Blue Ocean Strategy
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Blue Ocean Strategy EMBA(NCKU) Presentation Mark A. Hsu Professor Yeh Chih-Chung January 2011 1 Presentation Overview 1. Classic Competitive Strategy 2. Blue Ocean Strategy Value Curves Six Paths 3. Example: Cirque du Soleil 4. Q & A 2 Classic Competitive Strategy Strategic Focus Choosing attractive industries and building competitive positions within them Strategic Goal Outperforming the competition Analytic Tools Porter’s 5 Forces Value Chain Generic Strategies 3 Porter’s Five Forces 4 Kim and Mauborgne on Value The Boston Consulting Group Chair Professor of Strategy and International Management Innovation The INSEAD Distinguished Fellow and Professor of Strategy and International Management 1. “Value Innovation: The strategic Logic of High Growth,” Harvard Business Review (1997) 2. “Creating New Market Space,” Harvard Business Review (1999) 3. “Knowing a Winning Business Idea When You See One,” HBR (2000) 4. “Charting Your Company’s Future,” Harvard Business Review (2002) 5 Value Curves A value curve is a graphic depiction of the way a company configures its offerings to customers. It is drawn by plotting the performance of the offering relative to other alternatives along the key success factors that define competition in the industry or category. For example: Success Factors 6 How Do You Discover New Value Curves? Raise Create What factors should be raised well beyond the industry standard? What factors should be created that the industry has never offered? Eliminate WTP Cost Reduce What factors should be reduced well below the industry standard? What factors should be eliminated that the industry has taken for granted? The Key to Discovering a New Value Curve Lies in Asking Four Basic Questions 7 Value for Whom? One can use value curves for a variety of partners: End users Suppliers including employees Employee Distribution channels 8 Low Wage Profit sharing WAL Corporate image Average Management Respect Empowerment Quality of coworkers Slack Union protections Employee Value Curves High MART Industry Average Success Factors 9 An Alternative Approach Red Ocean Strategy Strategic Focus Choosing attractive industries and building competitive positions within them Strategic Outperforming the competition Goal Analytic Tools Porter’s 5 Forces Value Chain Generic Strategies Blue Ocean Strategy VALUE INNOVATION Redefining industry boundaries and creating new market space Making the competition irrelevant Value Curves 6 Paths 10 Key Dimensions of Competition? Food Acts Animals Comedy Clowns 11 1898 Ringling Brothers poster 12 Traditional Circus Industry Success Factors 13 Cirque du Soleil O http://www.cirquedusoleil.com/en/shows/o/show/about.aspx 14 Cirque du Soleil ZAIA’ Dream夢想之遊 http://www.cirquedusoleil.com/en/shows/zaia/home.aspx http://www.cirquedusoleil.com/en/home.aspx#/en/home/shows/details/zaia.aspx ALEGRIA歡躍之旅http://www.cirquedusoleil.com/en/shows/alegria/default.aspx \ 15 New Value Curves Eliminate Star Performers Animal shows Aisle concession sales Multiple show arenas Reduce Fun and humor Thrill and danger Create Theme Refined environment Multiple productions Artistic music and dance Raise Unique venues 16 The Strategy of Cirque du Soleil High Ringling Brothers Offering Level Cirque du Soleil Smaller Regional Circus Low Price Success Factors Animal Shows Star Performers Ring Master Aisle Concessions Multiple Productions Unique Artistic Music Refined 17 Venue (tent) Environment & Dance © Kim & Mauborgne 2006 Thrills & Danger Fun & Humor Theme The Strategy of Cirque du Soleil High Eliminate Reduce Raise Create Ringling Brothers Offering Level Cirque du Soleil Smaller Regional Circus Low Price Success Factors Multiple Show Theme Thrills & Danger Arenas Aisle Concessions Unique Venue Refined Fun & Humor Animal Shows Star Performers Environment Artistic Music 18 &Kim Dance © & Mauborgne 2006 Eliminated Elements Animals Ring Master Star Performers Language Aisle concession sales Is it still a circus? Is it still a circus? 19 Kept Elements Acrobatics Music Clowns Tent (important for keeping circus image) Audience Participation Seating Magic Exotic Feel PRICE 20 Created Elements Theme / Story Dance Lighting Singing Programs Intellectual, artistic orientation Where do these elements come from? 1. Adult Focus (Children or Parent?) 2. Substitute: Broadway show, Ballet, Opera 21 Profitable Growth High WTP by targeting adult and corporate High Volume: Different Shows Global Product (no Language) Traveling / Flexible Location Low Cost: No animals (40% Cost) No Stars Global sourcing (China, East Europe) Some cost additions because of target customers; e.g. seating 22 Cirque du Soleil Attendance 23 The Founder 24 New Value Curve of Yellow Tail Eliminate Enological terminology and distinctions 釀酒術語 Raise Price versus budget wines Retail store involvement Aging qualities Above-the-line marketing Reduce Create Wine complexity Easy drinking Wine range Ease of selection Vineyard prestige 葡萄園聲望 Fun and adventure Source: Blue Ocean Strategy, Kim and Mauborgne US Wine Industry vs. Yellow Tail Expensive wines Yellow tail Cheap wines High Low Price Above-the-line marketing Use of technical wine terminology Aging quality Vineyard prestige 26 Wine range Ease of selection Easy drink Wine complexity Fun and adventure Value Innovation : Six Paths 1. Substitute (替代) : Cirque du Soleil : Music, Ballet, Lighting Southwest : Other Transport 2. Strategic groups (策略群組) : Ralph Lauren / Polo / Polo Jean, Burberry / Blue Burberry, Banana Republic / Gap / Old Navy 3. Focus (破解顧客鏈) : Cirque du Soleil shifts emphasis from kids to adults (payer) 4. Complements (互補) : B&N(Barnes & Noble), IKEA, Eslite(誠品) 5. Functional / Emotional (理性 vs.感性) : From functional to emotional: Swatch From emotional to functional: Body shop, L’Occitane 6. Time Trends (看見未來趨勢): Technology, Social Changes, and Customer Learning 27 An Alternative Approach Red Ocean Strategy Strategic Focus Choosing attractive industries and building competitive positions within them Strategic Outperforming the competition Goal Analytic Tools Porter’s 5 Forces Value Chain Generic Strategies Blue Ocean Strategy - Value Innovation Redefining industry boundaries Creating new market space Making the competition irrelevant Value Curves 6 Paths 28 Blue Ocean Strategy Casella Wines Yellow tail 29 Callaway Big Bertha 30 Swiss Watch 31 Q&A 謝謝指教! 32
