3.6 Blue Ocean Strategy: FROM THEORY TO PRACTICE

Question 1

• Red oceans

Answer 1

represent all the industries in existence today. (Known)

Question 2

• Blue oceans

Answer 2

denote all the industries not in existence today. (Unknown market space. ) Untapped market space, demand creation, and the opportunity for highly profitable growth.

Question 3

The creation of blue oceans is about

Answer 3

driving costs down while simultaneously driving value up for buyers.

Question 4

4 Action Framework (ask 4 key questions to challenge an industry’s strategic logic and business model)

Answer 4

• Eliminating - The first question forces a company to consider eliminating factors that companies in an industry have long competed on.
• Reducing - The second question forces a company to determine whether products or services have been over-designed in the race to match and beat the competition.
• Raising - The third question pushes a company to uncover and eliminate the compromises an industry forces customers to make.
• Creating - The fourth question helps a company to discover entirely new sources of value for buyers and to create new demand and shift the strategic pricing of the industry.

Question 5

Three Characteristics of a Good Strategy

Answer 5

Focus, Divergence, and a Compelling Tagline

Question 6

• These three criteria guide companies in

Answer 6

in carrying out the process of reconstruction to arrive at a breakthrough in value both for buyers and for themselves.

Question 7

• focus;

Answer 7

the company does not diffuse its efforts across all key factors of competition.

Question 8

• The shape of its value curve diverges from the other players’, a result of

Answer 8

not benchmarking competitors but instead looking across alternatives.

Question 9

Both Blue Ocean and Five Forces approaches are focused on creating new markets. differebces

Answer 9

• Blue Ocean Strategy  Creates a new market. When this strategy would attract new customers on the long term, then the profits + number of vendors would increase.
• Five Force Strategy  (not in article but:) Try to dominate the existing markets

Question 10

Evidence Blue Ocean vs. Five Forces

Answer 10

blue-ocean strategy is sustainable, and competition eventually erodes the profits from innovation. But that takes the better part of a generation for the blue-ocean approach to yield to competitive strategy.

Question 11

Blue Ocean vs. Five Forces advice

Answer 11

advice: a blend of the two approaches.