BLUE OCEAN STRATEGYSTRATEGIC MANAGEMENT ASSIGNMENT

INDIAN INSTITUTE OF FOREIGN TRADE, NEW DELHI

Indian Institute of Foreign Trade, New DelhiStrategic Management

INTRODUCTION

RED VS. BLUE

PLAN OF ACTION

SUCCESS STORIES

SHORTCOMINGS

BLUE OCEAN STRATEGYCreation of uncontested market space is the primary goal

In the highly fragmented market space today, most companies are constrained by burgeoning competition and are struggling to break out of the clutter of bandwagon products/services

Blue Ocean Strategy offers a viable alternative to this by enabling creation of uncontested market space by ideating points-of-distinction in their core competencies

1Demand is created rather than fought over

2Feasible opportunities for growth and profit

3High chance of creation of brand equity

4Could be created by differentiation from an existing market or creation of a new one

5Could be driven by technology pioneering or value pioneering

5 Facets of Blue Ocean Strategy

Esta

blish

ed M

arke

tN

ew M

arke

t

Established Product New Product

Indian Institute of Foreign Trade, New DelhiStrategic Management

INTRODUCTION

RED VS. BLUE

PLAN OF ACTION

SUCCESS STORIES

SHORTCOMINGS

BLUE OCEAN STRATEGYRed and blue ocean are highly contrasting strategies

RED OCEAN BLUE OCEAN

Founded in 2011, Citruspay banked on the future lucrativeness of the mobile-wallet

segment, irrespective of PayTM’s presence

Founded in 2010, it availed first-mover advantage in the mobile-wallet segment

and is presently the market leader

Compete in existing market space

Beat the competition

Exploit existing demand

Make the value-cost trade-off

Align activities with strategic choice of differentiation or low cost

1

2

3

4

5

Create uncontested market space

Make the competition irrelevant

Create and capture new demand

1

2

3

Break the value-cost trade-off

Align activities with both differentiation and low cost

4

5

Create uncontested market space

Make the competition irrelevant

Create and capture new demand

1

2

3

Indian Institute of Foreign Trade, New DelhiStrategic Management

OVERVIEW

RED VS. BLUE

PLAN OF ACTION

SUCCESS STORIES

SHORTCOMINGS

BLUE OCEAN STRATEGYStructured planning is needed to execute this strategy

Evaluate which factors you should eliminate, create or changeIdentification

Use Voice-of-Customer to identify the best possible strategyEvaluation

Formulate your new product based on the identified strategyFormulation

See where your strategy needs to changeExploration

RED OCEAN Cost Price Utility Adoption

BLUE OCEAN Utility Price Cost Adoption

Indian Institute of Foreign Trade, New DelhiStrategic Management

OVERVIEW

RED VS. BLUE

PLAN OF ACTION

SUCCESS STORIES

SHORTCOMINGS

BLUE OCEAN STRATEGYMany companies have created new opportunities

DIFFERENTIATION

Each show had an original music score with unique lighting and timing

4

Each creation represented a theater performance with theme and story

Their clowns adopted a more sophisticated and enchanting style

Eliminated traditional 3-ring shows for undivided attention

1

2

3

PROBLEMS

People started preferring theater over circus

4

Circus business in long term decline due to competition

Star performers demanding high fee

Rising public concern about the treatment of animals in shows

1

2

3

BENEFITS

Invented a new industry altogether

Combined traditional circus with sophisticated theater elements

In 20 years, generated revenues that leading circuses like Barnum & Bailey needed more than a century to attain

1

2

3

Case Study: Cirque du Soleil

Through the successful application of blue ocean strategy, Cirque was able to create a niche for itself in a dying business segment

• Cirque du Soleil is a company founded by a bunch of street performers in 1984.

• It has staged dozens of productions that has entertained over 40 million people across 90 cities in the world

Indian Institute of Foreign Trade, New DelhiStrategic Management

OVERVIEW

RED VS. BLUE

PLAN OF ACTION

SUCCESS STORIES

SHORTCOMINGS

BLUE OCEAN STRATEGYCriticism primarily outlines superficiality of the strategy

? Argued that it is an extremely successful attempt to brand a set of already existing concepts and frameworks with a highly "sticky" idea.

? Construed as more descriptive, than prescriptive – it has been complained that the theory takes into account successful examples and fits itself around them as suited.

? Competition isn’t made irrelevant. In reality, it can’t be completely eliminated. A successful differentiating venture results in various copycat ones, which increases competition cyclically.

? Taking into account all its propositions and theoretical aspects, it can be summarized in the age-old fundamental of marketing – “differentiate your product to foster its appeal to customers.”

? Suggestions have been made that the strategy doesn’t delve much deep into understanding the customers’ actual needs – something, however, that it bases its theory on.

THANK YOU