Chapter 9 Team 1 Section:092 Time: 4:30-6:50 Members: Daniel, Jacob, & Seth Book: Blue Oceans Date: 06/15/2010

Chapter 9  Conclusion Sustainability & Renewal Team 1 Daniel, Jacob, & Seth Blue Oceans Strategy

Barriers to Imitation

Natural monopoly blocks imitation when the size of a market cannot support another player ◦ Belgian cinema, Kinepolis, created first megaplex in Europe in Brussels ◦ Highly successful ◦ No imitators because Brussels cannot support a second megaplex

Barriers to Imitation Patents and legal permits can block imitation High volume generated by a value innovation leads to rapid cost advantages Network externalities also block companies from easily and credibly imitating a blue ocean strategy

Barriers to Imitation Politics can kick in and delay the adoption of the blue ocean strategy When a company offers a leap in value, it rapidly earns buzz and loyal following ◦ Ex: iPhone

Barriers to Imitation Barriers to imitation are high Very rarely is there rapid imitation of blue ocean strategy Must get each strategic element right, as well as aligning them in an integral system to deliver value innovation

When to Value-Innovate Again

When to value-innovate again? Eventually every blue ocean strategy will be imitated ◦ Typically you launch offenses to keep market share ◦ Fall into the trap of competing to beat the competition ◦ Overtime your competition becomes the center of your strategy

When to value-innovate again? Monitor value curves on your strategy canvas (focus, divergence, tagline) ◦ This will signal when to value-innovate or when to stay put Stay in blue ocean for as long as possible ◦ Lengthen, widen, and deepen your foothold in the blue ocean through operational improvements and geographical expansions

When to value-innovate again? When ocean turns red (supply>demand) ◦ Chart your value curve and your competitor’s value curves on the strategy canvas. When you visually see the degree of imitation and convergence on your value curve, blue ocean is turning red ◦ Value-innovate to create a new blue ocean

When to value-innovate again? Overall, to obtain high performance in the overcrowded business world, companies should go beyond competing for market share to creating blue oceans and making the competition irrelevant