Ch. 9-Conclusion: The Sustainability and Renewal of Blue Ocean Strategy Team 1 Patrick Morales, Will Turner, Chris Mathis, Jared Stowe, Becky Alvarado

“Creating blue oceans is not a static achievement, but a dynamic process.” How easy or difficult is blue ocean strategy to imitate? When should a company reach out to create another blue ocean?

Barriers to Imitation Value innovation does not make sense to a company’s logic ▫CNN ridiculed by competitors when introduced Blue ocean strategy my conflict with other companies’ brand image ▫The Body Shop’s business model in beauty industry

Barriers to Imitation Natural monopoly: The market often cannot support a second player ▫Kinepolis’ megaplex theatre in Brussels, Belguim Patents or legal permits block imitation

Barriers to Imitation High volume leads to rapid cost advantage for the value innovator, discouraging followers from entering market ▫Wal-Mart’s huge economies of scale when purchasing products Network externalities discourage imitation ▫Ebay’s size and popularity online –discourages competitors

Barriers to Imitation Imitation often requires significant political, operational, and cultural changes ▫Southwest airlines’ model meant major revisions and training for competitors Companies that value-innovate earn brand buzz and loyal customer following that tends to shun imitators ▫Microsoft trying to dislodge Intuit’s value- innovation Quicken

When to Value-Innovate Again You need to monitor value curves on the strategy canvas ▫Aim to widen gap and swim in blue ocean as far as possible ▫Look to value-innovate and seek new blue oceans as gap closes

When to Value-Innovate Again When a company’s value curve still has focus and divergence from competition: ▫Resist temptation to value-innovate again ▫Improve operations and geographical expansion to achieve max economies of scale and market coverage ▫Make yourself a moving target ▫Dominate the blue ocean for as long as possible

When to Value-Innovate Again As competitor’s value curves converge towards yours: ▫Reach for another value innovation to create a new blue ocean ▫Creating new blue oceans will help in an overcrowded market

American Apparel: Future of Blue Ocean Strategy Strengthen and expand blue ocean strategy of domestic production and vertical integration ▫ Increase number of factories in the U.S. ▫Focus on improving operations at wholesale and retail levels

Conclusion Companies already know how to compete in red oceans Use tools learned in this book to make blue ocean strategy as systematic and actionable as red ocean strategy