Blue Ocesn POIM

By Priyanka Kale
Business Strategy
Blue Ocean Strategy
March 2014
Topics:
History and Background of Author and book
Traditional Logic
What is Blue Ocean?
Red Ocean vs. Blue Ocean
Value Innovation
Tools of BOS
1. EERC Grid
2. Canvas/Value Curve
Example of BOS
History and
Background
Blue Ocean Strategy is a business
strategy book first published in 2005
and written by W. Chan Kim
In this book the authors conveys that
an organization should create new
demand in an uncontested market
space instead of competing in existing
industry which they call as Blue
Ocean.
The contents of the book are based on
research and a series of Harvard
Business Review articles as well as
academic articles on various extents of
the subject.
Useful for CEOs, Executive, HOD and
prime ministers.
Traditional logic
Segmented; Competitive; defined boundaries;
competition based on established rules, represents
the current scenario
Blue Ocean
Blue Ocean Strategy is a powerful concept to work
on value proposition & explore new market
segments.

It is about pursuing - Value Innovation The
Simultaneous pursuit of differentiation and low cost

Red Ocean Strategy Blue Ocean Strategy
Focus on rival within its
industry
Looks across alternative
industries
Beat the competitor. (Fight
to win)
Make competition irrelevant
(Win without fighting)
Growth is limited New opportunities of growth
(unattractive market) with high
profit possibilities
Risk involved defined and
known.
Risk involved is high risk or there
is issue of risk
Decision between higher
quality or lower costs
Decision for higher customer
value and lower costs
Red versus Blue Ocean
Creating Blue Oceans - Value Innovation

Firm needs to decide
product/service which is innovative
in parallel to utility, price and cost.
Value Innovation is achieved by
aligning three propositions.

1) Value proposition (utility minus
price)
2) Profit proposition (price minus
cost)
3) People proposition

BOS Tools or how to find new value curve
The Strategy Canvas
As per author, it is the central diagnostic and action framework for building a compelling
blue ocean strategy.
The strategy canvas serves four purposes:
1) Identify the competitor and nature of business
2) Identify the factors of competitor and comparing your business with competitors
3) Understand the possibilities of creating new value propositions and exploring new value
curves
4) Targeting new customers for sustaining in marketspace

The value curve is the basic component of the strategy canvas. A strong value curve has
focus, divergence as well as a compelling tagline
ERRC Grid
ERRC grid is considered
as the immediate plan
of action to achieve the
below mentioned
benefits.
1) Utility
2) Price
3) Cost
4) Competitive factors
Blue Ocean Strategy Description
Alternative industries Create altogether new industry Cricket-ent
Value Innovation 20-20 cricket is a fast pace game innovation
which caters to total market segment rather
than just cricket lover
Creating new demand Created new demand of watching cricket
with family
Complementary product
and service offering
Provides complementary service of
entertainment along with cricket
Break value and cost trade
off
Provides differentiation value at low cost
Example 1: IPL Indian Premiere League

New
Value
Curve

Create
Entertainment New
Segment Crick-ent

Eliminate
Conventional
wisdom about
cricket

Raise
Speed of the game
Excitement
Family Involvement
Pool of young talent

Reduce
Time Spend
Money Spend
Uncertainty of Result

ERRC Grid of IPL - Indian Premiere League
Alternative industries Timeshare basis
Value Innovation Inflation free and cheaper
Creating new demand Pre bought holidays for 25 years
Complementary product and
service offering
Standard accommodation at a good
price
Break value and cost trade off Provides differentiation value at low
cost
Example 2: Mahindra Club Holidays
ERRC Grid of Mahindra Club Holidays
Reduce
Amount and Time
Luxury without compromising on
comfort
Create
Customization of packages/low cost
packages
Membership structure - in easy EMI
Tie up with all the RCI resorts
Eliminated
Miss selling of the product
Inconvenient way of registration

Raise
Discounts of food and beverages and
sightseeing
Focused on promotional activities
Increase in no. of properties in India and
Abroad with 15+ project in pipeline

New
Value
Curve
Alternative industries The speed of plane at price of car
Value Innovation Offering the flexibility of bus travel at the
speed of air travel by using secondary airports.
Creating new demand Short haul, low cost air travel
Complementary product
and service offering
Simple fare structure
Example 3: Southwest Airlines
Example 3: Southwest Airlines

New
Value
Curve

Create
able to price against
car transportation

Eliminate
Lounge/Food Facility
Seating of Class
choice

Raise
friendly service
Speed
frequent point-to-
point departures

Reduce
Uncertainty of
schedule
Hub Connectivity

ERRC Grid of Southwest Airlines

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By Priyanka Kale

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