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Blue Ocean Strategy - Case Study

Was written for Business Strategy class at Stony Brook University on July 03, 2020

1. How is the red ocean different than the blue ocean?

Blue ocean is the theory recommended for successful innovative groundbreaking companies whereas red ocean strategy is referred to as the generic old fashioned traditional mindset for business.

“Blue ocean” symbolizes the calmed stage of the water whereas the “Red Ocean” symbolizes the shark blood-fighting stage in the ocean to show how companies are fighting for the same thing.The biggest difference between the blue and red ocean lays in the mindset.

The red mentality is – how can I outperform my competition by getting a bigger share of the current market? While blue mentality asks – how can I create a new market where there is no competition (yet) and by that, I can have higher profitability.

Another big difference in mentality is focusing on customers. Red mentality asks – what do my customers want and need? How can I maintain my customer base? Whereas blue mentality asks – what are my non-customers want and need? What are the non-customers looking for? How can they become customers?

2. What is a strategic canvas? How will this help a company create a blue ocean product?

It is a helpful graph for companies to measure their strategy as a blue ocean strategy in a visual way. The graph shows -How current competitors of the industry compete in the market? What determinants do competitors focus on? What ranks the records for each determinant?

3. Explain the four actions framework; give me an example of how a new product could be created using this framework.

Framework action 1: create. What can the company create that is not currently available in the industry/market?

Example: Tesla creating electric cars in the automobile industry. The car industry had fuel car models for the most part and created something new.

Framework action 2: raise. Between the different ideas, what criteria should the company raise to a product level – what is most needed in the market?

Example: the online payment secured program revolutionized the way people make payments between person to business and person to person.

Framework action 3: estimate. Out of the many – which criteria should be eliminated? Which criteria are under the standards in the industry?

Example: Netflix used to be a movie-renting DVD company, however, the company eliminated that option and switched to an online streaming service. By that, Netflix revolutionized the way people consume TV shows / Movies.

Framework action 4: reduce. What criteria should be reduced as it is under industry value? That framework is in direct correlation with competitive advantage and differentiation to the company.

Example: a company that created plastic utensils can reduce the use of single-use plastic utensils that hurt the environment, to a recyclable/compostable materials for the same product.

4. How can a company Reconstruct Market Boundaries to improve its new products success.

Companies should perform an internal audit and focus on the following questions: What trends are up-and-coming currently? When building a new market (or expanding its boundaries) its important to consider what updated technological innovation permits now to create a new product that was never created before. Secondly, what do other companies in the same industry offering right now? how to different products can be improved and developed and be taken to the next level? Next, what are some of the needs consumers face nowadays - how can those "needs" be translated into solutions of things that the consumer didn't even know they want or need. Lastly, focus on the quality, value, and service offered in the industry among the product - what can be improved or upgraded in that regard?

5. What is the Sequence of Blue Ocean Strategy?

To build a Blue Ocean Strategy - companies must follow the sequence of buyer utility, price, cost, and adoption.

This sequence can empower companies to build a unique business model and maintain profits from the blue ocean strategy created.

The company needs to invest the time into true conclusions of the unique strategic sequence of their model. The book claims that companies who follow this sequence can and will dramatically lessen business model risk. The strategy claims to not be risky in business.

The company needs to ask: Is there exceptional buyer in the business idea?

Yes - Is your price easily accessible to the mass of buyers?

Yes - can you attain your target to profit at your strategic price?

Yes - What are the adoption hurdles in actualizing your business idea?


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