Jade BlackLaurenHeldrethTaylorHutchersonRoger MayKodyRoach
Blue Ocean StrategyConclusion: The Sustainability and Renewal of Blue Ocean Strategy
Introduction
Creating a blue ocean strategy is not a static achievement but a dynamic processAs the company and early imitators succeed and expand the blue ocean more companies eventually jump inQuestion:When should a company reach out to create another blue ocean?
Barriers to Imitation
A blue ocean brings barriers to imitation; some being operation and others cognitiveA value innovative move does not make sense based on conventional strategic logicEX: CNNBrand image conflict prevents companies from imitating a blue ocean strategy.EX: The Body Shop
Barriers To Imitation
Natural monopoly blocks imitation when the size of a market cannot support another playerEX:Megaplexin BrusselsPatents or legal permits block imitation
Barriers to Imitation
Cost Advantages: High volume by value innovationEx: Apple ‘i’ products helped discourage imitation for awhileNetwork externalities: the more customers, the more attractive a company looksEx:ebay– many buyers/sellers; hard to get them to move to a potential imitator
Barriers to Imitation
Politics and Culture: Imitation often requires companies to make changes to existing business practices and cultureEx: Southwest (offers speed of travel with cost/flex. of driving)Would mean major revisions in routing, training, marketing, and pricingBrand Buzz: High leap in value leads to loyal followersEx: Apple products (“I’m a Mac” campaign)
Apple’s Oceans: The Technology Industry
Drowning in a red oceanMoving to a blue oceanBlue oceans turn to red oceansWhat is the next step?Make another blue ocean (try to incorporate the barriers to imitation)
Eventually every blue ocean strategy will be imitated.In an effort to hold on to customer base a firm can become focused on the competition instead of the buyer.Apple in late 80’s.To avoid this trap a company needs to monitor their value curves.When a company’s value curve still has focus, divergence and a compelling tagline you should focus on expanding it and not re-innovating.
When to Value-Innovate Again
As long as value curve still good a company should focus on operation improvements, geographic expansion, economies of scale and market coverage.As more competitors enter the market and rivalry intensifies a blue ocean will turn red.This can be seen by plotting you and your competitions value curves on a strategy canvas.As they converge a company should start looking for a new blue ocean.
When to Value-Innovate Again
Blue and Red Oceans
Long-run profitability growth is a result of value-innovationCreate a blue ocean when competitors aggressively imitate and credibly converge value curvesGo beyond competing for market share and create blueoceans
Blue and Red Oceans
Blue and Red oceans have always coexisted“Great” businesses can succeed in both oceansGood companies must master their strategies for both oceans to become Great companiesTo create a blue ocean a company must make competitors in the red ocean irrelevantVia value-innovation
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