The Blue Ocean Strategy
Presented by: Stephene Roy Cardines Condino
Outline of the Report
Blue Ocean and the Red ocean
Three Compelling Taglines for a Blue Ocean Strategy
The Four Grids
Visualizing Strategies in 4 Steps
Sequence of Blue Ocean Strategies
Profit Model of Blue Ocean Strategy
Blue Ocean Idea Index
Avoiding imitations of Blue Ocean Strategy
Blue Ocean and the Red Ocean
Red Ocean Strategy Blue Ocean Strategy
Competition exist in the Market Place Making an uncontested market space.
Players tries to beat and compete with Make the competition irrelevant.
Exploit existing demand. Create and capture new demand.
Make the value-cost trade-off. Break the value-cost trade-off.
Align the whole system of a firm’s activities Align the whole system of a firm’s activities
with its strategic choice of differentiation or in pursuit of differentiation and low cost.
For an organization to discover the Blue Ocean and leave
the Bloody red Ocean, An Organization should have the so
called “Value Innovation”
Value Innovation is the cornerstone of the Blue Ocean
Strategy by making competition irrelevant and opening an
uncontested market space.
Value is referred as the “Value for both the Buyer and
Innovation (Product, service or delivery) that creates value
for the market
Value Innovation is not the same as technology Innovation
and Market Pioneering
Non Existent of Value and Innovation
“Value without innovation tends to focus on Value
“Innovation without Value tends to be technology
driven, market pioneering and even futuristic”
Three Compelling Tagline for a Blue
Which factors should be
reduced well below industry
Which of the factors that
A Which factors should be
the industry takes for
New created that the industry
granted should be Value
eliminated? has never offered?
Which factors should be
raised well above the
The four actions framework offers an technique that breaks the trade-off between
differentiation and low cost and to create a new value curve. It answers the four key
questions of what industry takes for granted and needs to be eliminated; what factors need
to be reduced below industry standards; what factors need to be raised above industry
standards; and what should be created that the industry has never offered.
Enological terminology and distinctions Price versus budget wines
Aging qualities Retail Store involvement
Wine complexity Easy drinking
Wine range Ease of selection
Vineyard prestige Fun and adventure
The eliminate-reduce-raise-create grid pushes companies not only to ask all four questions in the four
actions framework but also to act on all four to create a new value curve. By driving companies to fill in the
grid with the actions of eliminating, reducing, raising, and creating, the grid provides four immediate
benefits: it pushes them to simultaneously pursue differentiation and low costs; identifies companies who
are only raising and creating thereby raising costs; makes it easier for managers to understand and comply;
and it drives companies to scrutinize every factor the industry competes on.
Visualizing Strategy in Four Steps
The four steps include visual awakening, visual exploration, visual strategy fair, and visual
1. Visual 2. Visual 3. Visual Strategy 4. Visual
Awakening Exploration Fair Communicatio
•Compare your •Go into the field to •Draw your “to be” strategy •Distribute your before-
business with your explore the six paths to canvas based on insights and-after strategic profiles
competitors’ by creating blue oceans. from field observations. on one page for easy
drawing your “as is” comparison.
strategy canvas. •Observe the distinctive •Get feedback on
advantages of alternative strategy •Support only those
•See where your alternative products and canvases from customers, projects and operational
strategy needs to services. competitors’ customers, moves that allow your
change and noncustomers. company to close the
•See which factors you gaps to actualize the new
should eliminate, •Use feedback to build the strategy.
create, or change. best “to be” future strategy.
Sequence of Blue Ocean Strategy
Is there exceptional buyer utility in your
business idea? No-- Rethink
An important part of blue ocean strategy is to Yes
“get the strategic sequence right.” This Price
sequence fleshes out and validates blue ocean
Is your price easily accessible to the
ideas to ensure their commercial viability. This mass of buyers?
can then reduce business model risk. In this No-- Rethink
model, potential blue ocean ideas must pass
through a sequence of buyer
utility, price, cost, and adoption. At each step Cost
there are only two options: a “yes” answer, in Can you attain your cost target to profit
which case the idea may pass to the next at your strategic price?
step, or “no”. If an idea receives a no at any
point, the company can either park the idea or Yes
rethink it until you get a yes.
What are the adoption hurdles in
actualizing your business idea? Are
you addressing them up front? No-- Rethink
Viable Blue Ocean
Six Stages of Buyer’s experience. The six stages of Buyer experience is
running more or less sequentially from purchase to disposal. Each stage
encompasses a wide variety of specific experiences. At each
stage, managers can ask a set of questions to gauge the quality of buyer’s
Purchase Delivery Use Supplements Maintenance Disposal
How long does it How long does Does the product Do you need other Does the product Does use of the
take to find the it take to get require training or products and services require external product create
product you the product expert assistance? to make this product maintenance? waste items?
need? delivered? work?
Is the product easy to How easy is it to How easy is it to
Is the place of How difficult is store when not in use? If so, how costly are maintain and upgradedispose of the
purchase it to unpack and they? the product? product?
How effective are the
attractive and install the new
product’s features and How much time do How costly is Are there legal
functions? they take? maintenance? or environmental
How secure is the Do buyers have issues in
Does the product or How easy are they to
transaction to arrange disposing of the
service deliver far obtain?
environment? delivery product safely?
more power or options
How rapidly can than required by the How costly is
yes, how costly
you make a average user? Is in disposal?
and difficult is
purchase? overcharged with bells
Blue Ocean Idea Index
Utility Is there exceptional utility? Are there
compelling reasons to buy your offering?
Price Is your price easily accessible to the
mass of buyers?
Cost Does your cost structure meet the target
Adoption Have you addressed adoption hurdles up
Profit Model of Blue Ocean Strategy
The profit model of blue ocean strategy shows how value
innovation typically maximizes profit by using the three levers of
strategic price, target cost, and pricing innovation.
The Strategic Price
The Target Profit
The Target Cost
Streamlining and Cost
A Value Innovation move does not make sense based on
conventional strategic logic
Brand Image conflict prevents companies from imitating a blue
Natural monopoly blocks imitation when the size of a market
cannot support another player
Patents or legal permits block imitation
The high volume generated by a value innovation leads to rapid
cost advantages, placing potential imitators at an ongoing cost
Network externalities discourage imitation
Imitation often requires significant political, operational and
Retrieved November 8, 2011
Retrieved November 8, 2011 from
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