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Blue ocean strategy

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Blue Ocean Strategy
Blue Ocean Strategy
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Blue ocean strategy

  1. 1. Academic Journey E-Business MBA Program – ISC Paris University College Cork Course of Blue Ocean Strategy February 21st , 2012 Professor François Cazals 2
  2. 2. Agenda  ISC Paris School of Management  The Professor  Competition-based strategy  A little film  Blue Ocean Strategy 3
  3. 3. ISC Paris group  1800 students « grande école »  250 students MBA’s Business Executive MBA School Education 4
  4. 4. François Cazals  CEO Distriforce  ISC Paris  Affiliate Professor  Head  ISC Executive Education  E-Business MBA Program  Speaker  HEC Paris Executive fcazals@iscparis.com Education Twitter: @distriforce  ESSEC Paris Executive Blog: cazals.fr Education 5
  5. 5. Blue Ocean Strategy Creating new market space
  6. 6. Competition-based strategy
  7. 7. Subtle War Brutal War Blue Red “To subdue the enemy “ War is an act of violence without fighting is the acme intended to compel our of skill”. opponent to fulfill our will”. Sun Tzu (544-496 BC J.-C.) Clausewitz (1780-1831) 8
  8. 8. A founding principle “Competition is at the core of the success or failure of firms”. 1st sentence of Michael Porter’s most important book 9 Michael PORTER
  9. 9. Two generic strategies Low Cost Differentiation Paris-Dublin Ryanair 55 € Air France 286 € 10
  10. 10. A little film http://distriforce.net/insead.wmv 11
  11. 11. The Book and the Authors Prof Chan Kim Prof Renée Mauborgne 12
  12. 12. 10 Strategy Canvas 9 8 The value curve, the basic component of the strategy 7 canvas, is a graphic 6 depiction of a company’s relative performance across 5 its industries factors of 4 competition. 3 2 1 0 Comp Fact 1 Comp Fact 2 Comp Fact 3 Comp Fact 4 Comp Fact 5 Comp Fact 6 Comp Fact 7 Comp Fact 8 Firm Competitor 13
  13. 13. Strategic corridor 10 9 8 7 6 5 Corridor 4 3 2 1 0 Var 1 Var 2 Var 3 Var 4 Var 5 Var 6 Var 7 Var 8 Comp 1 Comp 2 Comp 3 Comp 4 Comp 5 Comp 6 14
  14. 14. Industry Cycle Start Growth Maturity Decline Loyalty One to One Innovation Low Cost 15
  15. 15. Red Ocean Vs. Blue Ocean  Compete in existing market  Create uncontested market space space  Beat the competition  Make the competition  Exploit existing demand irrelevant  Make the value-cost trade-  Create and capture new off demand  Align the whole system of a  Break the value-cost trade- firm’s activities with its off strategic choice of  Align the whole system of a differentiation or low cost firm’s activities in pursuit of differentiation and low cost
  16. 16. 4 actions framework Reduce Create a new Eliminate value Create curve Raise 17
  17. 17. Raise What factors should be raised well beyond the industry standard? Eliminate Create What factors What factors should should be be created that the eliminated that the industry has never industry has taken offered? for granted? Reduce What factors should be reduced well below the industry standard?
  18. 18. 6 Paths Framework Head-to-head competition Blue Ocean Creation Focuses on rivals within its Looks across alternative Industry industry industries Focuses on competitive Looks across strategic Strategic Group position within strategic groups within industry group Focuses on better serving Redefines the industry Buyer Group the buyer group buyer group Focuses on maximizing the Looks across to Scope of product or value of product and service complementary product service offering offerings within the bounds and service offerings of its industry Focuses on improving price Rethinks the functional- Functional-Emotional performance within the emotional orientation of its orientation functional-emotional industry orientation of its industry Focuses on adapting to Participates in shaping Time external trends as they external trends over time occur 19
  19. 19. Look across alternative industries Rent a apartment + Go to the hotel = Corporate Apartements = apart-hotel concept 20
  20. 20. Look across strategic groups within industry + = 21
  21. 21. Redefine the industry buyer group 22
  22. 22. Look across to complementary product and service offerings
  23. 23. Rethink the functional-emotional orientation of its industry Functional Emotional Fonctionnel 24
  24. 24. Participate in shaping external trends over time 3D TV Ultra Flat TV Connected TV 25
  25. 25. Blue ocean? 26
  26. 26. 3 Tiers of Non-customers 27
  27. 27. The Gamers • Men • Under 35 • Sports, Fig hts, Cars,…
  28. 28. 3 Tiers of Non-customers  « Soon-to-be » non- customers Men aged over 35  « Refusing » non- costumers Old people, parents, women  « Unexplored » non- customers Families 29
  29. 29. Business Case How Apple has created a new market space with the iPad
  30. 30. 3 examples Sony Vaio VPC-SB3L9E SAMSUNG Netbook iPad 2 64Go Wi-Fi W 13,3" LED USB 3.0 N145Plus 31
  31. 31. Red Ocean Variables Sony Samsung Price 899 € 239 € Weight 1,720 kg 1,240 kg Screen 13,3 inches 10,1 inches Hard Drive 500 Go 250 Go Connectivity 10/10 7/10 Keyboard Yes Yes Design 7/10 5/10 Market Laptops Netbooks 32
  32. 32. Strategy canvas Differentiation Low Cost Price Weight Screen Hard Drive Connectivity Keyboard Design 33
  33. 33. Blue ocean Variables iPad Price 489 € Weight 0,613 kg Screen 9,7 inches Hard Drive 64 Go Connectivity 3/10 Keyboard No Design 9/10 Touch New interface iCloud New AppStore New Market Touch Pads 34
  34. 34. Blue Ocean vs. Laptops E R R C 35
  35. 35. Blue Ocean vs. Laptops Three Tests of a Blue Ocean Strategy: E 1) R Focussed R C 2) Divergent 3) Compelling Tagline 36
  36. 36. Blue ocean vs. Netbooks E R R C 37
  37. 37. “If you dream it, you can do it”. Walt Disney 38
  38. 38. Annex
  39. 39. Exercise • 1. List Factors of Competition • 2. Top 2 or 3 in ERRC Grid Quadrants • Clearly define the group of “non- customer” that you are going after.
  40. 40. Examples
  41. 41. Exercise 3. Write on Worksheet: E left, C right 4. Draw “As Is” 5. Draw “To Be”
  42. 42. Examples
  43. 43. Exercise Demonstrate that iphone is a blue ocean strategy compared to blackberry (at the beginning)

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