Blue Ocean Strategy
Porter's Five Forces
A strategy map is a diagram that shows your
organization's strategy on a single page. It's great for
quickly communicating big-picture objectives to everyone
in the company. With a well-designed strategy map, every
employee can know your overallstrategy and where they
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It provides a simple, clean, visual representation that is easily
referred back to.
It unifies all goals into a single strategy.
It gives every employee a clear goal to keep in mind while
accomplishing tasks and measures.
It helps identify your key goals.
It allows you to better understand which elements of your strategy
It helps you see how your objectives affect the others.
A strategy map is an amazing communication device that
serves some excellent purposes. It allows your
organization to provide focus internally and show your
customers and investors where you’re on track. But it can
be even more powerful when used as the first step toward
a Balanced Scorecard (BSC).
The Balanced Scorecard is a strategy management framework
created by Drs. Robert Kaplan and David Norton. It takes into account
Objectives, which are high-level organizational goals.
Measures, which help you understand if you’re accomplishing
your objective strategically.
Initiatives, which are key action programs that help you achieve
The first process—translating the vision—helps
managers build a consensus concerning a company’s
strategy and express it in terms that can guide action at
the local level.
The second—communicating and linking—calls for
communicating a strategy at all levels of the organization
and linking it with unit and individual goals.
The third—business planning—enables companies to integrate
their business plans with their financial plans. The fourth—
feedback and learning—gives companies the capacity for
strategic learning, which consists of gathering feedback,
testing the hypotheses on which a strategy is based, and
making necessary adjustments.
Primary goal is to grow our profits. This is driven by two
other goals: manage costs and grow revenue. Having
three financial perspective goals is simple and fairly typical.
Your organization may want to consider being more specific
about your goals, like “double revenue in three years” or
“manage overhead expenses.”
How must we look to our customers?” You
may list things like “quality of product,”
“knowledgeable service,” or “ease of use.” Try
not to list everything—just the top three or
From there, consider your customer strategy. Are you trying to
grow revenue from your current customers or grow the number
of customers? You might say both, but it’s important to be very
clear about your strategy here. Some organizations put their
customer objectives in the voice of the customer, such as “X
has the best service” or “we view X as a partner.” Other
companies may also list the basic customer needs, like
“competitive pricing,” “quality offering,” or “great warranty.”
You may not measure these, but it is important to communicate
them on the map.
These are the internal processes or things that your organization
must do well in order to make your customers happy (and
manage your expenses). Many organizations now use themes
in order to better group their internal processes
Innovation—This could be product, process, or service
innovation and is the lifeblood of your long-term company future
So, what do you need to invest in to ensure long-term
organizational success? How will you innovate? Put two or three
objectives in this section.
Customer Management—Think about the internal processes
you have that will keep your customers happy. Perhaps this is
how you support your customers or how you listen to them for
feedback on the next generation of interaction. Maybe you’re
migrating them from one platform to another (paper vs..
electronic, for example). all link to the customer perspective and
Operational excellence—Think about managing your own
business and becoming more cost effective. Are you reducing
waste or improving output? Perhaps you’re ready to
restructure your operations for efficiency’s sake. This theme
may link directly to the financial goal of managing costs.
Learning & Growth
Look at things from a “people” perspective. Perhaps two of
these goals might be to “build engineering talent” and
“institute greater accountability” throughout the
organization. consider what skills you need that are
related to your strategy, what kind of culture you value,
and whether there are any tools or resources you need
for your staff.
Learning & Growth
Retirement – Apply succession planning and skills
transfer to potential staff; IPCR/OPCR and monitor
2CG, a strategic execution consultancy firm, has been conducting yearly surveys about the
Balanced Scorecard since 2009 in an effort to better understand why and how it’s used. (You can
find results from all nine of 2CG’s studies here.) Of the organizations that participated in the
77% report that their Balanced Scorecard is extremely or very useful.
75% use the Balanced Scorecard to influence business actions.
Of the 64% of organizations that have refreshed their Balanced Scorecard, the
majority—71%—did so during the previous 12 months.
The Balanced Scorecard is used by both small and large organizations: 61% of
respondents had less than 500 employees, and 9% had over 10,000 employees.
