill proposed that a combination of differentiation and low cost may be necessary for firms to achieve a sustainable competitive advantage. Blue Ocean Strategy is a business strategy that promotes a systematic approach "for making the competition irrelevant." A core idea is to create a leap in value for both the company and its buyers by breaking the differentiation/low cost trade-off and to align product value and profit proposition.
  9. 9. 3 | P a g e 3.0 Implementing Blue Ocean Strategy Before implementing Blue ocean strategy it is very important to know the difference between Red and Blue Ocean. The difference can be known by the following table:- Blue ocean strategists recognize that market boundaries exist only in managers’ minds, and they do not let existing market structures limit their thinking. To them, extra demand is out there, largely untapped. The crux of the problem is how to create it. This, in turn, requires a shift of attention from supply to demand, from a focus on competing to a focus on creating innovative value to unlock new demand. This is achieved via the simultaneous pursuit of differentiation and low-cost. Under blue ocean strategy, there is scarcely an attractive or unattractive industry because the level of industry attractiveness can be altered through companies’ conscientious efforts. As market structure is changed by breaking the value/cost tradeoff, so are the rules of the game. Competition in the old game is therefore rendered irrelevant. By expanding the demand side of the economy new wealth is created. Such a strategy therefore allows firms to largely play a non–zero-sum game, with high payoff possibilities.
  10. 10. 4 | P a g e 3.1 Implementation Look Across Functional or Emotional Appeal to Buyers When companies are willing to challenge the functional-emotional orientation of their industry, they often find new market space. We have observed two common patterns. Emotionally oriented industries offer many extras that add price without enhancing functionality. Stripping away those extras may create a fundamentally simpler, lower priced, lower-cost business model that customers would welcome. Conversely, functionally oriented industries can often infuse commodity products with new life by adding a dose of emotion and, in so doing, can stimulate new demand. Two well-known examples are Swatch, which transformed the functionally driven budget watch industry into an emotionally driven fashion statement, or The Body Shop, which did the reverse, transforming the emotionally driven industry of cosmetics into a functional, no-nonsense cosmetics house. Look Across Complementary Products and Service Offerings Few products and services are used in a vacuum. In most cases, other products and services affect their value. But in most industries, rivals converge within the bounds of their industry’s product and service offerings. Take movie theaters. The ease and cost of getting a babysitter and parking the car affect the perceived value of going to the movies. Yet these complementary services are beyond the bounds of the movie theater industry as it has been traditionally defined. Few cinema operators worry about how hard or costly it is for people to get babysitters. But they should, because it affects demand for their business. Imagine a movie theater with a babysitting service. Untapped value is often hidden in complementary products and services. The key is to define the total solution buyers seek when they choose a product or service. A simple way to do so is to think about what happens before, during, and after your product is used. Babysitting and parking the car are needed before people can go to the movies. Operating and application software are used along with computer hardware. In the airline industry, ground transportation is used after the flight but is clearly part of what the customer needs to travel from one place to another.
  11. 11. 5 | P a g e Look Across the Chain of Buyers Individual companies in an industry often target different customer segments—for example, large versus small customers. But an industry typically converges on a single buyer group. The pharmaceutical industry, for example, focuses overridingly on influencers: doctors. The office equipment industry focuses heavily on purchasers: corporate purchasing departments. And the clothing industry sells predominantly to users. Sometimes there is a strong economic rationale for this focus. But often it is the result of industry practices that have never been questioned. Challenging an industry’s conventional wisdom 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. Think of Novo Nordisk, the Danish insulin producer that created a blue ocean in the insulin industry…. [Novo Nordisk] saw that it could break away from the competition and create a blue ocean by shifting the industry’s longstanding focus on doctors to the users—patients themselves. In focusing on patients, Novo Nordisk found that insulin, which was supplied to diabetes patients in vials, presented significant challenges in administering. Vials left the patient with the complex and unpleasant task of handling syringes, needles, and insulin, and of administering doses according to his or her needs. Needles and syringes also evoked unpleasant feelings of social stigmatism for patients and patients did not want to fiddle with syringes and needles outside their homes, a frequent occurrence because many patients must inject insulin several times a day. This led Novo Nordisk to the blue ocean opportunity of Novo Pen, launched in 1985. Novo Pen, the first user-friendly insulin delivery solution, was designed to remove the hassle and embarrassment of administering insulin. Look Across Strategic Groups within Industries The key to creating a blue ocean across existing strategic groups is to break out of this narrow tunnel vision by understanding which factors determine customers’ decisions to trade up or down from one group to another. Consider Curves, the Texas-based women’s fitness company. Since franchising began in1995, Curves has grown like wildfire, acquiring more than two million members in more than six thousand locations, with total revenues exceeding the US$ 1 billion mark. A new Curve opens, on average, every four hours somewhere in the world. What’s more, this growth was triggered almost entirely through word of mouth and buddy referrals. Yet, at its inception, Curves was seen as entering an over saturated market, gearing its offering to customers
