1. Blue Ocean Strategy W. Chan Kim Renee Mauborne
Creating New Oceans
Blue Ocean Strategy
W. Chan Kim
Renee Mauborne

2. New Market Space Cirque du Soleil Red Oceans vs. Blue Oceans
Red Oceans- represent all the industries in existence today
Blue Oceans- represent the industries NOT in existence today.

3. Red Oceans Have a defined set of rules and practices
Competition tries to outperform one another.
The market space gets crowded and profit and margins decrease.
Production becomes a commodity, “cutthroat competitions turn the red ocean bloody.”

4. Blue Oceans “untapped market space”
Creates its own demand with higher margins and higher risk
Higher growth rates
NO RULES because they are the only player.
“Most are created from and within red ocean by expanding existing industry boundaries.”
Uncharted oceans, instead of competing in less risky red oceans.

5. Cirque du Soleil http://www.cirquedusoleil.com/

6. The Continuing Creation of Blue Oceans
New Industries emerge because of new technologies and further education of red ocean dynamics.
Examples- telegraph to telephone to smart cell phones.
Standard Industrial Classification system was replaced by North America Industry Classification Standard system.

7. The Continuing Creation of Blue Oceans
STRATEGIC THINKING with Red Oceans
Find the factors of constraints in order to succeed, for example, benchmarking, or specialization in a particular field.
Gaining high ground
Price wars decrease profits

8. The Impact of Creating Blue Oceans

9. The Impact of Creating Blue Oceans

10. The Impact of Creating Blue Oceans

11. The Rising Imperative of Creating Blue Oceans
Technological Advances
Increase supply and decrease demand
Mature Markets, decrease world population in Developed Markets
Globalization
Trade Barriers
Communications

12. The Rising Imperative of Creating Blue Oceans
Substitution, brands becoming more similar and selection is based on price.
Differentiating products is more difficult.
Management is increasingly changing focus to Blue Ocean Strategy.

13. From Company and Industry to Strategic Move
The Fairytale of Industry Leaders does not always have a happy ending.
Example
GM Industry Leader in the 70-80’s and loss in market share has created a gruesome ending.
Circuit City

14. From Company and Industry to Strategic Move
Strategic Move is the best unit of analysis in studying the roots of profitable growth, not by company nor the industry.
The creation and capturing of blue oceans were achieved by diverse industries, organizations, firms, and managers.

15. Value Innovation: The Cornerstone of Blue Ocean Strategy
The creation of value or the perception of value has encouraged profit growth
Low cost strategy, competition based strategy, or value based strategy
Economies of scale.

16. Red Ocean VS Blue Ocean Strategy
Red Ocean Strategy
Blue Ocean Strategy
Compete in existing market space
Create uncontested market space
Beat the competition
Make the competition irrelevant
Exploit existing demand
Create and capture new demand
Make the value-cost trade-off
Break the value-cost trade-off
Align the whole system of a firm’s activities with its strategic choice of differentiation or low cost
Align the whole system of a firm’s activities in pursuit of differentiation and low cost

17. Formulation and Executing Blue Ocean Strategy
Formulating Principles
Risk factors each principles attenuates
Reconstruct market boundaries
Search risk
Focus on the big picture, not the numbers
Planning risk
Reach beyond existing demand
Scale risk
Get the strategic sequence right
Business Model Risk
Execution Principles
Risk factor each principle attenuates
Overcome key organizational hurdles
Organizational Risk
Build execution into strategy
Management Risk