Transcript Blue Ocean Strategy

Blue Ocean Strategy
How to create
uncontested market space
and make the competition irrelevant
Katharina BOST
12/06/2006
About the Founders: Chan & Renee
W. Chan Kim
• The Boston Consulting Group
Bruce D. Henderson Chair
Professor of Strategy and
International Management
Renée Mauborgne
• The INSEAD Distinguished
Fellow and Professor of Strategy
and International Management
Two worlds …
Two worlds …
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
strategic firm's activities with
its choice of differentiation or
low cost.
Align the whole system of a
firm's activities in pursuit of
differentiation and low cost.
VALUE INNOVATION
The rising Imperative of Creating Blue Oceans
• supply exceeds demand
• globalization
• accelerated commoditization of products and services
• increasing price wars
• shrinking profit margins
• brands are becoming more similar
select based on price
• ...
BOS Logic: The Core Principles
Reconstruct Market
Boundaries
… overcome believes.
Reach beyond
existing Demand
… go for uncontested space.
Get the strategic
sequence right
… value [innovation] first.
COST
VI
VI
VALUE
BOS Logic: Reconstruct market boundaries
Boundaries of
Competition
Industry
Strategic Group
Buyer Group
Head-to-Head
Competition
Focuses on rivals within its
industry
Looks across alternative
industries
Focuses on competitive position
within strategic group
Looks across strategic groups
within its industry
Focuses on better serving the
buyer group
Redefines the buyer group of the
industry
Focuses on maximizing the value
Scope of Product and
of product and service offerings
Service Offerings
within the bounds of its industry
Functional-emotional
Orientation of an
Industry
Time/Trends
Creating
New Market Space
Focuses on improving priceperformance with the functionalemotional orientation of this
industry
Focuses on adapting to external
trends as they occur
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
BOS Logic: The Core Principles
Reconstruct Market
Boundaries
… overcome believes.
Reach beyond
existing Demand
… go for uncontested space.
Get the strategic
sequence right
… value [innovation] first.
COST
VI
VI
VALUE
BOS Logic: Reach beyond existing demand
Core Customer
Soon-to-be-NC
Noncostumer
Refusing Customer
BOS Logic: The Core Principles
Reconstruct Market
Boundaries
… overcome believes.
Reach beyond
existing Demand
… go for uncontested space.
Get the strategic
sequence right
… value [innovation] first.
COST
VI
VI
VALUE
BOS Logic: Get the Strategic Sequence right
Buyer utility
Is there exceptional buyer
utility in your business idea?
No  Rethink
YES
Price
Is your price easily accessible to
the mass of buyers?
No  Rethink
YES
Cost
Can you attain your cost target to
profit at your strategic price?
No  Rethink
YES
Adoption
What are the adoption hurdles in
actualizing your business idea?
Are you addressing them up
front?
No  Rethink
YES
A commercially viable Blue Ocean Strategy
The case of Accor's Formule 1
The value curve of Formule 1 in the French Low Budget Hotel Industry
References
• W. Chan Kim, Renée Mauborgne, Blue Ocean Strategy, 2005,
Havard Business School Press.
• http://www.blueoceanstrategy.com
• HANDELSBLATT, Donnerstag, 06. Oktober 2005,
Mit Nichtkunden neue Märkte finden.
• http://www.hotelformule1.com
Thank you for your
attention!!!