BLUE OCEAN STRATEGY

J. K. OKE
WHY BLUE OCEAN STRATEGY?
 CORPORATES HAVE BEEN LONG ENGAGED IN
HEAD-TO-HEAD RELENTLESS & RUTHLESS
COMPETITION IN SEARCH OF SUSTAINED
PROFITABLE GROWTH
 THEY HAVE FOUGHT FOR COMPETITIVE

ADVANTAGE, BATTLED OVER MARKET SHARE,

 STRUGGLED FOR PRODUCT DIFFERENTIATION
 TO GAIN, RETAIN & SUSTAIN COMPETITIVE

ADVANTAGE
 IN TODAY’S COMPETITIVE BATTLEFIELD
WHY BLUE OCEAN STRATEGY?
 HOWEVER, IN TODAY’S OVERCROWDED MARKETS,
COMPETING HEAD-ON IS NOTHING BUT A
BLOODY “RED OCEAN” OF RIVALS FIGHTING OVER
A SHRINKING MARKET / PROFIT POOL

 THIS MIGHT LEAD , AT TIMES, TO SOME

IMPROVEMENT IN MARKET SHARE, AND SOME
COMPANIES MIGHT FEEL THEY HAVE EMERGED AS
WINNERS.
 HOWEVER, IN A RAT RACE,
 THEY WOULD STILL REMAIN RATS!
BLUE OCEAN STRATEGY

 W. CHAN KIM & REN’EE MAUBORGNE

HAVE COME OUT WITH THE CONCEPT OF
“THE BLUE OCEAN STRATEGY”

 THEY CONTEND THAT WHILE MOST COMPANIES

COMPETE WITHIN THE RED OCEANS, THIS
STRATEGY IS INCREASINGLY UNLIKELY TO
CREATE PROFITABLE GROWTH IN THE FUTURE
 IFYOU FIGHT
 IN THE GIVEN COMPETITIVE SCENARIO

 KEEPON FIGHTING THE RAT RACE

 AND WIN

 YOU WOULD STILL REMAIN A RAT !

BLUE OCEAN STRATEGY
 HENCE THERE IS A NEED
 FOR A NEW STRATEGY
 WHERE YOU WOULD CHART
 AN ALTOGETHER DIFFERENT PATH,
 AND MAKE
 COMPETITION REDUNDANT!
 THAT STRATEGY IS KNOWN AS
 “THE BLUE OCEAN STRATEGY”
BLUE OCEAN STRATEGY
 THE BLUE OCEAN STRATEGY
 CHALLENGES CORPORATES
 TO BREAK OUT OF THE RED OCEAN OF

BLOODY COMPETITION
 BY CREATING UNCONTESTED MARKET SPACE

THAT MAKES THE COMPETITION IRRELEVANT

 INSTEAD OF DIVIDING UP EXISTING – AND AT

TIMES SHRINKING – DEMAND & BREAKING

AWAY FROM THE COMPETITION
BLUE OCEAN STRATEGY
 HOWEVER, ALTHOUGH BLUE OCEAN
OPPORTUNITIES HAVE BEEN OUT THERE, THEY
HAVE NOT BEEN REALLY EXPLORED AS
CORPORATES FEEL COMFORTABLE IN COMPETING
WITHIN THE RED OCEAN
 IF THESE OPPORTUNITIES ARE EXPLORED, IT

WOULD LEAD TO EXPANSION OF MARKETS

 THIS EXPANSION, IN TURN, WOULD FUNNEL

GROWTH,
 INDEED
 WOULD BE THE ROOT OF GROWTH
THE DRIVING FORCES OF
BLUE OCEAN STRATEGY
 ACCELERATED TECHNOLOGICAL ADVANCES
 RESULTANT SUBSTANTIAL IMPROVEMENT IN

INDUSTRIAL PRODUCTIVITY
 SUPPLIERS CAN NOW PRODUCE AN

UNPRECETENTED ARRAY OF
 PRODUCTS & SERVICES
 SUPPLY IS ON THE RISE, BUT THERE IS NO

CLEAR EVIDENCE OF AN INCREASE IN

DEMAND, WORLD-WIDE
THE DRIVING FORCES OF
BLUE OCEAN STRATEGY
 DECLINING/AGING POPULATION IN MANY
DEVELOPED COUNTRIES
 TRADE BARRIERS ARE BEING PROGRESSIVELY