  12. 12. 6 | P a g e who would not want it, and making its offering significantly blander than the competition’s. In reality, however, Curves exploded demand in the U.S. fitness industry, unlocking a huge untapped market, a veritable blue ocean of women struggling and failing to keep in shape through sound fitness. Curves built on the decisive advantages of two strategic groups in the U.S. fitness industry— traditional health clubs and home exercise programs—and eliminated or reduced everything else. Look Across Alternative Industries. In making every purchase decision, buyers implicitly weigh alternatives, often unconsciously. Do you need a self-indulgent two hours? What should you do to achieve it? Do you go to movie, have a massage, or enjoy reading a favorite book at a local café? The thought process is intuitive for individual consumers and industrial buyers alike. For some reason, we often abandon this intuitive thinking when we become sellers. Rarely do sellers think consciously about how their customers make trade-offs across alternative industries. A shift in price, a change in model, even a new ad campaign can elicit a tremendous response from rivals within an industry, but the same actions in an alternative industry usually go unnoticed. Trade journals, trade shows, and consumer rating reports reinforce the vertical walls between one industry and another. Often, however, the space between alternative industries provides opportunities for value innovation. Consider Net Jets, which created the blue ocean of fractional jet ownership. In less than twenty years Net Jets has grown larger than many airlines, with more than five hundred aircraft, operating more than two hundred fifty thousand flights to more than one hundred forty countries. Purchased by Berkshire Hathaway in 1998, today Net Jets is a multibillion-dollar business, with revenues growing at 30–35 percent per year from 1993to 2000. Net Jets’ success has been attributed to its flexibility, shortened travel time, hassle free travel experience, increased reliability, and strategic pricing. The reality is that Net Jets reconstructed market boundaries to create this blue ocean by looking across alternative industries.
  13. 13. 7 | P a g e 4.0 Six Path Framework To break from competition, an organization has to reconstruct the market boundary which is the first and foremost principle in creating blue ocean strategy. There are six basic approaches to reconstruct market boundaries, also known as Six Paths Framework. These paths challenge the conventional approach of the organization in strategy formulation to work within its boundaries, but instead break out of the known boundaries. This helps them to move out of red oceans and create blue oceans. These paths have general applicability across industry sectors, and they lead companies into the corridor of commercially viable blue ocean ideas. None of these paths requires special vision or foresight about the future. All are based on looking at familiar data from a new perspective. Following are the six paths framework involved in formulating the blue ocean strategy. Path 1: Look across alternative industries Organizations compete not only within the industries but also with organizations in other industries which produce alternative product and services to their industry. One of the biggest limitations we put on our organization is to assume that our products/services compete in a defined and unchanging industry with a very narrow view of the environment. The first path in formulating the blue ocean strategy is to find the alternative industries to your industry’.
  14. 14. 8 | P a g e In order to understand this path let us first understand difference between substitute and alternative: •Substitutes are products or services that have different forms but offer the same functionality or core utility. •Alternatives are products or services that have different functions and forms but the same purpose. Let us consider an example from entertainment industry. The function of this industry is to provide entertainment and the purpose of this industry is relax, rewind, de-stress, experience and fun. The substitutes to this industry are CDs, TV, stage shows, etc. But the alternatives to this industry include visiting a mall, library, hobby center, etc., all of which serves the same purpose. Thus by focusing on the key factors that lead buyers to trade across alternative industries and by eliminating or reducing everything else, you can create a blue ocean of new market space. Let us take the case of pro-biotic drink Yakult. It competes with health drinks, juice brands, at the same time it competes with pharma industry. However, both health drinks producers & pharma brands don’t consider Yakult as their competition. Thus Yakult has created a blue ocean for itself across industries. Path 2: Look across strategic groups Strategic groups within Industries are group of organizations within an industry that pursue a similar strategy. Strategic groups include a hierarchical order built on two dimensions, price and performance. TATA chose not to compete with entry level strategic group of cars in India such as Maruti Omni, Maruti 800, Alto & Hyundai Santro. Instead it questioned the un-questioned notion that cars can’t be less than a lakh of Indian Rupees. It looked for factors which, Maruti 800 buyers would trade down or 2 wheeler buyers would trade up! Path 3: Look across Buyer Groups In most industries, competitors converge around a common definition of target buyer. However there are chain of buyers who are directly or indirectly involved in buying decisions, such as: •Purchasers who pay for the product or service •Actual users who use the products •Influencers who have a role to play in decisions •Intermediate buyers who are traders •Regulators who influence the buying decisions.
