TUGAS
MANAJEMEN STRATEGIK
BLUE OCEAN STRATEGY
Oleh :
1. Winda Harviyanti Anandita
041311333076
2. Diah Ayu K.
041311333326
3. Mayadhanissa A. S. D.
041311333348
Program Studi : S1 Akuntansi / Kelas : L
Fakultas Ekonomi dan Bisnis
Universitas Airlangga
Surabaya
2015
By W. Kim Chan
Creating Blue Oceans
New Market Space
Red oceans and blue oceans make up market universe
Red oceans: all industries in existence = known market space
Blue oceans: all industries not in existence = unknown market space Red oceans
• Industry boundaries defined and accepted • Competitive rules of game known
• Companies try to outperform rivals; cutthroat competition
• As market space gets crowded, prospects for profit and growth reduced • Products become commodities
• Red ocean strategy is a market-competing strategy Blue oceans
• Undefined market space, demand creation, opportunity for highly profitable growth
• Most are created from within red oceans by expanding existing industry boundaries
• Rules of game waiting to be set • Competition irrelevant
• Blue ocean strategy is a market-creating strategy The Rising Imperative of Creating Blue Oceans
• Supply is exceeding demand in most industries • global competition is intensifying
• Problems:
• Accelerated commodization of products and services • Increasing price wars
• Shrinking profit margins
• Red oceans becoming bloodier, need to be concerned with creating blue oceans
The Continuing Creation of Blue Oceans
• Blue oceans have been around for some time; a feature of business life • Industries never stand still, constantly evolving
• Significant expansion of blue oceans over years • So why the focus on red ocean strategy?
• Corporate strategy influenced by military strategy • Need to create new market space that is uncontested The Impact of Creating Blue Oceans
Business Launch
Revenue Impact
Profit Impact
86
62
39
14
38
61
The Profit and Growth Consequences of Creating Blue Oceans
Red Oceans Blue Oceans
From Company and Industry to Strategic Move
• Are there lasting visionary companies that continuously outperform the market and create blue oceans?
• Found success of these model companies was a result of industry sector performance, not companies themselves
• Strategic move used as unit of analysis (rather than company or industry)
• Strategic move: the set of managerial actions and decisions involved in making a major market-creating business offering
Value Innovation: The Cornerstone of Blue Ocean Strategy • Creators of blue oceans follow value innovation
– Equal emphasis on value and innovation
– Defies value-cost trade-off of competition-based strategy – Successful value innovation:
• Drives down costs while driving up buyers’ value • Uses a whole-system approach • Follows reconstructionist view Red Ocean Vs. Blue Ocean
Red Ocean
• Compete in existing market space • Beat the competition
• Exploit existing demand • Make the value-cost trade-off
• Align the whole system of a firm’s activities with its strategic choice of differentiation or low cost
Blue Ocean
• Create uncontested market space • Make the competition irrelevant • Create and capture new demand • Break the value-cost trade-off
• Align the whole system of a firm’s activities in pursuit of differentiation and low cost
Formulating and Executing Blue Ocean Strategy • Six Principles of Blue Ocean Strategy
• Reconstruct market boundaries
• Focus on the big picture, not the numbers • Reach beyond existing demand
• Get the strategic sequence right • Overcome key organizational hurtles • Build execution into strategy
• The remaining chapters will give you the principles and generalized frameworks to succeed in blue oceans
• Red ocean strategy is a market-competing strategy, while blue ocean strategy is a market-creating strategy
• As red oceans are becoming bloodier, we need to create more blue oceans
• “The only way to beat the competition is to stop trying to beat the competition!”
The Six Principles of Blue Ocean Strategy
Formulation Principles Risk factor each principle
attenuates Reconstruct market boundaries
Focus on the big picture, not the numbers
Reach beyond existing demand Get the strategic sequence right
Search risk Planning risk Scale risk
Business model risk
Evaluation principles Risk factor each principle
attenuates Overcome key organizational hurdles
Build execution into strategy
Organizational risk Management risk
Points of view
• Business often look at the industry from a structuralist (supply) point of view
• What if we looked at the industry from a reconstructionist (demand) point of view?
• Market boundaries are not viewed as given, but could be reconstructed to unlock new demand
Example: A highly competitive Industry The American Wine Industry
Premium WinesBudget Wines
Massive Choice
Polarised Strategic Groups
• 3rd largest in world: worth $20 billion
• Californian makes 66% - the rest is from Italy, France, Spain, Chile, Argentina, Australia
• Exploding number of new wines – new vineyards in Oregon, Washington, New York
• Top 8 producers had 75% of the market; 1600 had the remaining 25% • $ millions spent in marketing - Titanic battles – intense competition • Sever price pressure
• The dominant growth strategy was towards premium wines – more complexity, better image, more prestigious vineyards, number of medals won at wine festivals.
