Assignment-5 Rohit Singh

191206
Q1.Explain the concept and principles of Blue Ocean strategy and the principle differences
between Red and Blue Ocean Strategy

Blue Ocean Strategy (BOS) is the simultaneous pursuit of differentiation and low-

cost to create new market space. Blue Ocean Strategy seeks to make the
competition irrelevant by creating a leap in value for both the company and its
buyers. 
Principles of 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. 

The four principles address Blue Ocean Strategy formulation:  

1. Reconstruct market boundaries.
This principle identifies the paths by which managers can systematically create
uncontested market space across diverse industry domains, hence attenuating
search risk. It teaches companies how to make the competition irrelevant by
looking across the six conventional boundaries of competition to open up
commercially important blue oceans. The six paths focus on looking across
alternative industries, across strategic groups, across buyer groups, across
complementary product and service offerings, across the functional-emotional
orientation of an industry, and even across time.
2. Focus on the big picture, not the numbers.
A company’s strategic planning process to go beyond incremental improvements
to create value innovations. It presents an alternative to the existing strategic
planning process, which is often criticized as a number-crunching exercise that
keeps companies locked into making incremental improvements. This principle
tackles planning risk. Using a visualizing approach that drives managers to focus
on the big picture rather than to be submerged in numbers and jargon, this principle
proposes a four-step planning process whereby you can build a strategy that creates
and captures blue ocean opportunities.  
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191206

3. Reach beyond existing demand. 

To create the greatest market of new demand, managers must challenge the
conventional practice of aiming for finer segmentation to better meet existing
customer preferences. This practice often results in increasingly small target
markets. Instead, this principle shows how to aggregate demand, not by focusing
on the differences that separate customers but by building on the powerful
commonalities across noncustomers to maximize the size of the blue ocean being
created and new demand being unlocked, hence minimizing scale risk. 
4. Get the strategic sequence right. 
This principle ensures companies not only create a leap in value to the mass of
buyers but also to build a viable business model to produce and maintain profitable
growth. In ensuring that companies build a business model that profits from the
blue ocean they have created, it addresses business model risk. This principle
articulates the sequence in which managers should create a strategy to ensure that
both their company and their customers win as they create new business terrain.
Such a strategy follows the sequence of utility, price, cost, and adoption.  
The principle differences between Red and Blue Ocean Strategy
Focus on current customers vs. focus on noncustomers:
There is little effort to attract new buyers to the industry, thus the focus on the
customers currently purchasing in that industry. In the Blue Ocean, there is a focus
on trying to increase the size of the industry by attracting people who have never
purchased in that industry.
Compete in existing markets vs. Create uncontested markets to serve:
All the customers doing business in the industry right now, whether they are doing
business with you or your competitors. If someone wins a customer, then it is
assumed, someone will lose a customer. For someone to win, someone must lose.
In uncontested markets, there is only a winner, you. No one else is fighting for the
business because either they don’t know about it, or they don’t know how. They
will try, of course, but if you have done things the Blue Ocean Strategy way, they
will not be successful for a very long time.
 Assignment-5 Rohit Singh
191206
Beat the competition vs. Make the competition irrelevant:
The competition becomes irrelevant because they cannot duplicate the ideas in a
way that is a commercial success. Remember, the whole idea of Blue Ocean
Strategy is to have high value at low cost. If you are doing that, how can anyone
compete with you? All the would-be competitors fall by the wayside.
Exploit existing demand vs. create and capture new demand:
Creating value so high that you will be attracting customers that never before
would have considered entering the market. Nintendo’s Wii appeals to families and
seniors.
Make the value-cost tradeoff vs. break the value cost tradeoff:
On Michael Porter’s Competitive Strategy concepts, there were only two strategies
to choose from, value or low cost. It was understood that you could not have both
value and low cost.

Q2.Explain the Meaning and your understanding of

1. Concept of Value Innovation in Blue Ocean strategy

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?  
 Assignment-5 Rohit Singh
191206
3. What factors can be raised well above the industry’s standard?  
4. What factors can be created that the industry has never offered?  

2. Blue Ocean Strategy Canvas

Strategy canvas (also known as Value Canvas, or Blue Ocean Strategy Canvas) is a
strategic tool that allows us to know the proposals offered by a certain market
analyzing all the companies present, compared to the proposed value that our
company will offer with its new product, all represented in a single chart which
allows us to understand at a glance to know and appreciate the differences between
the strategic profile of the market and the strategic profile of our new proposal.
The strategy canvas serves two purposes:

 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.
 Assignment-5 Rohit Singh
191206

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.

Controlling your Environmental bottom line means managing, monitoring, and

reporting your consumption and waste and emissions. This is typically the work of
your EHS department, though most sustainable business models also make waste
reduction and green policies corporate-wide values across all levels of
management. A sustainability committee is often required to communicate your
sustainability solution and sustainability goals across all departments.
 Assignment-5 Rohit Singh
191206
Measuring and reporting your environmental bottom line is certainly possible,
though depending on the size of your business, it can be a time-consuming and
difficult process. However, EHS or corporate sustainability software can make the
process much quicker and cost effective.

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

A key challenge of the TBL, according to Elkington, is the difficulty of measuring

the social and environmental bottom lines. Profitability is inherently quantitative,
so it is easy to measure. What constitutes social and environmental responsibility,
however, is somewhat subjective

Mixing Inverse Elements

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.
 Assignment-5 Rohit Singh
191206
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

 Destruction of the rainforest

 Exploitation of labor
 Damage to the ozone layer

Consider a clothing manufacturer whose best way to maximize profits might be to

hire the least expensive labor possible and to dispose of manufacturing waste in the
cheapest way possible. These practices might well result in the greatest possible
profits for the company, but at the expense of miserable working and living
conditions for laborers, and harm to the natural environment and the people who
live in that environment.