blue ocean strategy examples

In creating Polo, Ralph Lauren combined the most attractive features of two strategic groups in fashion: haute couture and classical lines. Microsoft tried for years to dislodge Intuits value innovation, but after nearly thirty years of efforts and investment, it finally threw in the towel and ceased operations of its contender, Microsoft Money, in 2009. The larger scale also gave it operational economies and leverage with distributors. Blue Ocean Strategy is a marketing theory in which there is little or no competition in the business that enters the market.There is a very highly competitive advantage as well as low-cost pressure given by these new markets for any company. Many industries had accepted it to get benefits, such as Netflix, Canon, iTunes, Cemex, Philips, NetJets, Curves, JCDecaux, Quicken, Polo Ralph Lauren, etc. With the technology out there for anyone to digitally download music free, the trend toward digital music was clear. When people bought cement they were on the path to building rooms of love, where laughter and happiness could be shared what better gift could there be? In the 1970s, Japanese manufacturers created a blue ocean of small, efficient, high-quality cars. Until Bloombergs debut in the early 1980s, Reuters, Dow Jones and Telerate dominated the online financial information industry, providing news and prices in real time to the brokerage and investment community. Until that time, Americas five hundred automakers built custom-made novelty automobiles. Blue ocean strategy: introduction. It was intimidating and pretentious, and the complexity of taste even though it was where the industry sought to excel created a challenge to the inexperienced palate. [Yellow tail] was a completely new combination of characteristics that produced an uncomplicated wine structure that was instantly appealing to the mass of alcohol drinkers. History reveals that there are no perpetually excellent companies. In the 1890s, the horse and buggy was the primary mode of transportation. Southwest entered a terrible marketplace that a Porter five forces analysis would have said . The systems also have two flat-panel monitors so that traders can see all the information they need at once and built-in analytic capability with the press of a button. Created by TopTalent Communications. Casella Wines turned this convention wisdom on its head. There were far more noncustomers than customers. Supplier power on the part of star performers was strong. The shape of its value curve diverged from the other players, a result of not benchmarking competitors but instead looking across alternatives. Before computers, businesses ran operations with a ledger and a pen. Here customers dont buy a jet outright. But Ford changed all of that with the Model T. He called it the car for the great multitude, constructed of the best materials. Although it only came in one color (black) and one model, the Model T was reliable, durable, and easy to fix. But Ford and Chrysler followed this strategy, and they began a red ocean period of competition and imitation. This is a key principle of blue ocean strategy which sees low cost and differentiation being pursued simultaneously. Learn theessentialsof blue ocean strategy and shift created by #1 Management Thinkers in the World. It was the problem of another industrythe public water supply. To read more in detail about characteristics of good strategy read the strategy vs tactics blog where we describe it in-depth. The same company can be brilliant at one moment and wrongheaded at another. In 1908, 500 American automakers existed making custom automobiles. Choosing the right blue ocean strategy must be the result of a deliberate and detailed process, backed by the right research. This strategic planning model is a departure from the typical management exercise that focuses on number crunching and competitive benchmarking. Under iTunes they receive some 70 percent of the purchase price of digitally downloaded songs, at last financially benefiting from the digital downloading craze. They only buy a small fraction of it. In 1908 the first Model T cost $850, half the price of existing automobiles. Neither the pencil nor other software packages could compete. By combining the decisive factors of both groups and eliminating or reducing everything else, Polo Ralph Lauren not only captured share from both strategic groups, but also drew many new customers into the market. Not only that but Marvel and Cuneo transformed the whole movie production model; that is, it fundamentally changed how a movie is made. The unprecedented value iTunes offered triggered customers the world over to flock to iTunes with recording companies and artists also winning. As the NetJets case study illustrates, insight into new market space can be gained by shifting an organizations focus from competing within to looking across defined industry