1. Jade Black Lauren Heldreth Taylor Hutcherson Roger May Kody Roach Blue Ocean Strategy Conclusion: The Sustainability and Renewal of Blue Ocean Strategy

2. Introduction Creating a blue ocean strategy is not a static achievement but a dynamic process As the company and early imitators succeed and expand the blue ocean more companies eventually jump in Question: When should a company reach out to create another blue ocean?

3. Barriers to Imitation A blue ocean brings barriers to imitation; some being operation and others cognitive A value innovative move does not make sense based on conventional strategic logic EX: CNN Brand image conflict prevents companies from imitating a blue ocean strategy. EX: The Body Shop

4. Barriers To Imitation Natural monopoly blocks imitation when the size of a market cannot support another player EX: Megaplex in Brussels Patents or legal permits block imitation

5. Barriers to Imitation Cost Advantages: High volume by value innovation Ex: Apple ‘i’ products helped discourage imitation for awhile Network externalities: the more customers, the more attractive a company looks Ex: ebay – many buyers/sellers; hard to get them to move to a potential imitator

6. Barriers to Imitation Politics and Culture: Imitation often requires companies to make changes to existing business practices and culture Ex: Southwest (offers speed of travel with cost/flex. of driving) Would mean major revisions in routing, training, marketing, and pricing Brand Buzz: High leap in value leads to loyal followers Ex: Apple products (“I’m a Mac” campaign)

7. Apple’s Oceans: The Technology Industry Drowning in a red ocean Moving to a blue ocean Blue oceans turn to red oceans What is the next step? Make another blue ocean (try to incorporate the barriers to imitation)

8. Eventually every blue ocean strategy will be imitated. In an effort to hold on to customer base a firm can become focused on the competition instead of the buyer. Apple in late 80’s. To avoid this trap a company needs to monitor their value curves. When a company’s value curve still has focus, divergence and a compelling tagline you should focus on expanding it and not re-innovating. When to Value-Innovate Again

9. As long as value curve still good a company should focus on operation improvements, geographic expansion, economies of scale and market coverage. As more competitors enter the market and rivalry intensifies a blue ocean will turn red. This can be seen by plotting you and your competitions value curves on a strategy canvas. As they converge a company should start looking for a new blue ocean. When to Value-Innovate Again

10. Blue and Red Oceans Long-run profitability growth is a result of value-innovation Create a blue ocean when competitors aggressively imitate and credibly converge value curves Go beyond competing for market share and create blue oceans

11. Blue and Red Oceans Blue and Red oceans have always coexisted “Great” businesses can succeed in both oceans Good companies must master their strategies for both oceans to become Great companies To create a blue ocean a company must make competitors in the red ocean irrelevant Via value-innovation