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Blue Ocean Strategy An Small Business Case Study

I read “Blue Ocean Strategy” by Kim & Mauborgne recently & thought it was compelling. I thought I'd give u some excerpts fm the book & use my current start up as a case study 2 explain some of the Blue Ocean concepts.

 
 
zubin poonawalla
zubin poonawalla
PRLog - Nov. 8, 2010 - MUMBAI, India -- The theme of the book reminds me a lot of what my strategy professor from JBIMS used to talk about when he quizzed us on cases. He repeated over and over again that we should "watch our competitors, but never follow them" and that we should "play a different game on the same field as the competition." This professor used to stress that within marketplaces, conventional wisdom about the rules of competition build up and that over time, those rules become irrelevant to potential customers.
Blue Ocean Strategy Synopsis
Rather than summarize, I thought I would give you a few quotes that lay out the theme in the authors' words:
"The only way to beat the competition is to stop trying to beat the competition. In red oceans, the industry boundaries are defined and accepted, and the competitive rules of the game are known. In blue oceans, competition is irrelevant because the rules of the game are waiting to be set. ...The companies caught in the red ocean followed a conventional approach, racing to beat the competition by building a defensible position within the existing industry order. The creators of blue oceans, surprisingly, didn't use the competition as their benchmark. ...Instead of focusing on beating the competition, they focus 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 innovation is based on the view that market boundaries and industry structure are not 'given' and can be reconstructed by the actions and beliefs of industry players. …To fundamentally shift the strategy canvas of an industry, you must begin by reorienting your strategic focus from competitors to alternatives, and from customers to non-customers of an industry. As you shift your strategic focus from current competition to alternatives and non-consumers, you gain insight into how to redefine the problem the industry focuses on and thereby reconstruct buyer value elements that reside across industry boundaries"

The first example in "Blue Ocean Strategy" is Cirque de Soleil. The criteria/boundaries/rules for the circus industry that were "taken for granted" for decades included: animal shows, star/famous performers, multiple shows at the same time (i.e. 3 rings), and pushing concession sales. Rather than keeping a high emphasis on all the existing rules and then creating new ones, they either eliminated or reduced many of those rules and created a bunch of new ones. In the process, they increased value for their target market while lowering their own costs.

A key thing they did at Cirque de Soleil was that they looked across market boundaries to alternatives to the circus. It ended up being part circus and part theatre. Rather than focus on the market boundaries, they focused on the job the customer was hiring for -- in this case, it was adults looking for sophisticated entertainment. Another key thing they did was not targeting the existing market (i.e. children), rather they targeted non-consuming adults. Blue ocean strategy is all about creating and capturing net new demand by ignoring boundaries defined by traditional competitors.

The authors are big on stressing that new technology rarely turns into a great company. They state that unless the technology makes buyers lives dramatically simpler, more convenient, more productive, less risky, or more fun/fashionable, it will not attract the masses.
Blue Ocean Strategy Framework
The Blue Ocean Strategy authors propose a graphical framework for helping readers understand the book and for helping businesses create blue oceans of their own. Here's an example of the tool applied to Southwest Airlines, who are an interesting case. Southwest entered a terrible marketplace that a Porter five forces analysis would have said was a blood bath. The criteria/rules/boundaries of the airline industry are listed along the x-axis. Most of the major airlines played the same game with only the slightest of nuances. Southwest eliminated many of the rules/criteria in the industry, reduced focus on some of the rules below industry standard, raised focus on some of the rules above industry standard, and created a new rule of their own. The way they were able to do that was they targeted non-consumers (family/shorter trips v. business trips) and they looked across industry boundaries at alternatives (cars v. planes) as their competition v. looking at traditional airlines. Only by de-emphasizing some of the existing rules were they able to lower costs enough to compete in this new market.

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