1. Chapter 10: Renew Blue Oceans
By: Gloria Solorzano and Luis Hernandez, Robert Smith
PepsiCo

2. Barriers to Imitation
When a company achieves a blue ocean, soon imitators will begin to appear
A blue Ocean strategy bring with it considerable barrier to imitation that effectively prolong sustainability
Imitation Barriers to Blue Ocean strategy:
Alignment Barrier
Cognitive and Organizational Barrier
Brand Barrier
Economic and Legal Barrier

3. Alignment Barrier
Alignment of the value, profit, and people propositions around both differentiation and low cost builds sustainability and hence formidable barrier to imitation
The 3 essential Propositions:
Value: developing an offer that attracts the buyer
Profit: creating a business model that allows the company to make money through it’s offering
People: motivating the people that work with or for the company to execute the strategy

4. Cognitive and Organizational Barrier
Value innovation does not make sense to a company’s conventional logic
Imitation often requires significant organizational change, delaying their commitment to their blue ocean strategy
Changes occur throughout years, could potentially cost overwhelming amounts of money, time and effort

5. The Brand Barrier
Blue Ocean strategy may conflict with other companies brands image
Companies that value- innovation earn brand buzz and a loyal customer following that tends to shun imitators
Even strong marketing tactics by imitators rarely have strength to overshadow the innovators

6. The Economic and Legal Barrier
Natural monopoly: THe market often cannot support a second player
HIgh volume leads to rapid cost advantage for the value innovator, discouraging followers from entering the market
Network externalities discourage imitation
Patents or legal permits block imitation

7. PepsiCo Imitation Barriers
PepsiCo definitely deals with the inevitable overflow of imitators
However, the PepsiCo is able to keep competitive advantage within its imitators by having brand barriers, legal barriers and alignment barriers
PepsiCo was able to expand and take priority advantage to consumers worldwide
PepsiCo is able to keep loyal customers by holding the beloved brand, Pepsi, Frito-Lay, Quaker, etc.
It also constantly stay competitive with price and in control of its value to the customer

8. Renewal
Understanding the process of renewal is key to ensure that the creation of blue ocean is not a one-off occurrence but is a repeatable process in the company
Almost every blue ocean will be imitated
Implementing offenses to defend it’s hard worked customer base
Monitoring value curves to see when renewal is needed
Renewal is needed to avoid the trap of competing and to keep the company from going into a red ocean

9. Renewal at the Individual Business Level
When a company's value curve still had focus, divergence and a compelling tagline it should resist the temptation to value- innovate the business again
Instead company should focus on lengthening, widening and deepening the company
Focus on Operational improvements and geographical expansion in order to achieve maximum economies of scale and market coverage
Dominate blue ocean imitators as long as possible

10. Renewal at the Corporate Level for a Multibusiness Firm
For companies that have a portfolio of offerings as opposed to a single business offering the pioneer-migrator-settler (PMS) map helps with the renewal of those business portfolios.
Chapter 4. Pioneers value innovation, Migrators value improvements, Settlers value imitation or are me-too businesses.
By using the PMS map, executives can see how their current portfolio of the business is doing, how it’s shifted over time, and when it is time to create a new blue ocean to renew.
Maximizing growth prospect. This is done by having a balance between pioneers for future growth and migrators and settlers for cash flow.
When pioneers become migrators and then settlers. Strong profitable growth is maintained when a company has a new blue ocean ready to launch.

11. Apple’s portfolio of businesses
Blue ocean strategic moves made apple America’s most admired and valuable company within a decade.
iMac, iPod, iTunes Store, iPhone, and iPad were all created by different business units within the company but shared the same strategic goal. To reconstruct the existing market and create new demand.
Maintained strong profitable growth by having a successful balance between their pioneers, migrators, and settlers.

12. Apple’s portfolio of businesses
In 1998 profitable growth increased when they simplified their Macintosh product range and launched their value-innovative iMac. First colorful and friendly desktop computer.
Followed this up with the launch of the iPod. Which revolutionized the digital music market and created a new blue ocean.
Two years later iTunes Music Store was launched along with the iPhone and iPad.
When the iPod or any other apple product started to become imitated, Apple would rapidly increase a range of iPod varients. iPod mini, shuffle, nano, touch. Kept a competitive advantage.

13. Apple’s PMS Map Pioneers Migrators Settlers 1997 2003 2008 2014 iPod
iPod
iTunes
Store
App
Store
iPhone
iTunes Store
iPad
App Store
iTunes
Macintosh
Macintosh
iPod
Macintosh
iPhone
Ipod

14. Pepsi Co. Started with an individual level mindset.
Soon became corporate level with a wider portfolio.
Created new blue oceans throughout the years.