Group 1 John Menth Brent Gafford Tim Loveland Zachary Mayor

Barriers to Imitation Creating blue oceans is not a static achievement but a dynamic process Sooner or later imitators appear o How soon or late will they come? o How easy or difficult is blue ocean strategy to imitate When should a company create another blue ocean?

Barriers to Imitation Blue ocean strategy brings with it barriers to imitation Some are operational and some are cognitive A blue ocean strategy can go without a challenge for years o Cirque du Soleil o Southwest Airlines o The Home Depot o CNN

Barriers to Imitation A value innovation move does not make sense based on conventional strategic logic o CNN was ridiculed o Other networks thought 24/7 news was not feasible Brand image conflict prevents companies from imitating a blue ocean strategy o Ex. The Body Shop vs. major cosmetic houses Natural monopoly blocks imitation o Ex. Kinepolis, o first megaplex in Europe o located in Brussels o 15 years success with no imitation o Brussels could not support another megaplex

Barriers to Imitation Patents or legal permits block imitation High volume generated by a value innovation leads to rapid costs advantages Places imitators at a cost disadvantage o Ex. Wal-Mart o Huge economies of scale

Sustaining and Renewal of BOS Network externalities also block companies from easily and credibly imitating a blue ocean strategy. Ebay The more customers they get, the more attractive the auction site becomes for both sellers and buyers.

Sustaining and Renewal of BOS Because imitation often requires companies to make substantial changes, politics kick in, delaying for years a company’s commitment Ex. Southwest Airlines

Sustaining and Renewal of BOS When a company offers a leap in value, it rapidly earns brand buzz and a loyal following in the marketplace. Microsoft Despite all its efforts and investment, it has not been able to dislodge Quicken. They have been trying for more than 10 yrs.

Review of Imitation Barriers to BOS Blue Ocean Strategy may conflict with other companies’ brand image. Patents or legal permits High volume leads to rapid cost advantage for the value innovator, discouraging followers from entering the market. Companies that value-innovate earn brand buzz and loyal customer following that tends to shun imitators.

When to Value-Innovate Again Eventually your blue ocean will be imitated… Don’t become obsessed with hanging on to market share Because over time, the competition, and not the buyer will become the center of your strategic thought If you stay do this, your value curve will begin to converge with the competition’s

Avoid the Trap Monitor your value curve on the strategy canvas. Doing this will signal you when to value-innovate and when not to. It also keeps you from pursuing another blue ocean when huge profits are still left in your current offering

Your Blue Ocean Swim as far as possible your blue ocean Be a moving target and dominate the blue ocean over your imitators for as long as possible. As value curves converge, eventually, the blue ocean will start to turn red. By plotting yours and your competition’s value curve you will know exactly when this starts to happen Ex: The Body Shop & Yellow Tail

Takeaways When you have created a unique and successful business model, others will try and imitate Keeping with your original blue ocean strategy will most likely only last years Example Pitney Bowes from GTG Expand on your blue ocean concept within your Hedgehog Concept

Takeaways Watch the Value Curve Avoid Competition Exploit the Economies of Scale that your blue ocean has established The most important thing you can take away from this book, MAKE THE COMPETITION IRRELEVANT.