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SM Assignment 5
SM Assignment 5
SM Assignment 5
Gaurav Sonkeshariya
191131
Q1.Explain the concept and principles of Blue Ocean strategy and the principle differences
between Red and Blue Ocean Strategy
Principles of Blue Ocean Strategy are the main principles that guide companies
through the formulation and execution of their Blue Ocean Strategy in a systematic
risk minimizing and opportunity maximizing manner.
Value Innovation is the strategic logic underpinning blue ocean strategy. Value
innovation is the simultaneous pursuit of differentiation and low cost. Value
innovation focuses on making the competition irrelevant by creating a leap of
value for buyers and for the company, thereby opening up new and uncontested
market space. Because value to buyers comes from the offering’s utility minus its
price, and because value to the company is generated from the offering’s price
minus its cost, value innovation is achieved only when the whole system of utility,
price and cost is aligned. In the Blue Ocean Strategy methodology, the Four
Actions Framework and ERRC grid assist managers in breaking the value-cost
trade- off by answering the following questions:
1. What factors can be eliminated that the industry has taken for granted?
2. What factors can be reduced well below the industry’s standard?
3. What factors can be raised well above the industry’s standard?
4. What factors can be created that the industry has never offered?
It captures the current state of play in the known market space, which allows
users to clearly see the factors that an industry competes on and invests in,
what buyers receive, and what the strategic profiles of the major players are.
It propels users to action by reorienting their focus from competitors form
competitors to alternatives and from customers to noncustomers of the
industry and allows you to visualize how a blue ocean strategic move breaks
away from the existing red ocean reality.
Q6.Explain the underlying Concept of Triple Bottom Line (TBL) and the likely threats to
managing sustainability
Triple bottom line (TBL), in economics, believes that companies should commit to
focusing as much on social and environmental concerns as they do on profits. TBL
theory posits that instead of one bottom line, there should be three: profit, people,
and the planet. A TBL seeks to gauge a corporation's level of commitment
to corporate social responsibility and its impact on the environment over time. In
finance, when we speak of a company's bottom line, we usually mean its profits.
TBL theory also says that if a company focuses on finances only and does
not examine how it interacts socially, then that company is not able to see the
whole picture, so cannot account for the full cost of doing business.
Social Sustainability
The Social bottom line measures your business’ profits in human capital, including
your position within your local society. Your social bottom line is increased by
having fair and beneficial labour practices and through corporate community
involvement, and can also be measured in the impact of your business activities on
the local economy. For example, some questions you can ask yourself when
measuring Corporate Social Responsibility are
Environmental Sustainability
The Triple Bottom Line approach to sustainability takes the view that the smaller
impact your business has on the environment and the fewer natural resources you
consume, the longer and more successful your business will be.
Economic Sustainability
In the Triple Bottom Line approach, economic sustainability is not simply your
traditional corporate capital. Your economic capital under the Triple Bottom Line
model should be measured in terms of how much of an impact your business has
on its economic environment.
The business that strengthens the economy it is part of is one that will continue to
succeed in the future, since it contributes to the overall economic health of its
support networks and community. Of course, a business needs to be aware of its
traditional profits as well, and the Triple Bottom Line accounts for this.
Threat
Measuring the TBL
It can be difficult to switch gears between priorities that are seemingly antithetical
—like maximizing individual financial returns while also doing the greatest good
for society. Some companies might struggle to balance deploying money and other
resources, such as human capital, to all three bottom lines without favoring one at
the expense of another.
Repercussions of Ignoring the TBL Framework
There can be dire repercussions of ignoring the TBL in the name of profits. Three
well-known examples of this are the