Blue Ocean Strategy-Appendix A,B,C Michal Medrano Casey Harvey Mason Stone Julio Garcia Courtney Ellis Glen Lesly Travis Tempel Roberto Padilla

Key Topics: Open New market Space Value Innovation- Linked to what buyers value Competition Buyer Value at an accessible price Two Distinct Views on Industry Structure Structuralist Strategies Reconstructionist Strategy Reconstruction & Recombination Market Dynamics of Value Innovation Appendix C Monopolies

Automobile Industry The Model T Started back in 1893 Woodrow Wilson said " the horseless carriage at the present is a luxury for the wealthy. It will never come into consumer use as the bicycle. The Model T Henry Ford Revolutionary Assembly Line Market Share rose from 9% in 1908 to 62% in 1921

General Motors 1924 Strategy- Produce a car for every purse and purpose Buyers trade up for fashion and comfort

Japanese Jump Into Blue Ocean Opportunity Small, Fuel Efficient cars Cars made were the Honda, Toyota, and Nissan Oil Crisis in the 1970's, Consumers flocked the Japanese cars Chrysler On edge of bankruptcy Introduce the minivan Ignites SUV market

Two Distinct Views on Industry Structure Structuralist View – Has its roots in industrial organization economics Industrial Organization Reconstructionist View – built on theory of endogenous growth Joseph A Schumpeter

Structuralist Strategies Structuralist – important implications often leads to competition-based strategic thinking. Leads to deciding whether or not to enter. Leads firms to divide industries into attractive and unattractive one. Decide whether or not to enter.

Reconstructionist Strategy Recognizing that structure and market boundaries. Managers & Practitioners do not let this view limit their thinking Creating Demand Reordering existing elements

Reconstruction & Recombination A change in market structure Stimulating the demand side Cirque de Soleil Reconstructing existing buyer value elements Reconstruction & Recombination

Market Dynamics of Value Innovation Appendix C Value innovation vs. technology innovation Value innovation rapidly increases demand Lowers price and long run average costs UnderArmour Submit and Idea

Monopolies Harm social welfare Charge high prices that exclude consumers Waste society’s resources-deadweight loss

Conclusion: Auto Industry Structuralist Reconstructionist Value Innovation and Monopolies