  15. 15. 9 | P a g e Thus blue ocean strategy is formulated by finding out who are the chain of buyers in your industry and which buyer group does your industry typically focus on? And if you shift the focus from one buyer group to another, how can you unlock new value? Novodisk, a leading producer of insulin created Blue Ocean by focusing on diabetes patients instead of doctors & nurses who are traditionally targeted. Thus they created travel friendly, easy to use, hassle free, easy to set, fancy looking, pen like shots instead of syringes and insulin bottles. Path 4: Look across complementary product and service offerings An organization has to think about what happens before, during, and after your product/service is used by the consumers. In most industries, competitors converge within the boundary of their industry’s product and service offerings. By understanding the context in which your product or service is used and what happens before, during, and after, you can identify pain points (constraints) of the consumers, eliminate these pain points through a complementary product or service offering. Philips saw that the biggest issue in brewing tea was not in the kettle itself but in the complementary product of water, which had to be boiled in the kettle. The issue was the lime scale found in tap water. Philips saw this as an opportunity and solved the major pain point of customer that related to water rather than their kettle by adding a mouth filter in the kettle that effectively captured the lime scale as the water was poured.
  16. 16. 10 | P a g e Path 5: Look across the functional-emotional orientation of an industry Emotional Appeal to buyers refers to the emotional utility a buyer receives in the consumption or use of a product or service. Competition tends to converge on one of two possible basis of appeal. ‘What are the extras we offer that add to the cost of our product without enhancing functionality? By eliminating or reducing these factors, can we create a simpler, functional, lower-priced, lower- cost offering that would dramatically raise buyers’ value’. These are to be questioned in blue ocean strategic formulation. Functional Appeal to buyers refers to the functional utility buyers receive from a business or product/service based on basic calculations of utility and price. Competition in an industry tends to converge on one of two possible basis of appeal. What emotional elements can we raise or create to infuse our commodity products with new life by adding a dose of emotion? By understanding your industry focus on functionality or emotional appeal, you can either compete on emotional appeal by stripping functional elements or compete on functionality by adding emotional elements. Fast Food producer, Subway uses emotional appeal to trade up its range of products which usually have more functional appeal rather than emotional. Fast food industry is driven by price and waiting time which are functional. This industry rarely competes on emotional appeal. Path 6: Look across time Many of us respond to trends in our industry at the point they are making an impact. In other words we create reactive strategies, which allow us to adapt to a changing environment. All industries are subject to external trends that affect their business over time. Instead of adapting incrementally and somewhat passively, one can gain insights into how the trend(s) will change value to customers and impact their organization’s business model. To assess trends across time, three criteria are critical: the trend must be decisive to the business, irreversible and have a clear trajectory. By knowing what trends have a high probability of impacting your industry, are irreversible, and evolving in a clear trajectory, you can open up unprecedented customer utility. When we look across these six paths at the commencement of our strategy formulation we find that this process helps us create new perspectives. Our thinking becomes more creative. It seems simple, because it is. However, it’s when we actually start the process of looking across these six paths we find our assumptions start to break down and simultaneously we awaken to new perspectives about our organization and its industry. And it’s from this place that innovations and new opportunities are created.
  17. 17. 11 | P a g e 5.0 Three Tires of Non Customers Typically, to grow their share of a market, companies strive to retain and expand their existing customer base. This often leads to finer segmentation and greater tailoring of offerings to better meet customer preferences. The more intense the competition is, the greater, on average, is the resulting customization of offerings. As companies compete to embrace customer preferences through finer segmentation, they often risk creating too-small target markets. To maximize the size of their blue oceans, companies need to take a reverse course. Instead of concentrating on customers, they need to look to noncustomers. And instead of focusing on customer differences, they need to build on powerful commonalities in what buyers’ value. This reorientation allows companies to reach beyond existing demand to unlock a new mass of customers that did not exist before.
