Blue ocean strategy cliff notes. What Is Blue Ocean Strategy? 2022-10-02
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The Blue Ocean Strategy is a business approach developed by W. Chan Kim and Renée Mauborgne that encourages companies to create new markets and value for their customers instead of competing in existing, crowded markets. The concept is based on the idea that companies are more likely to succeed when they can differentiate themselves from their competitors and offer unique value to their customers.
The Blue Ocean Strategy is based on the metaphor of the "red ocean," which represents the traditional, crowded market where companies compete for a share of the existing demand. In this scenario, companies are forced to fight for customers and market share by lowering prices and differentiating themselves in small ways. As a result, profits are often low and competition is fierce.
On the other hand, the "blue ocean" represents a new, uncontested market space where there is no competition and plenty of room for growth. According to the Blue Ocean Strategy, companies can create these blue oceans by identifying and targeting untapped customer segments, creating new market categories, and developing innovative products or services that meet the needs of these customers.
One key aspect of the Blue Ocean Strategy is the emphasis on value innovation, which involves creating a product or service that offers value to customers at a lower cost to the company. This can be achieved through a variety of means, such as finding new sources of raw materials, streamlining production processes, or finding new ways to deliver value to customers.
The Blue Ocean Strategy also focuses on creating a unique value proposition, or a clear statement of the benefits that a company's product or service offers to customers. This value proposition should be based on a deep understanding of customer needs and preferences, and should be communicated clearly and consistently to potential customers.
Overall, the Blue Ocean Strategy is a powerful approach for companies looking to differentiate themselves from their competitors and create new markets for their products or services. By focusing on value innovation and a unique value proposition, companies can successfully navigate the red ocean and create a blue ocean of opportunity for themselves and their customers.
What Is Blue Ocean Strategy?
This takes us to the third question: what would that area be? Blue Ocean Strategy Summary Part 2. They emphasize that you need to communicate clearly, because everyone on the team needs to understand the strategy in order to do their part effectively. FORMULATING BLUE OCEAN STRATEGY: 4 KEY PRINCIPLES How do you pull the tools above together to formulate your Blue Ocean Strategy? Blue Ocean is about finding a new market space where you can be the only In a blue ocean, there are no competitors. . Al Ries and Jack Trout assert that understanding your current positioning, that is, how people. People go to a restaurant for the same objective that they go to the movies: to enjoy a night out.
Here, the structure of the market will be explained. He thinks he's kind of a big deal because he writes in 3rd person but he's not. For example, Microsoft, to come out of the decline, needed to work on creating a more balanced portfolio in all businesses that not only compete in the red oceans, but also create blue oceans that will renew, expand, and build their brand value. For this, it is important to ask the following: what are the alternative sectors to my own sector? In some cases, consumers may not even know that they want something. This means taking into consideration customer preferences, as well as developing innovative solutions to solve their problems. If you buy something using a link here we may earn an affiliate fee at no cost to you. For a long time, the airlines were competing on this.
Consider Other Buyers in the Chain Kim and Mauborgne suggest appealing to under-served people in the purchasing chain. For example, an 2. Either way, you want to move with optimism tempered by cautious evaluation. Red oceans are extremely competitive, and the key to survival is to fight fiercely. This would differentiate itself from Yahoo, which was slow and often inaccurate. This cut-throat battle leaves the water bloody. Think of the rapid rise of cloud computing or the global movement toward environmental protection.
Their book provides a strategy for finding the blue ocean where your company can prosper. The winner is often the one who is willing to fight the hardest. What characteristics does your industry take for granted that could be eliminated? No, that does not mean that if you are an expert in website design, you would transform your company into a microbrewery. Buyer Utility Map This map shifts the focus to buyers, helping to identify the utility spaces that a product or service can potentially fill. Focus on that area. For example, s ome airlines eliminated the airport lounges.
Angels are those who have the most to gain from the strategic shift. Red Ocean In the 1980s, the circus industry was dominated by Ringling Bros. In this case, it meant tapping into working adults seeking education. If the end user and the person with purchasing power are not one and the same, the end user may have pain points, or persistent problems, you can address to provide unique value. For example, "premium" cars, such as BMW and Mercedes, form a group; while more popular cars, such as Volkswagen and Fiat, make up another group. Who is in the chain of buyers for your industry? Blue Ocean Strategy is a business strategy book written by W. Overtime the customers had more entertainment options, like television and video games.
Blue Ocean Strategy Book Summary by W. Chan Kim and Renée A. Mauborgne
These are not substitutes, but alternatives to choose from. The answer may sound cliche, but it will make sense as we dive deep into the summary: to innovate. And is Blue Ocean Strategy right for your business endeavors? This image has been adapted from figure 2. There are three tiers of noncustomers that have the potential to be transformed into customers: 1. If you want to save this summary for later, download the free PDF and read it whenever you want. Be the best in your area, not in all areas. If what you offer doesn't fit to the needs of customers, it doesn't represent greater value.
As the blue and red oceans have always coexisted, practical reality requires companies to navigate successfully in both waters. As the market gets crowded, prospects for profits and growth are reduced. In the face of these circumstances, how to create unprecedented utility for customers? In doing so, competitors have for more than a decade had to compete in a space Apple has staked. However, by focusing on key commonalities across these groups, in addition to existing customers, businesses can understand how to pull them into their blue ocean strategy. Which buyer group does the industry typically focus on? Red Oceans In Red Oceans, the industry boundaries are known and accepted. You can start with a clean slate and set the rules for a whole new game. Chan Kim and Renée Mauborgne begins the book "The Blue Ocean Strategy" explaining what a blue ocean is and comparing it to the red ocean.
Reaching the Blue Ocean is a big step for every company, because not only will it assure your survival in the market, but also grow your enterprise successfully, at least for a brief time. Embed Execution to Strategy The main idea of this section, according to Kim and Mauborgne, is that you should involve people in implementing a blue ocean project. Do you feel like your strategy differs little from the competition surrounding you? In a book that challenges everything you thought you knew about the requirements for strategic success, Chan Kim and Renée Mauborgne contend that while most companies compete within such red oceans, this strategy is increasingly unlikely to create profitable growth in the future. Download the "Blue Ocean Strategy" Book Summary in PDF for free Do you have no time to read now? Amazon created a market space for online bookselling. Find wide open space. Could you combine these features into your offering? It is a first principles reset of your entire approach to business and marketing. Chan Kim and Renée Mauborgne argue that the solution to business growth and success is to operate in an uncontested market.