DISMANTLED DUE TO GLOBALISATION

 INFORMATION ON PRODUCTS & PRICES IS

NOW AVAILABLE INSTANTLY (REAL TIME/ON

LINE)
 NICHE MARKETS & MONOPOLY CONTINUE TO

DISAPPEAR
THE IMPACT…
 ACCELERATED COMMODITISATION OF
PRODUCTS/SERVICES
 BRANDS ARE GETTING MORE & MORE

SIMILAR, LOSING THE DIFFERENTIATION EDGE

 PEOPLE ARE INCREASINGLY SELECTING

PRODUCT/SERVICE BASED ON PRICE, WHICH

HAS LED TO INCREASING PRICE WARS
 SHRINKING PROFIT MARGINS
THE IMPACT….
 IN VIEW OF THE AFORESAID FACTS,
 THE BUSINESS ENVIRONMENT IN WHICH MOST

STRATEGY & MANAGEMENT APPROACHES OF

THE TWENTIETH CENTURY EVOLVED IS
INCREASINGLY DISAPPEARING
 AS RED OCEANS BECOME MORE BLOODY,

THERE IS AN IMPERATIVE NEED FOR THE

MANAGEMENTS TO BE MORE CONCERNED
WITH BLUE OCEANS THAN THE CURRENT
COHORT OF MANAGERS IS ACCUSTOMED TO
WHY DO COMPANIES GET TRAPPED
COMPETING IN RED OCEAN…..
 DEFINE THEIR INDUSTRY SIMILARLY & FOCUS
ON BEING THE BEST WITHIN IT
 LOOK AT THEIR INDUSTRIES THROUGH THE
LENS OF GENERALLY ACCEPTED STRATEGIC
GROUPS (e.g. LUXURY AUTOMOBILES, ECONOMY
CARS, FAMILY VEHICLES) & STRIVE TO STAND
OUT IN THE STRATEGIC GROUP THEY PLAY IN
 DEFINE THE SCOPE OF THE PRODUCTS &
SERVICES OFFERED BY THEIR INDUSTRY
SIMILARLY
WHY DO COMPANIES GET TRAPPED
COMPETING IN RED OCEAN…..
 FOCUS ON THE SAME BUYER GROUP ,
BE IT
 THE PURCHASER
(AS IN THE OFFICE EQUIPMENT INDUSTRY),
 THE USER
(AS IN THE CLOTHING INDUSTRY),
OR
 THE INFLUENCER
(AS IN THE PHARMACEUTICAL INDUSTRY)
WHY DO COMPANIES GET TRAPPED
COMPETING IN RED OCEAN…..

 ACCEPT THEIR INDUSTRY’S FUNCTIONAL OR

EMOTIONAL ORIENTATION

 FOCUS ON THE SAME POINT IN TIME- &

OFTEN ON CURRENT COMPETITIVE THREATS-
IN FORMULATING STRATEGY
HENCE….
 TO BREAK OUT OF THE RED OCEAN,
CORPORATES MUST BREAK OUT OF THE
ACCEPTED BOUNDARIES THAT DEFINE HOW
THEY COMPETE
 INSTEAD OF LOOKING WITHIN THESE

BOUNDARIES MANAGERS NEED TO LOOK

SYSTEMATICALLY ACROSS THEM TO CREATE
BLUE OCEANS
LOOK ACROSS..
 THE MANAGERS NEED TO LOOK
 ACROSS ALTERNATIVE INDUSTRIES,
 ACROSS STRATEGIC GROUPS,
 ACROSS BUYER GROUPS,
 ACROSS COMPLEMENTARY PRODUCTS &