  18. 18. 12 | P a g e Although the universe of noncustomers typically offers big blue ocean opportunities, few companies have keen insight into who noncustomers are and how to unlock them. To convert this huge latent demand into real demand in the form of thriving new customers, companies need to deepen their understanding of the universe of noncustomers. There are three tiers of noncustomers that can be transformed into customers. They differ in their relative distance from the current market. The first tier of noncustomers is closest to the current market, sitting just on the edge. They are buyers who minimally purchase an industry’s offering out of necessity but are mentally noncustomers of the industry. They are waiting to jump ship and leave the industry as soon as the opportunity presents itself. However, if offered a leap in value, not only would they stay, but also their frequency of purchases would multiply, unlocking enormous latent demand. The second tier of noncustomers is people who refuse to use an industry’s offering. These are buyers who have seen the current offering as an option to fulfill their needs but have decided against participating. The third tier of noncustomers is farthest from the market. They are noncustomers who have never considered the market’s offering as an option. By focusing on key commonalities across these noncustomers and existing customers, companies can understand how to pull them into their new market. The blue ocean strategy highlights how everyone is so busy chasing customers within the safe red ocean when their focus should be on untapped markets of influence. First Tier: Soon to be Non Customer Second Tier: Refusing Non Customer Third Tier: Unexplored Non Customer
  19. 19. 13 | P a g e 6.0 Four Actions under Blue Ocean Strategy The Four Actions Framework is used to reconstruct buyer value elements in crafting a new value curve. To break the trade-off between differentiation and low cost and to create a new value curve, the framework poses four key questions, shown in the diagram, to challenge an industry’s strategic logic.
  20. 20. 14 | P a g e 7.0 Companies Using Blue Ocean Strategy Samsung: Value Innovation is Samsung’s core tool for product development and played a significant role in helping Samsung become the world’s top consumer electronics company. Last year there were 2,000 employees working in cross-functional teams on 90 Value Innovation projects at Samsung, and no product is introduced to the market without first getting a Value Innovation Certificate. In 2003 the Digital Media unit launched 40 new products using the VI process, and its first quarter profits were 50 times higher than that of the same period the previous year. Nokia: In 1991 trade with the Soviet Union, Finland’s and Nokia’s largest market, collapsed overnight. At the time the company’s core activities were paper and rubber products. By 1994 Nokia was selling off its industrial divisions and was listed on NYSEas the world’s premier supplier of mobile phones, which was just a small, peripheral division three years earlier. IBM: Between 1991 and 1993 IBM recorded losses of USD 16 Billion and the future was looking grim to say the least. In 1993 Lou Gerstner became CEO, the first company leader who was not from within the company, in fact not even from within the industry. He completely re-oriented the company’s focus from technology driven to customer solution driven, so that by 2001 $35 Billion of $86 Billion total sales were from then newly created Global Services. This radical shift in company culture and orientation is widely accredited with IBM’s exemplary recovery to growth and healthy profitability. CJ-GLS: CJ-GLS is a latecomer in the logistics industry, and its resources, such as the number of trucks and warehouses, are relatively small in comparison to those of established companies. But, it has achieved a distinct competitive advantage through innovative information technology (i.e., RFID—radio frequency identification), which has enabled it to create an uncontested market space, electronic logistics business. One remarkable fact about CJ-GLS is that its swift growth comes not from attracting competitors’ customers from the existing Red Ocean market but from creating a Blue Ocean market (3PL market), which previously existing incumbents ignored, and also from constructing a new business model founded on a RFID-based, ubiquitous-oriented3PL system. Analyzed through a Four Actions Framework and characterized as Blue Ocean, this case study provides valuable information on how a company reinforces its competitive advantage from the Red Ocean while it transitions into a Blue Ocean by utilizing advanced information communication technologies.
