BLUE OCEAN STRATEGY

BLUE OCEAN STRATEGY

 Blue ocean strategy is the simultaneous pursuit of differentiation and low
cost to open-up a new market space and create new demand. It is about
creating and capturing uncontested market space, thereby making the
competition irrelevant.

 It Denote all the industries that are not in existence today – the unknown
market space, untainted by competition. In blue oceans, demand is created
rather than fought over. There is ample opportunity for growth that is both
profitable and rapid.
EXAMPLE
Canon
Canon’s strategic move, which created the personal desktop copier industry, is a classic
example of blue ocean strategy. Traditional copy machine manufacturers targeted office
purchasing managers, who wanted machines that were large, durable, fast, and required
minimal maintenance.

Defying the industry logic, the Japanese company Canon created a blue ocean of new market
space by shifting the target customer of the copier industry from corporate purchasers to users.
With their small, easy-to-use desktop copiers and printers Canon created new market space by
focusing on the key competitive factors that the mass of noncustomers – the secretaries that
used copiers – wanted.

By questioning conventional definitions of who can and should be the target buyer, companies
can often see fundamentally new ways to unlock value. Path three of blue ocean strategy’s six
paths framework pushes companies to look across the chain of buyers in their industry. By
shifting focus to a previously overlooked set of buyers, companies can unlock new value and
create uncontested market space.
RED OCEAN STRATEGY vs BLUE OCEAN
STRATEGY
OCCUPYING AN UNCONTESTED
MARKET SPACE
One principle of blue ocean strategy is to reconstruct market boundaries to break from the
competition and create blue oceans.

Six(6) Basic approaches (six paths framework) to remaking market boundaries.

1. Define their industry similarly and focus on being the best within it.
2. Look at their industries through the lends of generally accepted strategic groups
(such as luxury , automobiles, economy cars, and family vehicles), and strive to
stand out in the strategic group they plan it.
3. Focus on the same buyer group, be it the purchase ( as in the office equipment
industry), the user (as in the clothing industry), or the influencer (as in the
pharmaceutical industry).
4. Define the scope of the products and services offered by their industry similarly.
5. Accept their industry’s functional or emotional orientation.
6. Focus on the same point in time- and often on current competitive threats in
formulating strategy.
STRATEGY CANVAS
The strategy canvas allows your organization to see in one simple picture all the
factors an industry competes on and invests in, what buyers receive, and what
the strategic profiles of the major players are. It exposes just how similar the
players’ strategies look to buyers and reveals how they drive the industry toward
the red ocean. Importantly, it creates a commonly owned baseline for change.
The strategy canvas serves two (2) purpose:
To capture the current state of play in the known market space, which allows
users to clearly see the factors that the industry competes on and where the
competition currently invested.
To propel users to action by reorienting their focus from competitors to
alternative and from customers to non-customers of the industry.
HOW TO CONSTRUCT A STRATEGY
CANVAS:
Plot the existing product’s top 6-8 value elements in which a
company currently competes.
Plot the competitor’s top 6-8 value elements.
What are the similarities and/or differences between you and
your competitor’s canvases
What are the competitive assumptions made about your
industry’s value elements.
What are the strategic implications for your organizations ,
competitors and industry.
Any general pattern? (convergence of divergence on value
elements).
ERRC(Eliminate-Reduce-Raise-Create)
 A helpful tool crafting a future strategy canvas is the Four Actions
Framework as it facilitates in identifying the value elements to be created,
increased , decreased or eliminated.
The ERRC Grid is a tool for the creation of blue oceans. This
complements the four Actions Framework. It pushes companies not
only to ask the questions posed in the four actions framework but also
to act on ocean. The grid gives companies four immediate benefits.
It pushes them to simultaneously pursue differentiation and low cost
to break the value-cost trade off.
It immediately flags companies that are focused only on raising and
creating, thereby lifting the cost structure and often over –
engineering products and services – a common plight for many
companies.
It easily understood by managers at any level, creating a high
degree of engagement in its application.
Because completing the grid is a challenging task. It drives
companies to thoroughly scrutinize every factor the industry
competes on, helping them discover the range of implicit
assumptions they unconsciously make in competing.