Summary of Lessons Learned Cole Bengford Weizhou Lin Jonathan Hoelzer

Strategies in Red vs. Blue Oceans Red vs. Blue Oceans. Strategies as a whole in Red creating Blue Oceans. What Strategies it mean for each of these companies

Blue From Red - 3M 3M’s Blue Strategy Corporate Strategy Customer satisfaction, commercial success, environmental, social and economic values. Continually Expand into new markets. Ex. Post it Notes to Military Headsets

Blue From Red Cont. - dyson Dyson’s Blue Strategy Invent Engineer quality improvements Value added via quality Quantity vs. Quality “Quantity has a quality all its own”

Strategy isn’t always Blue Strategy is just a large unifying and directional theme. It’s not a complete solution but a step in to right way. Dyson’s 5,127 prototypes 3M’s accident in Post it notes

Environmental Analysis – FS2 What is the Business Environment? All external influences that affect its decisions and performance So how do we organize all those influences? PEST analysis Simple yet systematic approach to identifying those factors that are likely to shape the competitive conditions within an industry Issues: High costs and information overload PoliticalEconomicSocialTechnological

Industry Analysis What is the Industry Environment? The core of the firm’s business environment is formed by its relationships with three sets of players: Customers, Suppliers, and Competitors In order to simplify the PEST Analysis for a micro-environment like an Industry Environment, we must analyze a more specific group of factors. The Industry Environment 1. Supplies 2. Competitors 3. Customers The National/International Economy TechnologyGovernment and PoliticsThe Natural EnvironmentDemographic StructureSocial Structure PEST Analysis

Industry Profit What determines the level of profit in an industry? The value of the product to the customers The intensity of the competition The bargaining power of the producers relative to their suppliers How does the company Sprouts match up to these profit defining factors? Affordable Healthy Scenic Fresh Less Expensive than Whole Foods*

Industry Attractiveness

Profitability Forecasting, Positioning, & Altering Structure To predict the future profitability of an industry, our analysis proceeds in three stages: 1.Examine how the industry’s current and recent levels of competition and profitability 2.Identify trends and determine if new players are seeking to enter 3.Identify how these structural changes will affect the five forces of competition and profitability in the industry Understanding the competitive forces that firm faces within and industry allows managers to position the firm where competitive forces are weakest Altering structure of an industry and increase profitability

The Strategy Canvas – BOS2 What is a Strategy Canvas? An analytic framework that is central to value innovation and the creation of blue oceans Serves two purposes: 1.Captures the current state of play in the know market space where the competition is investing 2.What customers receive from the existing competitive offerings on the market [yellow tail] Horizontal Axis Above-the-line marketing, refined image in packaging, & aging quality of wine Vertical Axis Low and High scores on the strategy canvas High meaning company offers buyers more; hence invests more

The Four Actions Framework A New Value Curve Reduce – which factors should be well below the industry’s standard? Create – which factors should be created that the industry has never offered Raise – which factors should be raised well above the industry’s standard? Eliminate – which of the factors that the industry takes for granted should be eliminated? The chart helps create blue oceans from within red oceans.

GoPro & The Eliminate- Reduce-Raise-Create Grid Eliminate - large cameras -equipment repair Raise -innovative qualities -versatility Reduce -price -difficult user interface Create -durability & waterproof -additional attachments Eliminate-Reduce- Raise-Create GoPro Developed a high-definition action cameras, often used in extreme-action videography Waterproof Small Ease-of-use Relatively inexpensive Multiple uses

Three Characteristics of a Good Strategy Focus  Every great strategy has focus, and a companies strategic profile, or value curve, should clearly show it Divergence  Divert from keeping up with the competition; be innovative Compelling Tagline  A good strategy has a clear-cut and compelling tagline  “The speed of a plane at the price of a car-whenever you need it” – Southwest Airlines

Reading the Value Curves The strategy canvas enables companies to see the future in the present. To achieve this, companies must understand how to read value curves. These factors should be considered:  A Blue Ocean Strategy  A Company Caught in the Red Ocean  Overdelivery Without Payback  An Incoherent Strategy  Strategic Contradictions  An Internally Driven Company

Ch. 3 BOS Chipotle’s Red Ocean Company differentiates itself by stepping out of the boundaries and creating a Blue Ocean Strategy Chipotle competes in the Fast Food Industry yet is thought of as ‘healthy’, producing their own Blue Ocean in this market Uses substitutes such as Organic Foods and Local Farms to produce food vs. using unhealthier resources Competes on price witj not only Fast Food chains but also other Mexican Restaurants; giving them a large market share

CH.3 BOS Chipotle & 3M Completely different companies but both successful on creating a Blue Ocean, expanding their Market Reach 3M competes in a variety of markets as the same with Chipotle Both Multi-Billion Dollar Companies Companies separate themselves from competitors with unique products

Ch.3 FOS Hyundai Multi-Billion Dollar Company Competes on Innovation Separates itself from competitors with reliable vehicles backed by long term vehicle warranties Strategic Leadership-Richard Smith Multi-National Company Employs Thousands Globally

FOS Cont Hyundai and 3M Multi-National/Billion Dollar Corporations Compete on Innovation Create a large market share by producing a Blue Ocean Market(Variety of Vehicles and Variety of Adhesives, Medical Equip etc..) Separate themselves from Competitors by developing strong Brand Recognition and Value of Products