BLUE OCEAN STRATEGY SIMULATION ROUND BLUE-2 DEBRIEF Theory by W. CHAN KIM & RENEE MAUBORGNE Design and Development by

TEAM BLUE OCEAN OFFERINGS I will first briefly introduce the STRATX Company. 17/04/2017 © STRATX

REFINEMENT OF BLUE OCEAN OFFERINGS Let´s take a look at your refined offerings and discuss which factors you decided to eliminate, reduce, raise and create and why? 17/04/2017 © STRATX

REFINED STRATEGY CANVAS – TEAM ALBATROSS Which factors did you decide to eliminate, reduce, raise and create and why? Length and complexity of games 17/04/2017 © STRATX

REFINED STRATEGY CANVAS – TEAM BUFFALO Which factors did you decide to eliminate, reduce, raise and create and why? Pleasant design 17/04/2017 © STRATX

REFINED STRATEGY CANVAS – TEAM COUGAR Which factors did you decide to eliminate, reduce, raise and create and why? Why not exer-gaming and exer-tainment? 17/04/2017 © STRATX

REFINED STRATEGY CANVAS – TEAM EAGLE Which factors did you decide to eliminate, reduce, raise and create and why? Rowing wireless function Why not simplicity and ease of starting games AND playing familiar games? 17/04/2017 © STRATX

BASE UNIT COST COMPARISON 17/04/2017 © STRATX

ACTUAL UNIT COST COMPARISON Blue Box actual unit costs depend on: Corporate projects that were initiated Accuracy of production planning Volume produced in each period 17/04/2017 © STRATX

ALL TEAMS HAVE DRAMATICALLY DECREASED DEVELOPMENT COST 17/04/2017 © STRATX

ALL TEAMS HAVE ADJUSTED THEIR PRICE DOWN TO ATTRACT THE MASS EAGLE INCREASED PRICE IN YEAR 45 – WHY? 17/04/2017 © STRATX

FORECASTING PRODUCTION FOR NEW OFFERING IS DIFFICULT ~ 2100 sold ~ 840 sold Buffalo and Eagle sales higher than forecasted ~ 330 sold ~ 250 sold 17/04/2017 © STRATX

TO-BE STRATEGY CANVAS – GEOGRAPHICAL COVERAGE DECISION A few teams are ahead of the other ones in term of Geographical Expansion. This depends on how fast each team designed a good solution to create demand, generate revenues and get increase in budget 17/04/2017 © STRATX

TO-BE STRATEGY CANVAS – MARKETING DECISION To be successful Marketing spending must be in line with Geographical Expansion Cougar leading in both. 17/04/2017 © STRATX

TEAM RESULTS I will first briefly introduce the STRATX Company. 17/04/2017 © STRATX

NO BIG DIFFERENCES IN TERMS OF MARKET SIZE +44% #1 17/04/2017 © STRATX

BUFFALO STRIKES OUT IN GROWING BLUE BOX SALES

RED BOX SALES STILL HIGHER THAN BLUE BOX SALES

TEAM TOTAL SALES EVOLUTION #1

TWO IMITATIONS HAVE BEEN LAUNCHED BLUE CONSOLE SALES IN CURRENT YEAR ALL TEAMS HAVE CREATED A BLUE OCEAN ATTRACTIVE ENOUGH TO ATTRACT LOW COST IMITATORS INTO THE MARKET – THE SALES OF IMITATORS VARY 17/04/2017 © STRATX

BLUE PACK IS LAUNCHED BY LOW COST COMPETITOR ALL TEAMS HAVE CREATED A BLUE OCEAN ATTRACTIVE ENOUGH TO ATTRACT LOW COST IMITATORS INTO THE MARKET – THE SALES OF IMITATORS VARY 17/04/2017 © STRATX

BLUE BOX EBIT EVOLUTION (IN M$) #1 ONLY BUFFALO HAS POSITIVE BLUE BOX EBIT 17/04/2017 © STRATX

RED BOX EBIT EVOLUTION (IN M$) COUGAR HAS VERY HIGH RED BOX EBIT #1 17/04/2017 © STRATX

BLUE BUDDIES TOTAL EBIT EVOLUTION #1 17/04/2017 © STRATX

BLUE BUDDIES SHARE PRICE INDEX #1

AVERAGE SPI SCORES AT END OF ROUND BLUE-2 Buffalo Cougar & Albatross Eagle 17/04/2017 * The results on this chart have been compiled by analyzing all BOSS courses run in 2008 and 2009 © STRATX 26

ROUND BLUE-2 KEY LEARNING POINTS I will first briefly introduce the STRATX Company. 17/04/2017 © STRATX

LEARNING POINTS FROM ROUND BLUE-2 Searching for commonalities across noncustomer groups allows organizations to see how to collapse Strategy Canvases and capture a far greater share of noncustomers than would creating a strategic offering for a single large group of noncustomers By reconstructing market boundaries and focusing on the Four Actions Framework of Eliminating, Reducing, Raising and Creating, organizations are able to achieve differentiation and low cost – these are no longer tradeoffs. In reality, organizations may not get the Strategy Canvas right the first time, due to the traditional practice of most companies of ‘Raising’ and ‘Reducing’ their offering level along the traditional factors of competition. The importance of Strategic Pricing and the price corridor of the mass is highlighted. It is crucial set the right strategic price at the first moment of market entry to capture the mass of buyers. There are many cases where the failure to price strategically has led to demand remaining locked, and a lack of pressure on new entrants and competitors – e.g. the first mobile phones, the X-box. Organizations will traditionally price too high when they have an innovation of any sort believing that their innovation has created a differentiation desired in the market. 17/04/2017 © STRATX