Blue Ocean Strategyabout winning without fighting

to fight and conquer in all your battles is not supreme excellence; supreme excellence consists in breaking the enemy's resistance without fighting

Master Sun Tzu in ‘ Art of War’

BLUE OCEAN STRATEGY

Conventional Strategy DIFFERENTIATION OR LOW COST

Blue Ocean talks about Value InnovationDIFFERENTIATION AND LOW COST

Value Innovation• Region where a company’s

actions favourably affect both its cost structure and its value proportion to buyers

– Cost savings by eliminating and reducing the factors an industry competes on

– Buyer values is lifted by raising & creating elements the industry has never offered

– Over time, costs are reduced further as scale economies kick in

Buyer Value

Costs

Value Innovation

Comparison of Red vs. Blue

How to find new Value Curve Four Actions Framework

• Eliminate– Which of the factors that the industry takes for granted should be

eliminated?

• Reduce– Which factors should be reduced well below the industry's

standard?

• Raise– Which factors should be raised well above the industry's

standard?

• Create– Which factors should be created that the industry has never

offered?

Case Study 1 : US Wine Industry Pre-Yellow Tail

Case Study 1: US Wine Industry Post Yellow Tail

Case Study 1 :Value Curve for Yellow Tail• Eliminate

– Enological Terminology– Above the Line– Focus on Aging Quality

• Reduce– Vineyard Prestige & Legacy– Wine Complexity– Wine Range

• Raise– Price as compared to Budget– Retail Store Environment

• Create– Easy Drinking– Ease of Selection– Fun & Adventure

Case Study 2 : US Women Exercise Pre Curves

Case Study 2: US Women Exercise Post Curves

Case Study 2 :Value Curve for Curves• Reduce

– When compared to traditional gym• Price• Amenities• Equipment• Workout time• Availability of instructors

• Raise– Environment encouraging discipline & motivation– Same sex non-threatening

• Create– Womanly fun atmosphere

Case Study 3 : Cricket Before IPL

Case Study 3: Cricket After IPL

Case Study 3 :Value Curve for IPL• Reduce

– Spectator Time Invested (Competes with Movie/Football)– Emphasis on Classic Techniques (Batting/Bowling)– Emphasis on Patience, Perseverance

• Raise– Emphasis on Athleticism– Pace of the Game– Entertainment with Bollywood, Cheerleaders etc.– Certainty of Result

• Create– City Loyalty – Welcome to Dummies

Is Tata Nano Really Creating a Blue Ocean ?

skillful leader subdues the enemy's troops without any fighting; he captures their cities without laying siege to them; he overthrows their kingdom without lengthy operations in the field

Master Sun Tzu in ‘ Art of War’

Reference : Blue Ocean Strategy By W. Chan Kim, Renée Mauborgne