Entrep Presentation

Blue Ocean Strategy
Acosta, Baldomar, Batcharo, Belandres, Botero

What is the 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 is based on the view that market boundaries and industry structure
are not a given and can be reconstructed by the actions and beliefs of
industry players.
Red Ocean vs. Blue Ocean
Six steps (six paths framework) to reshaping
market boundaries
1. Define industry requirements and focus on being the best within them.
2. Look at the industries through the lens of generally accepted strategic
groups (rival firms with similar competitive approaches such as luxury
automobiles, economy cars, etc.), and strive to stand out.
3. 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).
4. Define the scope of the products and services offered by the industry.
5. Accept the industry’s functional or emotional orientation.
6. Focus on competitive threats and formulate strategy.
Blue Ocean Strategy Examples
Nintendo Wii
The Nintendo Wii launched in 2006 and at its heart is the concept of value innovation.
To reduce costs, Nintendo did away with the hard disk and DVD functionality found in most game
consoles and reduced the processing quality and graphics. At the same time, Nintendo introduced a
wireless motion control stick to differentiate itself against the market offering. This allowed the
company to offer a range of new features and benefits that hadn’t been seen in the world of gaming
previously such as the ability to use a games console to get fit or to play in a larger social group.
By pursuing value innovation, Nintendo could go beyond competing against the likes of PlayStation
and X-Box in a crowded and fiercely competitive red ocean. Instead, it was able to open up a new
market entirely. The Nintendo Wii, with its innovative, new features and affordable price point,
appealed to an entirely new and expansive market – a blue ocean – spanning non-gamers, the
elderly and parents with young children.
https://yonderconsulting.com/3-examples-blue-ocean-strategy/
Cirque de Soleil
It is formed in Canada in the early 1980s, the company has since gone on to
entertain 155 million people in over 300 cities. How? Cirque du Soleil reinvented
the circus industry by pursuing both low cost and differentiation.
Doing away with live animal acts enabled the company to reduce its cost base,
whilst the introduction of live music and a storyline, inspired by the world of
theatre, and an emphasis on human physical skill helped Cirque du Soleil to
create new elements that had never before been seen in the world of the circus.
The result? Cirque du Soleil created a new market space. Their new audience of
adults and corporate clients (rather than the traditional audience of families) is
also willing to pay higher prices to watch this extraordinary spectacle.
https://yonderconsulting.com/3-examples-blue-ocean-strategy/
What are the Advantages and Disadvantages
of Blue Ocean Strategy?
Advantages Disadvantages
It helps organizations find undisputed markets and avoid It is challenging to come up with new ideas and capture
saturated and matured markets. untapped markets.
It helps break traditional model strategies, competing with Entering and venturing in the early phase carries a high risk.
the existing saturated markets and expanding profits and There is a chance that consumers may not understand the
demand by catering to a new and unrealized market. product or services.
Value innovation is crucial in the strategy as it creates new Launching new products requires a lot of patience, trust,
value/demand for consumers and expands the chances of preparation, and faith.
potential growth.
It helps in recognizing opportunities and encourages the Migrating to a new ocean has high risks as new sharks from
transformation of mindsets. the saturated markets may be lured toward the newly
created market.
Products under the blue ocean strategy follow the concept of
differentiation and low cost.
Implementing the blue ocean strategy offers high payoff
possibilities.
Strategy Canvas
• The strategy canvas graphically depicts a company’s and its
competitor’s value proposition, suggests opportunities to
escape/eliminate competition, captures the current and future state
of activity within a market space, and documents current and future
competitive investments. It captures the current strategic landscape
and the prospects for an organization.
The strategy canvas serves two (2) purposes:
• To capture the current state of a market space, which allows users to
see the factors that the industry competes on and where the
competition currently invests
• To propel users to refocus from competitors to alternatives and from
customers to non-customers of the industry
How to construct a strategy canvas
Plot the existing product’s and competitor’s top 6-8 value elements.
Rate each value element and plot the points on the graph.
In writing an interpretation and analysis of the graph, use the guide questions
below:
1. What are the similarities and/or differences between you and your competitor’s
canvases?
2. What are the competitive assumptions made about your industry’s value
elements?
3. What are the strategic implications for your organization, competitors, and
industry?
4. Any general patterns? (convergence or divergence on value elements)
Sample graph:
ERRC (Eliminate, Reduce, Raise, Create)
• A helpful tool in crafting a future strategy canvas is the “Four (4)
Actions Framework,” as it facilitates identifying the value elements to
be created, increased, decreased, or eliminated.
• The Eliminate-Reduce-Raise-Create (ERRC) Grid developed by W. Chan
Kim and Renee Mauborgne is a simple matrix-like tool that drives
companies to focus simultaneously on eliminating, reducing, raising,
and creating while unlocking a new blue ocean.
Example of an ERRC
The ERRC Grid
• The ERRC Grid is a tool for creating blue oceans. It pushes companies
to act on the questions posed in the Four (4) Actions Framework to
create a new value curve (or strategic profile), essential to unlocking a
new blue ocean.
The four immediate benefits of the grid
• It pushes them to simultaneously pursue differentiation and low cost
to break the value-cost tradeoff.
• It immediately flags companies focused only on raising and creating,
solving problems related to cost structure and over-engineering
products and services.
• It is easily understood by managers at any level, creating a high
degree of engagement in its application.
• It drives companies to thoroughly scrutinize every factor in the
industry, helping them discover the implicit assumptions they
unconsciously make in competing within the market.
Example of ERRC Grid
ERRC grid: iPad

ERRC grid: Starbucks Coffee

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Blue Ocean Strategy

Acosta, Baldomar, Batcharo, Belandres, Botero

ERRC grid: iPad

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