SERVICE OFFERINGS,
 ACROSS THE FUNCTIONAL-EMOTIONAL

ORIENTATION OF AN INDUSTRY , & EVEN

 ACROSS TIME
LOOK ACROSS
 THIS “LOOKING ACROSS”
 WOULD GIVE CORPORATES THE INSIGHT
 INTO
 HOW TO RECONSTRUCT
 MARKET REALITIES
 TO OPEN UP BLUE OCEANS
FROM HEAD-TO-HEAD COMPETITION
TO BLUE OCEAN CREATION
HEAD-TO-HEAD BLUE OCEAN
COMPETITION STRATEGY
INDUSTRY FOCUSES ON RIVALS LOOKS ACROSS
WITHIN ITS INDUSTRY ALTERNATIVE
INDUSTRIES
STRATEGIC GROUP FOCUSES ON LOOKS ACROSS
COMPETITIVE STRATEGIC GROUPS
POSITION WITHIN WITHIN INDUSTRY
STRATEGIC GROUP
BUYER GROUP FOCUSES ON BETTER REDEFINES THE
SERVING THE BUYER INDUSTRY BUYER
GROUP GROUP
FROM HEAD-TO-HEAD COMPETITION
TO BLUE OCEAN CREATION
HEAD-TO-HEAD BLUE OCEAN
COMPETITION CREATION
SCOPE OF FOCUSSES ON LOOKS ACROSS TO
PRODUCT/SERVICE MAXIMISING THE COMPLEMENTARY
OFFERING VALUE OF PRODUCT /SERVICE
PRODUCT/SERVICE OFFERINGS
OFFERINGS WITHIN
THE BOUNDS OF ITS
INDUSTRY
FUNCTIONAL- FOCUSSES ON RETHINKS THE
EMOTIONAL IMPROVING PRICE FUNCTIONAL-
ORIENTATION PERFORMANCE WITHIN EMOTIONAL
THE FUNCTIONAL- ORIENTATION OF THE
EMOTIONAL INDUSTRY
RED OCEAN BLUE OCEAN
 COMPETE IN EXISTING  CREATE UNCONTESTED
MARKET SPACE MARKET SPACE

 BEAT THE  MAKE THE COMPETITOR

COMPETITION IRRELEVANT

 CREATE & CAPTURE NEW

DEMAND
 EXPLOIT EXISTING
DEMAND
RED OCEAN BLUE OCEAN
 MAKE THE VALUE-  BREAK THE VALUE-
COST TRADE-OFF COST TRADE-OFF

 ALIGN THE WHOLE  ALIGN THE WHOLE

SYSTEM OF A FIRM’S SYSTEM OF A FIRM’S
ACTIVITIES WITH ITS ACTIVITIES IN PURSUIT
STRATEGIC CHOICE OF OF DIFFERENTIATION
DIFFERENTIATION OR & LOW COST
LOW COST
THE BASIC PRINCIPLES OF
BLUE OCEAN STRATEGY
 THERE ARE SIX BASIC PRINCIPLES OF BLUE OCEAN
STRATEGY

 THESE SIX BASIC PRINCIPLES OF BLUE OCEAN

STRATEGY, HOWEVER, COULD BE BROADLY DIVIDED
INTO TWO CATEGORIES:

 PRODUCTION PRINCIPLES
 EXECUTION PRINCIPLES
THE SIX BASIC PRINCIPLES OF
BLUE OCEAN STRATEGY
 PRODUCTION  RECONSTRUCT
PRINCIPLES MARKET BOUNDARIES
 FOCUS ON THE BIG
PICTURE, NOT THE
NUMBERS
 REACH BEYOND
EXISTING DEMAND
 GET THE STRATEGIC
SEQUENCE RIGHT….
THE SIX BASIC PRINCIPLES OF
BLUE OCEAN STRATEGY
 EXECUTION  OVERCOME KEY
PRINCIPLES ORGANISATIONAL
HURDLES
 BUILD EXECUTION
INTO STRATEGY
ARE THESE BLUE OCEAN STRATEGIES /
CREATIONS?
 TRANSISTORS
 SONY WALKMAN
 DELL COMPUTERS
 I-PHONES / SMART PHONES
 OUTSOURCING
 SANTRO (TALL BOY)
 TATA INDICA / NANO/ACE
 M&M SUV 500
 NIRMA
 WALMART
 ICICI BANK/HDFC BANK (ONE STOP FIN. SERVICES SUPER-SHOPPE)
 RELIANCE JIO (THEN THE TYPICAL RED-OCEAN RESPONSE OF NEW PLANS,
COSTING LESS – LOWERING “ARPU”)
CAN YOU THINK OF
MORE BLUE OCEAN
STRATEGIES/CREATIONS?