Blue Ocean StrategyHow to create

uncontested market spaceand make the competition irrelevant

Katharina BOST 12/06/2006

About the Founders: Chan & Renee

W. Chan Kim• The Boston Consulting Group Bruce D. Henderson Chair Professor of Strategy and International Management

Renée Mauborgne• The INSEAD Distinguished Fellow and Professor of Strategy and International Management

Two worlds …

Two worlds …

Red Ocean Strategy Blue Ocean Strategy

Compete in existing market space.

Create uncontested market space.

Beat the competition. Make the competition irrelevant.

Exploit existing demand. Create and capture new demand.

Make the value-cost trade-off. Break the value-cost trade-off.

Align the whole system of a strategic firm's activities with its choice of differentiation or low cost.

Align the whole system of a firm's activities in pursuit of differentiation and low cost. VALUE INNOVATION

The rising Imperative of Creating Blue Oceans

• supply exceeds demand

• globalization

• accelerated commoditization of products and services

• increasing price wars

• shrinking profit margins

• brands are becoming more similar

select based on price

• ...

BOS Logic: The Core Principles

Reconstruct Market Boundaries… overcome believes.

Reach beyondexisting Demand… go for uncontested space.

Get the strategic sequence right… value [innovation] first.

VIVI

COST

VALUE

BOS Logic: Reconstruct market boundaries

Industry Focuses on rivals within its industry

Strategic Group Focuses on competitive position within strategic group

Buyer Group Focuses on better serving the buyer group

Scope of Product and Service

Offerings

Focuses on maximizing the value of product and service offerings within the bounds of its industry

Functional-emotional Orientation of an

Industry

Focuses on improving price-performance with the functional-emotional orientation of this industry

Time/Trends Focuses on adapting to external trends as they occur

Looks across alternative industries

Looks across strategic groups within its industry

Redefines the buyer group of the industry

Looks across to complementary product and service offerings that go beyond the bounds of its industry

Rethinks the functional-emotional orientation of its industry

Participation in shaping external trends over time

Boundaries of Competition

Head-to-HeadCompetition

Creating New Market Space

BOS Logic: The Core Principles

Reconstruct Market Boundaries… overcome believes.

Reach beyondexisting Demand… go for uncontested space.

Get the strategic sequence right… value [innovation] first.

VIVI

COST

VALUE

BOS Logic: Reach beyond existing demand

Core Customer Noncostumer

Soon-to-be-NC Refusing Customer

BOS Logic: The Core Principles

Reconstruct Market Boundaries… overcome believes.

Reach beyondexisting Demand… go for uncontested space.

Get the strategic sequence right… value [innovation] first.

VIVI

COST

VALUE

BOS Logic: Get the Strategic Sequence right

Buyer utilityIs there exceptional buyer

utility in your business idea?

AdoptionWhat are the adoption hurdles in actualizing your business idea?

Are you addressing them up front?

PriceIs your price easily accessible to

the mass of buyers?

CostCan you attain your cost target to

profit at your strategic price?

A commercially viable Blue Ocean Strategy

YES

YES

YES

YES

No Rethink

No Rethink

No Rethink

No Rethink

The case of Accor's Formule 1

The value curve of Formule 1 in the French Low Budget Hotel Industry

References

• W. Chan Kim, Renée Mauborgne, Blue Ocean Strategy, 2005, Havard Business School Press.

• http://www.blueoceanstrategy.com

• HANDELSBLATT, Donnerstag, 06. Oktober 2005, Mit Nichtkunden neue Märkte finden.

• http://www.hotelformule1.com

Thank you for your attention!!!