SWOT Analysis – Applicable to All
A SWOT analysis (or SWOT matrix) is a high-level model used at
the beginning of an organization’s strategic Planning. It is an
acronym for “strengths, weaknesses, opportunities, and
threats.” Strengths and weaknesses are considered internal
factors, and opportunities and threats are considered external
Able to respond very quickly as we have no red tape, and
no need for higher management approval.
Able to give really good customer care, as the current
small amount of work means we have plenty of time to
devote to customers.
Our lead consultant has a strong reputation in the market.
We can change direction quickly if we find that our
marketing is not working.
Low overheads, so we can offer good value to customers.
Start by asking the question, “What are we good at?” This is a broad question, but in the
beginning stages of your discussion, you should accept all answers.
Financial Strengths: What is your most reliable source of financial growth? Is it your current
customers? A particular product? Your service fee structure?
Customer Strengths: Where is your customer growth coming from? Is this coming from
referrals, or a particular industry segment like healthcare or retail? Is it mainly retail or
commercial? Why are your customers choosing you over your competitors?
Internal Strengths: What do you do very well as an organization? Are you the first to
innovate products in your industry? Do you have strong customer relationships or
Learning & Growth Strengths: Where do you excel insofar as your employees are
concerned? Is it your compensation model? Could it be your workforce development
program? Your culture?
Our company has little market presence or reputation.
We have a small staff, with a shallow skills base in many
We are vulnerable to vital staff being sick or leaving.
Our cash flow will be unreliable in the early stages.
Financial Weaknesses: What is your biggest financial weakness? Perhaps most of your
customers are in a cyclical industry and subject to market whims, for example. Or maybe
your most used product has the lowest profit margins.
Customer Weaknesses: Where do your customers think you need to improve? This
could be your investment products, locations, loan origination, or competitive prices for
Internal Weaknesses: What do you do poorly? Do you have opportunities to improve in
project management for opening new branches? What about for one-touch call resolution
for customer service?
Learning & Growth Weaknesses: What are your biggest challenges with employees?
Do you have particularly high turnover in certain departments or a negative perception of
the organizational culture?
Our business sector is expanding, with many
future opportunities for success.
Local government wants to encourage local
Our competitors may be slow to adopt new
Financial Opportunities: What is your biggest opportunity to improve your finances? This
might be starting a new product line, increasing customer retention, or going after a new
Customer Opportunities: Where could you dramatically improve with your customers? Could
you improve your online interface? What about cross-selling related products, or better
understanding your customers’ purchasing habits?
Internal Opportunities: What processes will drive you well into the future if you could
improve upon them? This may entail partnering with a mortgage origination company or
developing neighborhood sponsorships.
Learning & Growth Opportunities: What opportunities do you have to leverage staff? For
example, do you have cross-training opportunities? Could you make a few tweaks to improve
your culture and thus your retention?
Developments in technology may change this market
beyond our ability to adapt.
A small change in the focus of a large competitor
might wipe out any market position we achieve.
Financial Threats: What threats could seriously impact your financial health? This could be
low-cost competitors, a partner entering the banking space, or an overseas banking product.
Customer Threats: What is your biggest concern about your customers? Does one of your
competitors offer zero-fee checking that could steal some of your market share? How simple
is your customers’ ease of departure?
Internal Threats: What current areas of your business might harm you later? Do you have a
new product rollout soon that could potentially fail? Are you struggling through a merger or an
Learning & Growth Threats: What threatens the people within your organization? This
could be anything from instability in your customer support department to staff member
departures to a department-specific pushback against new technology.
strategic options to
decisions and what
direction to take?
Tine Wade (2017)
Some reasons that a company might kick off a gap analysis include the following:
•Benchmarking: Comparing results against external criteria. A computer company may want to see where
they stand against industry performance criteria, or a candy company may want to compare their reputation
with their competitors.
•Portfolio Analysis: Examining their product portfolio to look for new sales opportunities, a company can use
a gap analysis to identify new products to sell. In the opposite direction, they can also look for existing
products that are not selling well, use a gap analysis to find out why, then promote them (e.g. feature them
more promentilty in marketing or put them on sale), change them to better meet customer needs, or remove
them from their portfolio.