boundaries. Stitch Fix a blue ocean example in the fashion retail industry, 4. The Eliminate-Reduce-Raise-Create (ERRC) Grid above shows how Marvel was able to break the value-cost trade-off, i.e., strategic actions that created unprecedented value at low cost. The traders and analysts wielded their power within their firms to force IT managers to purchase Bloomberg terminals. All were produced by Marvel. Founded in 1939 as a comic book company, Marvel plodded along in its first few years at a time when superheroes had fallen out of fashion. Defining Blue Ocean Strategy: Red Ocean Versus Blue Ocean . By entering the motion picture industry and value innovating the motion picture production model, Marvel restored its blue ocean to become the most profitable movie franchise in history. 1. Four steps to streamline strategic planning Take the Assessment. It would appear, therefore, that the company per se is not the appropriate unit of analysis when exploring the roots of high performance. Partially as a result, the industry was suffering from steadily decreasing audiences and, in turn, declining revenue and profits. Airbnb Airbnb Logo A range of options created new demand as buyers went up or down-market relative to the Model T. With frequent updates to cars, they were replaced more frequently, driving up demand. Other notable examples include Samsung, LG, Agricultural Bank of China, Kimberly Clark, Citizen M Hotels and many others. 4 Examples Of Blue Ocean Strategy Seeing is believing. By shifting focus to a previously overlooked set of buyers, companies can unlock new value and create uncontested market space. They thus became a publicly maligned symbol of excess. Marvel a super-powerful blue ocean strategy example, 3. As a result of applying blue ocean strategy, the Nintendo Wii opened up a new market pulling in traditional non-gamers and outselling all Sony and Microsoft gaming products combined. Commercial travel avoids the high up-front, fixed-cost investment of a multimillion dollar jet aircraft. Kodak invented the first digital camera. Examples of blue ocean strategy The blue ocean strategy might sound new, but businesses have been successfully using it for quite some time - even before Kim and Mauborgne named the approach.. On the other hand, corporations buy private jets to dramatically cut total travel time, to reduce the hassle of congested airports, to allow for point-to-point travel, and to gain the benefit of having more productive and energized executives who can hit the ground running upon arrival. They also introduced features around the users personal lives, like the ability to buy flowers and make travel arrangements through the terminal. For anyone tired of competing head-to-head and wanting to seize new growth. Review our Privacy Policy to learn more.Got it! Now that cars were mass-market, Fords cars were getting boring. This combated the trend of moviegoers watching movies at home on VHS instead by offering superior sight and sound. Identifying the best blue ocean for your company will require the reconstruction of market boundaries. In traditional tandas the winning family would spend the windfall on an important festival or religious event such as a baptism or marriage. Learn about Cirque du Soleils blue ocean strategy here. dan bam. Intuit created a blue ocean with its Quicken financial software package by looking across substitute industries and reconstructing boundaries across them. In 1893, the Duryea brothers created the first automobile. Think of the Blue Ocean Strategy as a way to open up opportunities and markets for a new organization, or an existing organization looking to grow. See examples of organizations that applied the blue ocean shift tools and process to successfully shift from red to blue oceans. In fact, Endgame is the highest-grossing movie ever. Standardization reduced costs by employing unskilled laborers instead of car artisans. 1. In 1914 Palace Theaters created a blue ocean by moving upmarket, creating plush theaters showing longer films with more mature plots. Blue Ocean Strategy vs. Netflix did not invent movies, but it offered a unique opportunity to watch them online. Lets jump right in, starting with one of the most extraordinary blue ocean turnarounds in corporate history. Arriving too early. Examples of how Blue Ocean Strategy can be used for Nantucket Nectars case study. Blue Ocean Strategy is based on "time and again" proven data rather than unproven theories. This idea "Blue Ocean Strategy: How to Create Uncontested Market Space and the Make Competition Irrelevant." was proposed by Professors W. Chan Kim . They operate and compete in the saturated short-haul airline business and focus on providing low-cost services. Eventually, Americans moved into suburbs, and Palace Theaters were too expensive to service a large geographical area. Luckily, the Blue Ocean Strategy can be paired with other models. Key