BLUE OCEAN STRATEGY OF APPLE

FROM iPod to iPad

Presented ByManuBalajiKowshikMayur

BLUE OCEAN STRATEGY

This new thinking makes it possible for innovative entrepreneurs to increase their chances for success and the extent of potential success. It includes:

• Insights about the innovative positioning of new ventures; and • Tools to make it possible.

To help you:

• Modify your business model, • Re-orient your product or service, • Change the borders of your target market, and • More effectively carry out your venture.

CUSTOMER ORIENTATION

• A distinctive aspect of Blue Ocean Strategy is that:

• instead of looking to serve existing prime customers in the existing market place,

- it is largely concerned with modifying a

product or service offering, and

- establishing new market space by targeting

dissatisfied customers and non-customers,

the potential customers for the new venture.

THE POTENTIAL IMPACT OF BLUE OCEAN

What interests us most about Blue Ocean is that it gives you a path to find and implement a winning formula for your business model:

• with improved understanding of the way that markets work; along with• methods of analysis, and tools for strategy implementation

• Its principal objective is to make it possible to reconfigure and implement a new business model in order:

• to leave a highly-contested market (a “Red Ocean” with blood in the water); and

• create new market space without effective competition (a “Blue Ocean”).

• The Blue Ocean approach makes use of a process called “value innovation” in which you:

• look at the elements of a product or service offering on which ventures in the industry compete, and

• determine elements that can be: – Eliminated, – Reduced, – Improved, and – Added

THE KEY TO BLUE OCEAN STRATEGY

RESEARCHING THE HISTORY OF“BLUE OCEAN CREATION”

• Data: 150 blue ocean creations, more than 30 industries, over 100 years (1880-2000)

• Hotel, cinema, retail, airline, energy, computer, broadcasting, home construction, automobile, steel manufacturing, chemicals, cosmetics, software, etc.

• Variables considered: industrial, organizational, strategic

Reference From : www.hbs.org

Business Launch

Revenue Impact

Profit Impact

Red OceansMarket-Competing Business Launches

Blue OceansMarket-Creating Business Launches

Companies Have Achieved Substantially Higher Returns from Investments in Blue Oceans

7

Red Ocean Versus Blue Ocean Strategy

Create uncontested market space

Blue Ocean StrategyRed Ocean Strategy

Compete in existing market space

Beat the competition

Exploit existing demand

Make the value-cost trade-off

Make the competition irrelevant

Create and capture new demand

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 with its strategic choice of

differentiation and low cost

Blue Ocean

Strategy

Value Innovation: The simultaneous pursuit of differentiation and low cost

Eliminate

Reduce

Raise

Create

Cost

Buyer Value

Value

Cost

Four Actions Framework for Apple

EliminateEliminate RaiseRaise

ReduceReduce CreateCreate

Difficulty in text messaging-use keyboard instead

•Carrying separate devices: phone, MP3, PDA

•Requirement to always hook up to PC

•Difficult user interface-make touch screen

• Device to download music directly

• Hold more songs

• Simple user interface, no user manual required

• Sleek design

• User interface & improve navigation

• Hold more music

• Applications-games, money management, news, etc.

• Wireless internet on phone

The Six Conventional Boundaries of Competition

To Creating Across

From Competing

Within

Industry

Strategic group

Buyer group

Scope of product or service

offeringFunctional-emotional

orientation of an industry

Time

Six Paths to Blue Ocean Strategy

6 PATHS: Allows Exploration Outside of Traditional Boundaries

Path 6 - TimeWhat trends have a high probability of impacting your industry, are

irreversible, and evolving in a clear trajectory? How will these trends impact your industry? Given this, how can you open up

unprecedented customer utility?Apple Music, Cisco Systems, CNN,

HBO’s “Sex and the City”

Path 6 - TimeWhat trends have a high probability of impacting your industry, are

irreversible, and evolving in a clear trajectory? How will these trends impact your industry? Given this, how can you open up

unprecedented customer utility?Apple Music, Cisco Systems, CNN,

HBO’s “Sex and the City”

Path 1 - IndustryWhat are the alternative industries to your industry?

