Podcast
Questions and Answers
What factor often leads to a company not imitating a blue ocean strategy due to brand perception?
What factor often leads to a company not imitating a blue ocean strategy due to brand perception?
What is one reason Kinepolis's megaplex has not been imitated for over fifteen years?
What is one reason Kinepolis's megaplex has not been imitated for over fifteen years?
Which of the following can block imitation by providing a cost disadvantage to potential imitators?
Which of the following can block imitation by providing a cost disadvantage to potential imitators?
What role does political factors play in the imitation of blue ocean strategies?
What role does political factors play in the imitation of blue ocean strategies?
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Which factor can result in rapid imitation being discouraged in the face of a successful blue ocean strategy?
Which factor can result in rapid imitation being discouraged in the face of a successful blue ocean strategy?
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What does a company typically need to change to implement a blue ocean strategy?
What does a company typically need to change to implement a blue ocean strategy?
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Why is it difficult for companies to imitate a successful blue ocean strategy?
Why is it difficult for companies to imitate a successful blue ocean strategy?
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What can signal a company that it needs to pursue value innovation again?
What can signal a company that it needs to pursue value innovation again?
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What can happen if a company becomes too focused on competition?
What can happen if a company becomes too focused on competition?
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Which example illustrates a company struggling with imitation of value innovation?
Which example illustrates a company struggling with imitation of value innovation?
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Study Notes
Blue Ocean Strategy (BOS)
- BOS is a strategic planning method developed over 15 years of research
- It studies 150 strategic moves from 30 industries (1880-2000) to analyze successes and failures
- BOS differentiates between Red Oceans (existing markets) and Blue Oceans (new markets)
- Companies wanting to succeed in new markets should avoid competing with each other
- BOS provides tools and frameworks to create a step-by-step process for remarketing boundaries.
Summary of BOS
- It assumes markets are either Red Oceans (existing) or Blue Oceans (new).
- It emphasizes creating new market space and tapping into previously unfulfilled consumer demand.
- Competition is rendered irrelevant when a new market space is created.
BOS Application
- Use "strategy canvas" to chart the competition's shortcomings
- Execution is a part of strategy
- Aligns three propositions for a win-win outcome
- Provides a systematic strategy to create and capture new, uncontested market spaces.
Red Ocean vs. Blue Ocean
- Red Oceans represent existing industries with defined boundaries and known competitive rules.
- Blue Oceans represent untapped or new markets with the potential for significant, high rates of profit
- Companies in red oceans need to compete with existing rivals. Businesses in blue oceans require market creation.
Quick Check: Red or Blue Ocean
- Increased competition from rivals?
- Deep price discounts to drive sales?
- Declining returns from marketing expenses?
- Answering 'yes' to three or more questions points toward a 'red ocean' situation.
Five Forces Model Critique
- Kim and Mauborgne argue that Porter's Five Forces analysis is suited to remain in a red ocean.
- They emphasize the value of creating a 'blue ocean'.
Creating Blue Oceans
- Creating new markets/ industries is possible by finding uncontested market space
- Innovation is achieved by finding a balance between innovation and value to create a leap in value for both customers and the company
- Value innovation defies conventional wisdom about competition based strategy
- Value innovation is achieved by creating new or improved value for buyers and at the same time lowering costs for the company
Barriers to Imitation
- Operational barriers: Operational issues hinder imitation
- Cognitive barriers: existing conventional strategies resist the break from the competition
- Brand image: Brand image conflicts limit imitation of blue ocean strategies
- Natural monopoly: Large market share makes imitation impossible
- Legal barriers: patents or similar legal protections hinder imitation
When to Value-Innovate Again
- Eventually, blue ocean strategies will be imitated
- Defending the hard-earned customer base against imitators
- When your value curve begins to converge with competitors, it is time to value-innovate again
Four Actions Framework
- Eliminate: Eliminate factors customers don't want
- Reduce: Reduce factors already in the industry below standard
- Raise: Raise factors above industry standards
- Create: Create new factors the industry hasn't offered
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Description
Explore the concepts and frameworks of the Blue Ocean Strategy (BOS) through this quiz. Understand the distinction between Red Oceans and Blue Oceans, and learn how companies can succeed by creating new market spaces without direct competition. Gain insights on tools like the strategy canvas and aligning strategic propositions for effective execution.
