Blue Ocean StrategyChapter 1- Creating Blue Oceans

Team 3 – Hayley Jacobs, Paige Adams, Dan Lawson, Gage Mitchell, Laura Freeman,

Haley Smith

What are blue oceans?

How do you create a blue ocean?

Why are blue oceans important?

What is value innovation?

Learning Objectives

What are blue oceans?

“Creating uncontested new market space that makes the competition irrelevant.”

New Market SpacesBlue

Untapped market space

Demand creation

Opportunity for highly profitable growth

Most blue oceans are created from within a red ocean

Little practical guidance exists on how to create them

Risky from a business standpoint

Red

Represents all industries already in existence

Industry boundaries are defined and accepted

Competitive rules of the game are known

Companies try to outperform rivals

The more competition there is, the slower growth becomes

Will always be necessary

Creation of Blue Oceans Blue oceans have evolved over time

Standard Industrial Classification (SIC) system vs. North American Industry Classification Standards (NAICS) system

Ten sectors into twenty

Service sector expanded into seven

What Blue Oceans have been created in our lifetime?

Rising Imperative of Creating Blue Oceans Price vs. Brand Loyalty

Nike vs. Adidas

Technology innovation leads to supply exceeding demand

Shrinking profit margin

From Company and Industry to Strategic Move

• In Search of Excellence, Built to Last, and Creative Destruction• “Stable excellent visionary companies” tend to fall quickly

• Strategic move: a move that delivers goods and services that opens and captures new market spaces

• Strategic move is the unit of analysis for blue oceans

• Blue oceans are in all industries• Not predominantly in any one industry according to the

authors

Value InnovationFocus on making the competition irrelevant by creating a leap in value for buyers and your company, thereby opening up new and uncontested market space.

Value without Innovation is not sufficient

Innovation without Value is not considerate of buyers ISQS 3344 - Tucker: The Man and His Dream

What to Consider in Value Innovation

The whole system Differentiation and Low Cost – Blue Oceans use

both strategies Apple vs. HP Cost

Buyer Value

ValueInnovation

Structuralist vs. Reconstructionist

• Standard view of business

• Contains standards and guidelines

• Create new “best practice”

• Breaks existing value-cost trade-off

Conclusion

• Blue Ocean Strategy will always contain both opportunity and risk

• Managers are concerned about the risks and don’t take the opportunity

• Red oceans will continue even as Blue Ocean Strategy becomes urgent

Questions?