questions: Who are the buyers in your industry? Marvel - a super-powerful blue ocean strategy example 2. Just over two decades ago, the firm emerged from bankruptcy saddled with USD $250 million of high-interest debt, a decimated sales channel, disgruntled customers, and a skeleton staff of employees. Offering complements to your product even at cost may add additional value through bundling. Marvel, on the other hand, took a blue ocean approach, pursuing differentiation and low cost simultaneously. So great was the blue ocean Ford created that the Model T replaced the horse-drawn carriage as the primary means of transport in the United States. Amazon typically tops the charts due to its bookstore-alternative beginnings, followed by Uber. Even though 1,000+ premium wineries tried to differentiate from each other, they were strategically very similar. The youngest female CEO to ever lead a US initial public offering, Katrina Lake created a new market space in the highly competitive fashion retail industry. Amazon is an ideal demonstration. As shown in the strategy canvas, [yellow tail]s value curve has focus: the company did not diffuse its efforts across all key factors of competition. The time from your car to takeoff is measured in minutes instead of hours. Blue Ocean Strategy Canvas. These three characteristics serve as an initial litmus test of the commercial viability of blue ocean ideas Zara Overspends Needs to Avoid these Six Red Ocean Strategy Traps Trap 1 - Making Existing Customers Happier Trap 2 - Equating Creative Destruction with Market Creation Trap 3 - Treating Market-Creating Strategies as Niche Strategies US automakers, who had fallen complacent and focused on luxury, were caught by surprise. They have tremendous income but work such long hours that they have little time to spend it. In agreement with five major music companiesBMG, EMI Group, Sony, Universal Music Group, and Warner Brothers Records iTunes offered legal, easy-to-use, and flexible la carte song downloads. It also scored a home run by making wine shop employees ambassadors of [yellow tail], introducing fun and adventure into the sales process by giving the Australian outback clothing. The research of Chan Kim and Rene Mauborgne focused on discovering the common factors that lead to the creation of blue oceans and the key differences that separate those winners from the mere survivors and those adrift in the red ocean. Despite being unreliable, they cost $1,500, twice the average annual income. Cemex complemented the winnings with the delivery of the cement to the winners home, construction classes on how to effectively build rooms, and a technical adviser who maintained a relationship with the participants during their project. The traditional circus catered to kids. You need to make an appointment and talk with a bank manager, then provide a handful of documents to open an account. Yellow Tail - a blue ocean example in the wine industry 7. Strategy Canvas Example This figure shows an example of a strategy canvas. Well cover 15+ Blue Ocean Strategy examples so you can figure out how to create your own blue ocean. Market share increased from 9% in 1908 to 61% in 1921. The US wine industry in 2000 faced intense competition, mounting price pressure, increasing bargaining power on the part of retail and distribution channels, and flat demand despite overwhelming choice. At its debut, the Patrimonio Hoy building materials club that Cemex set up consisted of a group of roughly seventy people contributing on average 120 pesos each week for seventy weeks. Here at ClearPoint, we recently used the framework for our own business. Achieved via the delivery of features that have a highest marginal benefit to customer needs . The Apple II wasnt the first personal computer the Altair 8800 was. Dell Computer upended this pattern, selling direct to consumers and reducing price substantially. During this time, management pocketed hundreds of millions of dollars while decimating Marvels staff and retail channels, leaving customers alienated and confused. Also, a company purchases only the number of corporate airline tickets needed per year, lowering variable costs and reducing the possibility of unused aviation travel time that often accompanies the ownership of corporate jets. objectives develop understanding of blue ocean tool sets and how to apply them effectively strategy canvas errc perform as-is analysis to compare current strategy of xyz vs competitors explore pathways to breakaway from market boundaries to look for bigger playing field brainstorm and agree on the to-be strategy for xyz all This is a key principle of blue ocean strategy which sees low cost and differentiation being pursued simultaneously. Blue Ocean Strategy Example 1: Automobile Industry In the 1890s, the horse and buggy was the primary mode of transportation.

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