•Profits: If a forecast profit percentage isn’t reached, a company can use a gap analysis to determine what
went wrong, and whether it was in planning or execution. Was the organization paying higher-than-expected
expenses for materials, or having to lower prices due to unexpected competition?
•Processes: A gap analysis can help reveal the shortcomings of processes, so that the real outcomes match
the expected outcomes. A shipping firm could examine their AP process to see why so many of their vendors
are not getting paid on time, or examine their billing processes to see why many of their suppliers don’t get
their invoices until after the due date.
•Performance Indicators: A gap analysis can also be applied to key performance indicators like new
customer acquisition, average order amount, or return on investment (ROI). A mobile carrier could look for the
reasons that caused them to miss their customer acquisition goal, or a seafood company could seek the
reasons they didn’t process as much salmon as expected.
•Usage Gaps: A usage gap is the difference between current market size for a product or service, and the
potential market size. A gap analysis in this area can help an organization see why they are not reaching the
full potential. Is a company's reputation pushing down sales? Or did management misread the demand for a
Gap planning is also referred to as a “Need-Gap Analysis,”
“Need Assessment,” or “the Strategic-Planning Gap.” It is
used to compare where an organization is now, where it
wants to be, and how to bridge the gap between. It is
primarily used to identify specific internal deficiencies.
Gap analysis: The right method for
transitioning to ISO 9001:2015
In your gap planning research, you may also hear about a
“change agenda” or “shift chart.” These are similar to gap
planning, as they both take into consideration the
difference between where you are now and where you
want to be along various axes. From there, your planning
process is about how to ‘close the gap.’
The VRIO is an acronym for value, rarity,
limitability, organization.” This framework relates more to
your vision statement than your overall strategy. The
ultimate goal in implementing the VRIO model is that it
will result in a competitive advantage in the marketplace.
Value: Are you able to exploit an opportunity or neutralize an outside
threat using a particular resource?
Rarity: Is there a great deal of competition in your market, or do only a
few companies control the resource referred to above?
Iimitability: Is your organization’s product or service easily imitated, or
would it be difficult for another organization to do so?
Organization: Is your company organized enough to be able to exploit
your product or resource?
Is one strategic planning model better than the others?
Some of these frameworks have been around longer than others, or
have been used in various case studies in different ways. And
sometimes managers are more comfortable with one over another, for a
any number of reasons.
We recommend determining which of these strategic planning models
applies most to your organization’s way of thinking.
For example, if you still need to work out your vision statement, it may be
wise to begin with the VRIO framework and then move to something like
the Balanced Scorecard to track and manage your ongoing strategy.
If you are set on pitching a particular strategic planning model to
management, be prepared to give your boss or board of directors an
example of another successful company that has utilized that particular
A real-life VRIO framework example is Google.
There’s no doubt that Google is one of the most powerful companies in the world, and its success arguably
stems from a sustained competitive advantage in human capital management. If we were to break down
Google’s VRIO framework from the HR perspective, it might look something like this:
•Value: Use human capital management data to hire and retain innovative, productive employees. These
employees consistently create some of the most popular consumer products and services in the world.
•Rarity: No other companies are using data-based employee management so extensively.
•Imitability: Data-based human capital management is both costly and difficult to imitate, at least for the near
future. Companies have to build the software and invest in training their HR staff on the new technology and
•Organization: Google is organized to capture value from this capability. The IT department has the skills to
collect and maintain the data, while HR and team leaders are trained on how to use the data to hire, promote,
manage, and improve performance of employees.
PEST is also an acronym—it stands for “political, economic,
sociocultural, and technological.” Each of these factors is
used to look at an industry or business environment, and
determine what could affect an organization’s health. The
PEST model is often used in conjunction with the external
factors of a SWOT analysis.
Benefits of PEST Analysis
Some benefits that we can gain from the findings of a PEST Analysis:
Provides an understanding of the wider business environment.
Encourages the development of strategic thinking.
Straightforward and only costs time to do.
May raise awareness of threats to a project.
Can help an organization to anticipate future difficulties and take
action to avoid or minimize their effect.
Can help an organization to identify and exploit opportunities.