Why do buyers trade across to them?NTT DoCoMo, Federal Express, Southwest Airlines, NetJets

Path 1 - IndustryWhat are the alternative industries to your industry?

Why do buyers trade across to them?NTT DoCoMo, Federal Express, Southwest Airlines, NetJets

Path 2 – Strategic GroupWhat are the strategic groups in your industry?

Why do buyers trade up for the higher group, and why do they trade down for the lower one?

Polo Ralph Lauren, Curves, Sony Walkman, Toyota Lexus

Path 2 – Strategic GroupWhat are the strategic groups in your industry?

Why do buyers trade up for the higher group, and why do they trade down for the lower one?

Polo Ralph Lauren, Curves, Sony Walkman, Toyota Lexus

Path 3 - Buyer GroupWhat is the chain of buyers in your industry?

Which buyer group does your industry typically focus on?If you shifted the buyer group of your industry,

how can you unlock new value?Novo Nordisk, Bloomberg Terminals, Canon Copiers, Philips

Alto

Path 3 - Buyer GroupWhat is the chain of buyers in your industry?

Which buyer group does your industry typically focus on?If you shifted the buyer group of your industry,

how can you unlock new value?Novo Nordisk, Bloomberg Terminals, Canon Copiers, Philips

Alto

Path 4 - Scope of product or service offeringWhat is the context in which your product or service is used?

What happens before, during, and after? Can you identify the pain points? How can you eliminate these pain points through a

complementary product or service offering?Borders and Barnes & Noble, Dyson Vacuum Cleaners, Kinépolis

Kiné-kids, Zenick Salick’s Cancer Centers

Path 4 - Scope of product or service offeringWhat is the context in which your product or service is used?

What happens before, during, and after? Can you identify the pain points? How can you eliminate these pain points through a

complementary product or service offering?Borders and Barnes & Noble, Dyson Vacuum Cleaners, Kinépolis

Kiné-kids, Zenick Salick’s Cancer Centers

Path 5 - Functional-emotional orientation of an industryDoes your industry focus on functionality or emotional appeal? If

you compete on emotional appeal, what elements can you strip out to make it functional? If you compete on functionality, what

elements can be added to make it more emotional?Starbucks, QB House, Direct Line Group, Pfizer’s Viagra

Path 5 - Functional-emotional orientation of an industryDoes your industry focus on functionality or emotional appeal? If

you compete on emotional appeal, what elements can you strip out to make it functional? If you compete on functionality, what

elements can be added to make it more emotional?Starbucks, QB House, Direct Line Group, Pfizer’s Viagra

PMS MAP

Formulation Risks

Execution Risks

Formulation Principles

Execution Principles

Minimizing Risks & Maximizing Opportunities in Formulating and Executing Blue Ocean Strategy

Focus on the big picture, not the numbers

Search Risk

Reach beyond existing demand

Get the strategic sequence right

Overcome key organizational hurdles

Build execution into strategy

Reconstruct market boundaries

Planning Risk

Scale Risk

Business Model Risk

Organizational Risk

Management Risk

Purple Ocean Strategy

• Purple Ocean Strategy Just as Blue Ocean Strategy states that a Red ocean Strategy (Competitive Strategy) does not guarantee success for the firm

• Purple Ocean strategy also claims that Blue Ocean Strategy cannot guarantee the business success in the long run since the Blue Ocean strategy will finally turn Red.

Purple Ocean strategy

• The Purple Ocean strategy believes that in today’s business world organizations require both innovative ideas as well as a series of strategies to compete with rivalry and remain functional in the long term.

• Consequently, the name Purple Ocean strategy was initially adopted following the secondary colour generated by combining red and blue colours.

References

• www.hbs.org

THANK YOU