Blue Ocean Latest

8/8/2019 Blue Ocean Latest

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Presentation

By

Sannareddy karthik

Sravan Kumar BPhani Kumar A V

Harish AnreddyPGP/FW/09-11/B2 (FINANCE)


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About the Founders: Chan & Renee

W. Chan Kim

The Boston Consulting Group

Bruce D. Henderson Chair

Professor of Strategy and

International Management

Rene Mauborgne

The INSEAD Distinguished

Fellow and Professor of Strategy

and International Management


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Rewind..

100 Years Back Who Knows About

Automobiles, Music Recording,

Aviation, Management Consulting. 30 Years Back Mutual Funds , Bio Technology,

Cellular Phones ,Coffee Bars , Package

Delivery.


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Blue Ocean

A blue ocean is a market space that is

created by identifying an unserved set Of

customers, then delivering to them a

Compelling new value proposition.


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Two worlds


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The rising Imperative ofCreating Blue Oceans

Supply exceeds demand.

Globalization.

Accelerated commoditization of products and services.

Increasing price wars.

Shrinking profit margins.

Brands are becoming more similar.

.people select based on price


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BOS Logic: The Core Principles

Reconstruct Market

Boundaries

overcome believes.

Reach beyond

existing Demand go for uncontested space.


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BOS Logic: Reconstruct market boundaries

IndustryFocuses on rivals within its

industry

Strategic GroupFocuses on competitive position

within strategic group

Buyer GroupFocuses on better serving the

buyer group

Scope of Product

and Service

Offerings

Focuses on maximizing the value

of product and service offerings

within the bounds of its industry

Functional-

emotionalOrientation of an

Industry

Focuses on improving price-

performance with the functional-emotional orientation of this

industry

Time/TrendsFocuses on adapting to external

trends as they occur

Looks across alternative

industries

Looks across strategic groups

within its industry

Redefines the buyer group of the

industry

Looks across to complementary

product and service offerings that

go beyond the bounds of its

industry

Rethinks the functional-emotional

orientation of its industry

Participation in shaping external

trends over time

Boundaries ofCompetition

Head-to-HeadCompetition

CreatingNew Market Space


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BOS Logic: The Core Principles

Reconstruct Market

Boundaries

overcome believes.

Reach beyond

existing Demand

go for uncontestedspace.


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BOS Logic: Reach beyond existing demand

Core Customer Noncostumer

Soon-to-be-NC Refusing Customer


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Differences between

Blue and Red ocean


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How to create value curve?


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value innovation


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When to go for value innovation?

The companies caught in the red ocean, racing to

beat the competition by building a defensible

position within the existing industry order.

The creators of blue oceans, surprisingly, didnt

use th

e competition as th

eir bench

mark


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Value innovation

value innovation is instead of focusing on

beating th

e competition , you focus on makingthe competition irrelevant by creating a leap

in value for buyers and your company, there

by opening up new and uncontested market

space


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Value innovation

Value without innovation-

value creation on an

incremental scale Innovation without value -

technology driven buyers

are ready to accept and payfor.


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Examples

Deccan Airlines: They introduced Everyday Low Pricesconcept in Indian Airlines. The ticket were as low as $10. So they

entered a space with no competition in airlines at that point of

time. Now its like a red ocean

Skin Care in India: When FMCG companies in India saw that

the personal - skin care market is getting saturated and there are

many players competing, they entered in service industry. Marico

started Kaya Skin Clinic. Here the margins are more and players

are less.

Reva electric car: came out the battle of Automobile giants fora more environmentally and fuel efficient car.


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Himalaya Drugs: They created an entirely new market of

consumers who prefer medically proven herbal medicine.

Following their lead, all FMCG majors came out with their

own little herbal range

Ford: assembly line replaced skilled craftsmen with ordinary

unskilled laborers, who worked one small task faster and more

efficiently, cutting the time to make a Model T from twenty-

one days to four days and cutting labor hours by 60 percent .


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Get the Strategic Sequence right


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3 Tiers of Noncustomers

First Tier: Soon-to-be noncustomers who are onthe edge of your market, waiting to jump ship.

Second Tier: Refusing noncustomers whoconsciously choose against your market.

Third Tier: Unexplored noncustomers who are inmarkets distant from yours.


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BOS Logic: Get the Strategic Sequence right

Buyer utility

Is there exceptional buyer

utility in your business idea?

Adoption

What are the adoption hurdles in

actualizing your business idea?

Are you addressing them up front?

Price

Is your price easily accessible to the

mass of buyers?

Cost

Can you attain your cost target to

profit at your strategic price?

A commercially viable BlueOcean Strategy

YES

YES

YES

YES

No Rethink

No Rethink

No Rethink

No Rethink


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The Buyer Utility Map


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Buyer utility



Adoption




Price


mass of buyers?

Cost




YES

YES

YES

YES

No Rethink

No Rethink

No Rethink

No Rethink


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Buyer utility



Adoption




Price


mass of buyers?

Cost




YES

YES

YES

YES

No Rethink

No Rethink

No Rethink

No Rethink


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The Profit Model ofBlue Ocean

Strategy

Streamlining the process

Partnering Outsourcing


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The Four Organizational Hurdles to

Strategy Execution


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Cognitive Hurdle That blinds employees fromseeing that radical change is necessary

Resource hurdle that is endemic in firms;

Motivational hurdle that discourages anddemoralizes staff

Political hurdle of internal and external

resistance to change


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companys three main stakeholders

Employees

Its business partners The general public.


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