2. Based on ‘Blue Ocean Strategy’, a book published
in 2005 and written by W. Chan Kim and Renée
Mauborgne, Professors at INSEAD and Co-Directors
of the INSEAD Blue Ocean Strategy Institute
Presented by
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3. BOS defined…
The avoidance of costly competition
through innovation with the aim to create
a market where no firms currently
operate, leaving the company to expand
without competition.
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8. Viewing the Cost / Value Relationship as Inverse…
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Cost
Reduction
Value
Increase
• Increase of value implies
increase of cost
• Reduction of cost implies
decrease in value
9. Viewing the Cost / Value Relationship as Direct…
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Cost
Reduction
Value
Increase
• Both cost reduction and
value increase are
possible…
13. Six Principles of BOS
• Reconstruct market boundaries
• Focus on the big picture, not
the numbers
• Reach beyond existing demand
• Get the strategic sequence right
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Formulation
Principles
• Overcome key organisational
hurdles
• Build execution into strategy Execution
Principles
15. 2. Focus on the Big Picture, Not the Numbers…
• Which factors
should be created
that the industry
never offered?
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• Which factors
should be raised
well above the
industry standard?
• Which factors
should be reduced
well below the
industry standard?
• Which of the factors
that the industry
takes for granted
should be
eliminated?
Eliminate Reduce
Raise Create
21. www.derekhendrikz.com
BOS Case Studies…
Cirque du Soleil:
Blending of opera and ballet with circus format while eliminating star
performer and animals.
Netjets:
Fractional jet ownership.
Southwest Airlines:
Offering flexibility of bus travel at the speed of air travel using secondary
airports.
22. www.derekhendrikz.com
BOS Case Studies (cont)…
Curves:
Redefining market boundaries between health clubs and home exercise
programs for women.
Home Depot:
Offering the prices and range of lumberyard, while offering consumers
classes to help them with DIY projects.
Dyson:
Cyclonic Vacuum Cleaners.
24. www.derekhendrikz.com
The Strategy Canvas:
• Shows the strategic profile of an industry by depicting very clearly the
factors that affect competition among industry players, as well as those
that might in the future.
• Shows the strategic profile of current and potential competitors,
identifying which factors they invest in strategically.
• Draws the company’s strategic profile, or value curve, showing how it
invests in the factors of competition and how it might invest in them in
the future.
• The horizontal axis lists factors of competition for the industry.
• The vertical axis indicates the degree to which industry players and the
providers of alternative services invest in the competitive factors.