This document provides an overview of Blue Ocean Strategy. It defines Blue Ocean as uncontested market space created by industries that do not yet exist. The key aspects of Blue Ocean Strategy are to stop competing and instead create value innovation that makes competition irrelevant by establishing a new market space. An example given is Apple's iTunes, which transformed the digital music industry. The document contrasts Blue and Red Oceans, with Red representing existing competitive industries and Blue representing new market opportunities. It outlines six principles for formulating and executing a successful Blue Ocean Strategy.
1. SM PRESENTATIONSM PRESENTATION
BHORANIYA DARSHANBHORANIYA DARSHAN
DATTANI PRATIKDATTANI PRATIK
DAVRA NIKUNJKUMARDAVRA NIKUNJKUMAR
PIMRPIMR
MBAMBA
MARKETING –AMARKETING –A
TOPIC- Blue Ocean StrategyTOPIC- Blue Ocean Strategy
2. WHAT IS BOS ?WHAT IS BOS ?
• Blue ocean strategy describes how
organizations should try and find a way to
work in a marketplace that isn't bloodied
by the competition and is free of
competitors.
3. DEFINITION OF 'BLUE
OCEAN'
A slang term for the uncontested market
space for an unknown industry or
innovation. Coined by professors W. Chan
Kim and Renee Mauborgne in their book
"Blue Ocean Strategy: How to Create
Uncontested Market Space and the Make
Competition Irrelevant" blue oceans are
associated with high potential profits.
4. • While businesses are always looking for
ways in which they can better contend
with their competitors, one theory
suggests they would be better off looking
for ways in which they are competing
against no one but themselves. This is
known as the blue ocean strategy.
5. Blue Oceans of appleBlue Oceans of apple
A good example of a Blue Ocean Strategy is Apple’s
iTunes. In 2003 Apple moved into the digital music space
as a provider and distributor of content – and signalled the
end of the previous innovation, the CD. Apple created
iTunes as an online service where people could download
legal, high quality songs for a very reasonable price.
Apple observed the flood of illegal music file programs
such as Napster and LimeWire had created a network of
Internet savvy music lovers freely, yet illegally, sharing
music. By 2003 more than two billion illegal music files
were traded every month and the recording industry fought
to stop the cannibalisation of physical CDs.
6. Apple’s strategy was also unique in that the success of
iTunes fed into Apple’s other hot product, the iPod.
People would go to iTunes and download music onto
their iPods. Apple provided the content, the means of
acquisition and distribution, and the device. A great
Blue Ocean!
Another reason for Apple’s success is that it is more a
design-driven company rather than a technology-driven
company, putting customers at the centre of its product
innovation. In doing so, Apple created the need for its
products and then exploited its newly created market
share quickly, making it very difficult for competitors to
grab a piece of the pie.
7. STRATEGYSTRATEGY
• Compete in existingCompete in existing
market spacemarket space
• Beat the competitionBeat the competition
• Exploit existing demandExploit existing demand
• Make the value-costMake the value-cost
trade-offtrade-off
• Align the system withAlign the system with
differentiationdifferentiation OROR lowlow
costcost
• Create uncontestedCreate uncontested
market spacemarket space
• Make the competitionMake the competition
irrelevantirrelevant
• Create and capture newCreate and capture new
demanddemand
• Break the value-costBreak the value-cost
trade-offtrade-off
• Align the system inAlign the system in
pursuit of differentiationpursuit of differentiation
ANDAND low costlow cost
Blue oceanRed ocean
8. New Market SpaceNew Market Space
• Red oceans and blue oceans make upRed oceans and blue oceans make up
market universemarket universe
• RedRed oceans: all industries in existenceoceans: all industries in existence
• = known market space= known market space
• BlueBlue oceans: all industries not in existenceoceans: all industries not in existence
• = unknown market= unknown market
spacespace
9. RedRed OceanOcean Vs.Vs. BlueBlue OceanOcean
• Compete in existingCompete in existing
market spacemarket space
• Beat the competitionBeat the competition
• Exploit existing demandExploit existing demand
• Make the value-costMake the value-cost
trade-offtrade-off
• Align the whole systemAlign the whole system
of a firm’s activitiesof a firm’s activities
with its strategic choicewith its strategic choice
of differentiation or lowof differentiation or low
costcost
• Create uncontested
market space
• Make the competition
irrelevant
• Create and capture new
demand
• Break the value-cost
trade-off
• Align the whole system of
a firm’s activities in
pursuit of differentiation
and low cost
10. RedRed OceansOceans represent all industries in existencerepresent all industries in existence
today.today.
They have defined rules, competitors, and marketThey have defined rules, competitors, and market
boundaries.boundaries.
Key words might includeKey words might include competitioncompetition,, price warsprice wars,,
market sharemarket share,, commoditization, benchmarking,commoditization, benchmarking,
strategic positioning, value addstrategic positioning, value add..
11. Blue OceansBlue Oceans represent all industriesrepresent all industries
NOTNOT
in existence today.in existence today.
This is undefined market space, otherwise knownThis is undefined market space, otherwise known
as OPPORTUNITY.as OPPORTUNITY.
Key words might beKey words might be value innovation, focus,value innovation, focus,
differentiation, creation of demand, newdifferentiation, creation of demand, new
marketplacemarketplace
12. The premise is simpleThe premise is simple::
To win in the future, companies must stopTo win in the future, companies must stop
competing with each other.competing with each other.
The only way to beat the competition is toThe only way to beat the competition is to
stopstop tryingtrying to beat the competition.to beat the competition.
13. Value innovationValue innovation is the “new” strategic logicis the “new” strategic logic
behindbehind Blue OceanBlue Ocean Strategy.Strategy.
Instead of focussing on beating the competition,Instead of focussing on beating the competition,
you focus onyou focus on making it irrelevantmaking it irrelevant by creating aby creating a
leap in value for buyers and creatingleap in value for buyers and creating
uncontested market space.uncontested market space.
14. Formulating and ExecutingFormulating and Executing
Blue Ocean StrategyBlue Ocean Strategy
Six Principles of Blue Ocean StrategySix Principles of Blue Ocean Strategy
– Reconstruct market boundariesReconstruct market boundaries
– Focus on the big picture, not the numbersFocus on the big picture, not the numbers
– Reach beyond existing demandReach beyond existing demand
– Get the strategic sequence rightGet the strategic sequence right
– Overcome key organizational hurtlesOvercome key organizational hurtles
– Build execution into strategyBuild execution into strategy