Blue Ocean Strategy Lecture


Blue Ocean Strategy

Blue Ocean Strategy (BOS)

“Go where profits and growth are – and where competition isn’t.” Kim & Mauborgne



The Profit and Growth Consequences of Creating Blue Oceans

What is Blue Ocean Strategy?
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The simultaneous pursuit of differentiation and low cost The aim of BOS is:

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Not to out-perform the competition in the existing industry (a red ocean), But to create new market space (a blue ocean), Thereby making the competition irrelevant



Red Versus Blue
Red Ocean Strategy Compete in existing market Beat the competition Exploit existing demand Make the value-cost trade-off Blue Ocean Strategy Create uncontested market space Make the competition irrelevant Create and capture new demand Break the value-cost trade-off

Align the whole system of a company’s activities with its strategic choice of differentiation or low cost

Align the whole system of a company’s activities in pursuit of differentiation and low cost

Examples of BOS



Key Concepts of BOS
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The key conceptual building blocks of BOS are:
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Value innovation Fair process

BOS requires organizations to develop and align the three strategy propositions:
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Value proposition Profit proposition People proposition

Value Innovation: Four Actions Framework (ERRC)



Criteria for Effective ERRC
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Cost reduction and elimination efforts should focus on nonstrategic activities.

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Important investment affecting organizational performance should not be eliminated.

Investment in human capital development

Value creation efforts should focus on core competencies improvement.
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Investment in research support Investment in classroom equipments in order to improve learning experience

How Fair Process Affects People’s Attitudes and Behavior
Strategy Formulation Process Attitudes
Fair Process Engagement...