Blue Ocean Strategy

Go where the profits and growth are - and where the competition isnt
 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 firms Align the whole system of a firms
activities with its strategic choice of activities in pursuit of differentiation and
differentiation or low cost low cost
http://www.blueoceanstrategy.com Kim & Mauborgne 2005
 Researching the History of Blue
Ocean Creation

Data: 150 blue ocean creations, more than 30

industries, over 100 years (1880-2000)
hotel, cinema, retailing, airline, energy, computer, broadcasting, home
construction, automobile, steel manufacturing, chemicals, cosmetics,
software, etc.

Variable considered: industrial, organizational

strategic variables

http://www.blueoceanstrategy.com Kim & Mauborgne 2005

 Six Paths to Blue Ocean Strategy
The six conventional boundaries of competition
Industry

Strategic group

Buyer group To
From
Competing Creating
Scope of product or service
Within offering
Across
Functional-emotional
orientation of an industry

Time

http://www.blueoceanstrategy.com Kim & Mauborgne 2005

 http://www.blueoceanstrategy.com Kim & Mauborgne 2005

Result: Strategy Canvas of [yellow tail]

hi

Premium Wines

[yellow tail]
offering level

Budget Wines

lo
Use of enological
Above-the- Vineyard
Price terminology and
line
Aging
prestige
Wine Wine Easy Ease of Fun &
distinctions in wine
communication
marketing
quality
and legacy
complexity range drinking selection Adventure
 The Four Actions Framework
Reduce
Which factors
should be reduced
well below the
industrys
standard?

Eliminate Create
Which of the Which factors
factors that the should be created
industry takes for that the industry
granted should be has never offered?
eliminated ?

Raise
Which factors
should be raised
well above the
industrys
standard?
http://www.blueoceanstrategy.com Kim & Mauborgne 2005
 Minimizing Risks and Maximizing
Opportunities in Formulating and
Executing Blue Ocean Strategy
Formulation Principles Formulation Risks

Reconstruct market boundaries

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 Execution Risks

Overcome key organizational hurdles Organizational Risk

Build execution into strategy Management Risk

http://www.blueoceanstrategy.com Kim & Mauborgne 2005

http://www.blueoceanstrategy.com
Kim & Mauborgne 2005