These are all about how and to what degree a government intervenes
in the economy. This can include - government policy, political stability
or instability in overseas markets, foreign trade policy, tax policy, labor
law, environmental law, trade restrictions and so on.
It is clear from the list above that political factors often have an impact
on organizations and how they do business. Organizations need to be
able to respond to the current and anticipated future legislation, and
adjust their marketing policy accordingly.
Economic factors have a significant impact on how an organization this
include - economic growth, interest rates, exchange rates, inflation,
disposable income of consumers , etc
Macro-economic factors deal with the management of demand in any
given economy. Governments use interest rate control, taxation policy and
government expenditure as their main mechanisms for managing macro-
Micro-economic factors are all about the way people spend their incomes.
Social factors are the areas that involve the shared belief and
attitudes of the population. These factors include - population
growth, age distribution, health consciousness, career
attitudes and so on. These factors are of particular interest as
they have a direct effect on how marketers understand
customers and what drives them.
Know how fast the technological landscape changes and how this
impacts the way we market our products. Technological factors affect
marketing and the management thereof in three distinct ways:
New ways of producing goods and services
New ways of distributing goods and services
New ways of communicating with target markets
Blue Ocean Strategy
Blue Ocean Strategy is a strategic planning model that emerged
in a book by the same name in 2005. by W. Chan Kim and
Renée Mauborgne, professors at the European Institute of
Business Administration (INSEAD).
The idea behind Blue Ocean Strategy is for organizations to
develop in “uncontested market space” (e.g. a blue ocean)
instead of a market space that is either developed or saturated
(e.g. a red ocean). If your organization is able to create a blue
ocean, it can mean a massive value boost for your company, its
buyers, and its employees.
Red Ocean 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 reduce. Products become
commodities and cut-throat competition turns the ocean bloody red.
Blue Ocean companies, in contrast, access untapped market space
and create demand, and so they have the opportunity for highly
profitable growth. In Blue Oceans, competition is irrelevant. Yes,
imitators arise, but experience shows there is a wide window of
opportunity to stay ahead of imitators.
What characterizes Red Ocean
Dwelling vs. Blue Ocean Creating
Blue Ocean Strategy VS. Red
What consistently separates winners from losers in creating Blue
Oceans is their approach to strategy. Creators of blue oceans do not
use the competition as their benchmark, but follow a different strategic
logic that we call value innovation. Instead of focusing on beating the
competition, Blue Ocean-creating organizations make them irrelevant, by
simultaneously creating a leap in value for buyers, and their
organization, thereby opening up new and uncontested market space.
Blue Ocean creating businesses follow a different
We Challenge Industry Conditions & Paradigms
We Focus On Customers, Not Competitors
We Don’t Segment Customers, We Aggregate Them
Our Assets Capabilities Are Not Fixed, They Are Fluid
We Solve Problems Across The Entire Supply Chain
Here are a few examples of blue ocean strategic moves from a
variety of different industries and sectors
Porter's Five Forces
Porter’s Five Forces is an older strategy execution framework created by Michael
Porter in 1979 built around the forces that impact the profitability of an industry or a
market. The five forces it examines are:
The threat of entry. Could other companies enter the marketplace easily, or are there
numerous entry barriers they would have to overcome?
The threat of substitute products or services. Can buyers easily replace your
product with another?
The bargaining power of customers. Could individual buyers put pressure on your
organization to, say, lower costs?
The bargaining power of suppliers. Could large retailers put pressure on your
organization to drive down the cost?
The competitive rivalry among existing firms. Are your current competitors poised
for major growth? If one launches a new product or files a new patent—could that
impact your company?
The amount of pressure on each of these forces can help you determine how future
events will impact the future of your company
The threat of substitute products or services. Can buyers easily replace
your product with another?
The bargaining power of customers. Could individual buyers put pressure
on your organization to, say, lower costs?
The bargaining power of suppliers. Could large retailers put pressure on
your organization to drive down the cost?
The competitive rivalry among existing firms. Are your current competitors
poised for major growth? If one launches a new product or files a new
patent—could that impact your company?
The amount of pressure on each of these forces can help you determine how
future events will impact the future
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