  21. 21. 15 | P a g e Apple: Apple computers invented a new market with the iPOD digital music player. The company’s idea was to create a portable music player so people could listen to it anywhere. Apple has sold more than 10 million music players, adding $6.2 billion to the company’s revenue. Whirlpool: Whirlpool’s front-loading washer-dryer combo called the Duet, which the company introduced to a well-saturated market in 2001. The Duet was tagged at US$2,300, vs. US$ 600 a pair for most existing models, yet it became a sensation. Because the Duet had features never seen before: It could wash big loads yet used very little water and electricity, and cleaned better. It could also handle silks, lace, and comforters. But best of all, it inspired real affection among women. They said that it changed their lives because it saves them time and gave back some of their freedom, doing laundry in record time. Stokke: Norwegian furniture company Stokke entitled 'Hotweels' from Fast Company (May 2005). When Stokke introduced the Xplory baby stroller in the U.S., priced at a hefty US$ 749, it sold in the first nine weeks what it had planned to sell over six months. Because it offers a package of unprecedented attributes: It’s flexible design makes life easier for parents by allowing the seat to be raised to eye-level, to face either forward or backward, and enabling the stroller to navigate any terrain. It’s flashy, futuristic form creates a strong emotional bond Net jets: Net Jets, which created the blue ocean of fractional jet ownership. In less than twenty years NetJets has grown larger than many airlines, with more than five hundred aircraft, operating more than two hundred fifty thousand flights to more than one hundred forty countries. Purchased by Berkshire Hathaway in 1998, today NetJets is amulet billion-dollar business, with revenues growing at 30–35 percent per year from 1993to 2000. NetJets’ success has been attributed to its flexibility, shortened travel time, hassle free travel experience, increased reliability, and strategic pricing. The reality is that NetJets reconstructed market boundaries to create this blue ocean by looking across alternative industries. Other companies using Blue OceanStrategyare:  Cirque du Soleil (The circus reinvented for the entertainment market).  Starbucks (Coffee as low-cost luxury for high-end consumers).  EBay (Online auctioning).  Sony (The Walkman - personal portable stereos).  Cars: Japanese fuel-efficient autos (mid-70s) and Chrysler minivan  Dell (Mid-1990s).
  22. 22. 16 | P a g e 8.0 In Asia: Blue Ocean Strategy for National Development Malaysia As Malaysia continues its ambitious journey towards becoming an advanced nation by 2020, the government has adopted Blue Ocean Strategy to deliver programs and services to the public that are high-impact, low cost, and rapidly executed. Through National Blue Ocean Strategy, over 80 ministries and agencies – from the police and military, to women, youth, and higher education organizations – are collaborating to formulate and execute creative blue ocean strategy initiatives that are transforming the country. Taiwan In 2007 the Minister of Foreign Affairs of Taiwan, James Huang, proposed his “21st century global village diplomatic policy.” The new policy is an “updated, situation-coping” policy that emphasizes Taiwan’s distinct identity. The policy includes four major strategies for the Ministry of Foreign Affairs to follow, one of which is adopting blue ocean strategy to build relations with other countries. According to the Minister, by following BOS, Taiwan will not engage in “zero sum” competition with China and will instead use its advantages in various fields to build comprehensive partnerships with nations around the world. South Corea Inter-Korean economic cooperation can be a blue -ocean strategy for us,” says Moon Jae-in, the leader of the opposition in South Korea. He sees that improved relations between North Korea and South Korea would be economically beneficial to his country. China The city of Shenyang in China’s Liaoning Province established a Blue Ocean Economic Zone to spur economic development in the region. The project has huge potential to provide a new engine for the old industrial base as well as provide residents with reasonably priced cultural and technological imports. National Yiwu Economic and Technology Development Zone, a 93-square kilometer economic zone, was established in 1992 as a wholesale hub for all of China. The zone is now looking into applying blue ocean strategy to move away from being a wholesale and manufacturing zone to more sophisticated areas to open new market spaces. The Agriculture Bank of China (ABC) has surpassed the Bank of China in the extent to which it has implemented blue ocean strategy in its state operations. The ABC offers loans to improve public services in cities, supports development of local industry, and assists residents in settling down in cities.