What wine customers said …
• “It is too confusing and complex” • Wine descriptions and terminology • The shopping experience
• Thus, massively intimidating for ‘noncustomers’ (the large majority of the US population who were not wine drinkers)
Segmentation of Market and Brands Low
Involvement HighInvolvement
Easy Going Enjoyers Aspirationa
ls Appreciators Connoisseurs Glass with friends Least care choosing a wine Not wine preferrers Price is a strong influencer Everyday enjoyment To relax/unwind Stick with limited list of known brands Choose in-store Not interested in wine language Influenced by major brand advertising Image important Wine preferrers (sic) Varietal knowledge Interested in some wine language Enjoy trying new wines Visit wineries / read wine articles Want to discover wine Knowledge of wine regions Frequently buy >$10 wines
Join wine clubs Don’t stick to known brands Ideal wine is complex & interesting Sophisticated drinker Discerning wine tastes Don’t decide in store Have a cellar Less influenced by specials/ promotions Actively pursue wine knowledge
Brand: Lindemans RosemountEstate Wolf Blass Penfolds
Demographi
c: M/F: 50/50Age: 35-49 M/F: 30/70;Age: 30-40 M/F: 70/30; Age:35-50 Age: 40+
Strategy Canvas
The strategy canvas is both a diagnostic and an action framework for building a compelling blue ocean strategy. It captures the current state of
Budget Wines Premium Wines
play in the known market space. This allows you to understand where the competition is currently investing, the factors the industry currently competes on in products, service, and delivery, and what customers receive from the existing competitive offerings on the market. The horizontal axis captures the range of factors the industry competes on an invests in. The vertical axis captures the offering level that buyers receive across all these key competing factors. The value curve then provides a graphic depiction of a company’s relative performance across its industry’s factors of competition.
Four Steps of Visualizing
1. Visual
Awakening 2.ExplorationVisual 3.Strategy FairVisual 4.CommunicationVisual Compare your
business with your
competitors’ by drawing your “as is” canvas
See where your strategy needs to change
Go into the field to explore the six paths to creating blue oceans Observe the distinctive advantages of alternative products and services See which factors you should eliminate, create or change
Draw your “to be” canvas based on insights from field observations Get feedback on alternative strategy canvases from customers, competitors’ customers, and non-customers Use feedback to build the best “to be” future
strategy
Distribute your before-and-after strategic profiles on one page for easy comparison Support only those projects and operational moves that allow your company to close gaps and actualize the new strategy
Price Above-the-line marketing Aging quality
Vineyard prestige and legacy Wine complexity
Wine range
A New Value Curve Reduce
Eliminate Create
Raise
Which factors should be reduced well below industry standards?
Which factors should be created that the industry has never offered?
Which factors should be raised well above the industry’s standard? Which of the factors that the industry takes for granted should be eliminated?
Four Actions Framework + Eliminate/Reduce/Raise/Create Grid
The four actions framework offers an technique that breaks the trade-off between differentiation and low cost and to create a new value curve. It answers the four key questions of what industry takes for granted and needs to be eliminated; what factors need to be reduced below industry standards; what factors need to be raised above industry standards; and what should be created that the industry has never offered.
The eliminate-reduce-raise-create grid pushes companies not only to ask all four questions in the four actions framework but also to act on all four to create a new value curve. By driving companies to fill in the grid with the actions of eliminating, reducing, raising, and creating, the grid provides four immediate benefits: it pushes them to simultaneously pursue differentiation and low costs; identifies companies who are only raising and creating thereby raising costs; makes it easier for managers to understand and comply; and it drives companies to scrutinize every factor the industry competes on.
Case of yellow tail Eliminate
Enological terminology & distractions
Aging qualities
Above-the-line marketing
Raise
Price versus budget wines Retain store involvement The Reduce Wine complexity Wine Range Vineyard prestige Create Easy drinking Ease of selection Fun & adventure
To Be Canvas • Eliminate • Reduce • Raise • Create Yellow Tail
• Only 2 types initially – Chardonnay and Shiraz
• Fruity, soft on palette, sweet-ish – great for those who had not drunk wine before
• Same bottle for red and white – low logistics costs • Simple vibrant packaging – lower case letters/kangaroo • Un-intimidating
• They were selling “The essence of a great land … Australia” – ie they were not selling the wine
• Australian clothing for the retail staff – they enthusiastically promoted a wine they could understand.
Value Innovation of [yellow tail] Results • No 1 imported wine (outsells France and Italy) • Fastest growing imported wine in the history of the USA industry
• New consumers of wine • Jug drinkers trade up
• Premium wine drinkers trade down
• Industry criticizes them mercilessly at first Key Takeaways
Three tiers of non-customers:
1: buyers who purchase your industry offerings out of necessity; will jump ship if given an opportunity.
2: buyers who purchase alternative offerings that serve the same function • Utility
proposition • (customers,
distributors and retailers)
• Creating of a social drink that is accessible to anyone
• Easy drinking, ease of selection, sense of fun and adventure
• Limit number of SKUs
• Price to move at volume • Price
proposition
• Targeted at the mass of customers
• Priced against the alternative (6-pack)
• Cost structure
• Elimination of working capital tied up in aging wines
3: people who don’t consume even the alternatives to your offerings
Non-customer demand is unlocked by providing new buyer utilities, at a price that attracts a mass of buyers, given target costs.
Buyers could be not only end-users, but also other participants in a value chain (e.g. distributors)