  23. 23. 17 | P a g e Myanmar The President of Myanmar and Chairman of STX Group (the world’s fourth-largest ship and plant manufacturer) discussed plans to unlock blue ocean opportunities in infrastructure projects in Myanmar. The President invited the group to invest in three special economic zones which are underway and to cooperate in solar power generation to supply electricity to rural areas, infrastructure development, and dockyards. Sri Lanka The Colombo Plan for Cooperative Economic and Social Development in Asia and the Pacific is an inter-governmental organization providing development assistance with a focus on human resources development in the Asia-Pacific region. The Colombo Plan was conceived at the Commonwealth Conference on Foreign Affairs held in Colombo, Ceylon (now Sri Lanka) in 1950 as a cooperative venture for economic and social advancement of the people of South and Southeast Asia. The Colombo plan used blue ocean strategy to develop a training program on entrepreneurship development that targeted senior and mid-level government and non- government officials and working with SMEs to formulate and implement entrepreneurship programs. Sri Lanka is urged to apply blue ocean strategies similar to those adopted by Dubai. The editorial urges Sri Lanka to align its value, profit, and people propositions. Sri Lanka could emulate Dubai in pursuing its ambition to become a miracle economy in Asia. Specific actions Sri Lanka could take would be a fine-tuning of its incentive packages for foreign investment, infrastructure improvements, and a focus on housing and education. Nepal The article suggests there are plenty of opportunities for Nepal to achieve the success that Switzerland and Dubai have. Nepal needs to find alternative revenue sources as a means of lessening its dependence on foreign aid. It must also stop competing in areas where it has no comparative advantage and focus on creating a blue ocean. This can be achieved through determined leadership and direction. Singapore Singapore has applied blue ocean strategy to achieve the growth it saw in its first 30 years by pursuing low-cost and differentiation simultaneously. The Value Innovation Action Tank (VIAT), a non-profit organization founded in partnership by 15 Singaporean government ministries and agencies, was established in 2004. Its objective is to apply the ideas, frameworks, tools, and processes of value innovation and blue ocean strategy to the country’s private and public sectors to power Singapore in the knowledge economy.
  24. 24. 18 | P a g e United Arab Emirates The Emirates Identity Authority seeks to apply blue ocean strategy at all leadership levels. Its Senior Management Committee emphasizes the importance of changing the concept of performance from developing procedures and services, to innovation-based approaches that would allow the organization to move away from competition. Oman According to one of the principal presenters at the Conference on Strategic Growth Planning and Change Management, the Sultanate’s prodigious natural and human resources, if leveraged through the application of the blue ocean strategy, can put Oman on a path to accelerated growth, achieving even better results than Dubai.
  25. 25. 19 | P a g e 9.0 In Bangladesh: How could Use the Blue Ocean Strategy In today‘s overcrowded industries in Bangladesh, competing head-on results in nothing but a bloody red ocean of rivals fighting over a shrinking pool. A red ocean refers to a saturated market where there is fierce competition among companies offering similar services; a blue ocean is new markets untouched by competition. Companies have long engaged in head-to-head competition in search of sustained profitable growth, they have fought for competitive advantage, battled for market share and struggled for differentiation. Blue Ocean Strategy argues that tomorrows leading companies will succeed not by battling competitors, but by creating blue oceans of uncontested market space, where competition is rendered irrelevant of companies that made competition irrelevant in their industries to elicit the strategic logic behind Blue Ocean Strategy. The authors studied 150 blue ocean creations in 108 companies over 30 industries. The study found that 86% of new ventures were line extensions (Red Ocean Strategy) Incremental improvements to existing industry offerings and a mere 14% were aimed at creating new markets or industries. While line extensions did account for 62% of the total revenues, they delivered only 39% of the total profits. Blue Ocean Leadership First, identify how Blue Ocean Leadership uses to implement this strategy in Bangladesh. Blue Ocean Leadership applies to all organizations which have an ocean of disengaged employees and need a step change in leadership strength. Specifically, Blue Ocean Leadership applies to:  Corporations  Non-profits  Governments  And across small, medium and large size organizations
  26. 26. 20 | P a g e There is a huge opportunity in Bangladesh to practice Blue Ocean Strategy. There are several companies in Bangladesh practicing Blue Ocean Strategy. Some of local and most of them are multi-national companies. Many organization, board and government sectors also use this strategy.
  27. 27. 21 | P a g e 9.1 Developing a Blue Ocean Strategy Creating New Market Space If we do operate in an existing market that is highly competitive (red ocean), then that is not necessary a bad thing but we believe it is vital to eliminate potential risk (competing in a Red Ocean) and begin to identify how we can create uncontested market space(blue ocean)and make the competition irrelevant.
  28. 28. 22 | P a g e Thinking beyond Existing Boundaries Consider being unconventional during our strategic planning process. Challenge yourself; Challenge the performance of your existing services, products and delivery systems. Too many organizations become complacent and fail to innovate themselves. Identifying Non-Customers There are customers out there who are not showing up on our radar screen. Capitalize on existing demand but ensure you leave no stone unturned in exploring ways to create new customers. Who should be your next customer? Who will be your customers in three to five years’ time? What do you need to do to make them customers? Challenging the Industry Cost The industry we operate in has a degree of over capitalizations that is not adding value and is simply not needed by your customers. Whether that is in product, service or delivery systems. You need to identify these areas and eliminate them from your value proposition. Ultimately, we need to be the leader in driving down the industry cost. 9.2 The Business Application For a small-business owner, the strategic plan often is geared to gaining market share at the expense of competitors -- or preventing them from taking market share from the company. In the book "Blue Ocean Strategy," W. Chan Kim and Renee Mauborgne propose a different strategic objective -- creating an entirely new market space for the company where there are no competitors rather than battling in the existing space. Competitive intelligence -- gathering information about competitors’ strategies, strengths and weaknesses -- is the foundation for creating the Blue Ocean Strategy. Value of Blue Ocean Strategy The Blue Ocean Strategy can help the company accelerate company's growth by suggesting new products or services could offer that no one else is -- a potential opportunity the size of an ocean. It injects additional creativity into company's strategic planning process, forcing the company to think what it could do differently and better rather than being satisfied with its current products or services. The authors use the example of Cirque du Soleil taking a completely new approach to a declining industry, circus-style entertainment. The company did not narrowly define itself as a "circus company." By thinking outside the circus tent, Cirque du Soleil was able to create a new form of entertainment that incorporated various styles such as dance and music as well as feats of athleticism. This allowed the company to attract new demographic groups that traditional circuses failed to penetrate.
  29. 29. 23 | P a g e Find What Customers Want or Need Applying a Blue Ocean Strategy requires that company have a market orientation -- looking at mission as satisfying customer needs or wants in a superior fashion relative to competitors. The first step is to determine what product features or attributes are most important to the target market. A small business is ideally positioned to accomplish this because many times members of the organization all the way up to the CEO deal with customers on a daily basis. Take time to ask customers what their current needs or wants are, either informally through conversations with them on the phone or when they visit your company's location, or more formally with online or in-store customer surveys. Evaluate Competitors' Performance – with the Company Once the company understands the multi-faceted needs of its target market, the company should evaluate how the company and its major competitors are doing at meeting these needs -- all of them. Many companies find that what they believe they excel at is not of particular importance to customers, and they are missing the mark on product attributes or dimensions of customer service that are of major concern to their target market.
  30. 30. 24 | P a g e Identifying the Gaps Evaluate the benefits of the company and its competitors are providing versus what the customer is looking for in her ideal purchase. The will see gaps that it could fill with an innovative product or service. To achieve a True Blue Ocean breakthrough, the innovation must be strikingly different from what customers have available to them now. The company isn't simply finding this new ocean of opportunity -- it is creating it. Company’s objective is to introduce product or service attributes that the customers in its industry have not seen before. The Blue Ocean approach works for both existing companies seeking to re-invent themselves and spur faster growth, and start-up ventures seeking to sprint out ahead of potential competitors.
  31. 31. 25 | P a g e 9.3 Some examples in Bangladesh Walton Walton limited is now the leading Electronics, motors, Machineries service provider in Bangladesh. Walton is now the largest Electronics, Motors, Machineries service Provider Company in Bangladesh. Bangladesh is the only owner of this company. The position of Walton Company better than any other company in Bangladesh. They provide good product and service for Bangladeshi people. Day by day they are developing the value of product. Walton use Blue Ocean Strategy in their business prospects. The demand of their product not only in our country all over the world. Walton put a positive impact on the lifestyles of the people of Bangladesh. Walton has crossed at 30% million with 35% market share at the end of 2011. There are the 120 outlets of Walton throughout the country so that customers everywhere can buy Walton products. Walton is the first Bangladeshi company which produce lots of own countries products, and quality goods at a lower price than any other company product. Walton works with R.B. groups. It is one of the top business groups in the country operating with great reputation since 1977. Walton is providing customers the latest technology based products innovative design and excellent quality with different models and capacities. Beximco Pharma Beximco Pharma (BPL) is the leading pharmaceutical company based in Bangladesh. Beximco was incorporated in 1976 and commenced operations in 1980 of manufacturing and marketing of Bayer AG, Germany and Upjohn Inc. In 1983, the company started manufacturing its own formulations and it launched export operation in 1992. Beximco uses Blue Ocean strategy to invent new drugs, new level of customer and new uses.In 2005 BPL formed a subsidiary known as Beximco Infusions Ltd, the company produced intravenous products, and later on Bexicom Infusion Ltd was merged with the parent company i.e. BPL. In the same year it completed the state-of-the-art oral solid dosage plant in compliance with the US FDA and UK MHRA standards, which has been approved by major global regulatory bodies. Software Firms There are many software firms standing in Bangladesh using Blue Ocean Strategy such as Onnorokom.com, bdsoft, DIIT and many more. They produce many software, create many uses and users and compete in new markets.
  32. 32. 26 | P a g e Bikroy.com Bikroy.com is a classified advertisements website operating in Bangladesh using Blue Ocean strategy. It has sections dedicated to private & business advertisements for cars & vehicles, property, electronics, home appliances and personal items, sport & hobby items and jobs, among others. Classified advertisements are currently placed on Bikroy.com free of charge and remain on the site for a period of 180 days. Similar business running in ekhanei.com. BPL BPL means Bangladesh Premier League is one of the best examples of blue ocean marketing in Bangladesh arranged by Bangladesh Cricket Board. The Bangladesh Premier League (BPL) is a professional domestic Twenty20 cricket tournament in Bangladesh which was established in 2012. The Bangladesh Premier League replaced the previous competition, the National Cricket League Twenty20, and features city-based franchises instead of the divisional teams which had participated previously and continue to do so in other domestic competitions. The third season of BPL might take place in November, 2015. Cricket in Bangladesh before BPL
  33. 33. 27 | P a g e CONCLUSION Blue Ocean Strategy is a portfolio of inter-related concepts and methodology allowing companies to break away from head-on competition in order to create and maintain uncontested market spaces of high customer value. The portfolio includes the whole leadership gamut from Strategy Formation, Strategy Implementation, Organizational Change and Staff Motivation. Value Innovation is the first component of BOS, and provides the strategy formation framework. Value Innovation is a highly pragmatic, visual methodology that allows companies to challenge industry boundaries and taken for granted assumptions and in the process discover highly distinctive and successful strategies. Value Innovation sets the stage for the rest of the Blue Ocean Strategy concepts. Blue Ocean Strategy is the most influential new concept in management strategy, whose exciting premise is that companies can rearrange conventional factors of competition in order to create a leap in customer value. In the process, companies make their competition irrelevant and discover unoccupied market space (hence the shift from a bloody, confined red sea to an expansive blue ocean).This focus on beating the competition in existing market space was exasperated by the meteoric rise of the Japanese in the 1970s and 1980s. Faced with mounting competition in the global marketplace as, for virtually the first time incorporate history, customers were deserting Western companies in droves, the center of strategic thinking gravitated further towards the competition. A slew of competition- based strategies emerged which argued that competition is at the core of the success and failure of firms, and that competition determines the appropriateness of a firm’s activities that can contribute to its performance. The result has been a fairly good understanding of how to compete skillfully in red waters, from analyzing the underlying economic structure of an existing industry, to choosing a strategic position of low cost or differentiation or focus, to benchmarking the competition. Yet, although some discussions around blue oceans exist, little practical guidance exists to create and capture them. It is a good area for concentration as a view point of Bangladesh. Bangladesh uses Blue Ocean Strategy very recently but may not successfully implement. In this report, discussed how Blue Ocean strategy can use in Bangladesh, the processes and methods. There are some companies such as Walton, Bkash, Beximco Pharma, Bangladesh Premier League, Ekhanei.com, Bikroy.com, Rokomary.com, Software firms uses Blue Ocean strategy successfully. They implement it and make a road for others who wish to use Blue Ocean strategy in Bangladesh.
  34. 34. 28 | P a g e BIBLIOGRAPHY/ WEBLIOGRAPHY  www.google.com  www.ask.com  www.slideshare.com  www.assignmentpoint.com  www.scribd.com  www.feedblitz.com , “Creating Blue Oceans” 26 november2006.  www.12manage.com , “Blue Ocean strategy” 4 june2007.  www.wikipedia.com  www.gamasutra.com , “Nintendo’s Kaplan Discusses 'Blue Ocean' Strategy”February 9, 2006.  www.sciencedirect.com , “A strategy for third-party logistics systems: A case analysis using the blue ocean strategy” 24 May 2007.  www.emergic.org , “TECH TALK: Blue Ocean Strategy” May 1, 2006.  www.blueoceanstrategy.com , “How we can develop a Blue Ocean Strategy for your organization” January2007.  Blue Ocean strategy by W Chan Kim and Renee Mourbogne  Harward Business Review, “A Conversation with W. Chan Kim and Renee Mauborgne authors of “BLUE OCEAN STRATEGY”
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