Your Strategy

Needs A Strategy

Vijay Tandon onBlue Ocean Strategy @ UBS

Prof. Vijay TandonDirector – PGDM/PGCM/PGPM ProgramUniversal Business SchoolSubject - International Business ManagementTopic - Blue Ocean Strategy (Part 1)

A Strategy against

All Strategies

Vijay Tandon on Blue Ocean Strategy @ UBS

What is the colour of yourstrategy canvas?

RED BLU

E

OR

Vijay Tandon on Blue Ocean Strategy @ UBS

RED OCEANWhy the ocean is red

Vijay Tandon on Blue Ocean Strategy @ UBS

What makes the Ocean BLOODY RED?

BLOODY RED OCEANAggressive/Intense/cut throat competition

Vijay Tandon on Blue Ocean Strategy @ UBS

Competitors compete for customers

RED OCEAN - There is one market

Vijay Tandon on Blue Ocean Strategy @ UBS

BLUE OCEANHow to make competition irrelevant

Vijay Tandon on Blue Ocean Strategy @ UBS

What is BLUE OCEAN STRATEGY?Vijay Tandon on Blue Ocean Strategy @ UBS

Tomorrows leading companies will succeed not by battling competitors , but by creating BLUE OCEANS

Vijay Tandon on Blue Ocean Strategy @ UBS

Strategic Approach – A strategic shift

How to createuncontested market space

There is no competitorMake the competition irrelevant

Vijay Tandon on Blue Ocean Strategy @ UBS

BLUE OCEAN VS. RED OCEANVijay Tandon on Blue Ocean Strategy @ UBS

RED OCEAN BLUE OCEAN

• Known market space• Many competitors• Fight for market share

• Unknown market space• Few competitors• Create market share

Cut throat competition turns the Ocean bloody red

New market makes competition irrelevant

Vijay Tandon on Blue Ocean Strategy @ UBS

“Bloody competition to take a larger share in the market”

RED OCEAN

BLUE OCEAN“Why compete when you

don’t have to?”

Vijay Tandon on Blue Ocean Strategy @ UBS

Compete in existing market place

Beat the competition

Exploit existing demand

Make the value-cost trade off

Align organization - Low cost or differentiation

Create uncontested market place

Make the competition irrelevant

Create & capture new demand

Break the value-cost trade off

Align organization - Low cost & differentiation

Defend current position perspective

Innovate & pursue new opportunities perspective

RED OCEAN BLUE OCEANVS.

Vijay Tandon on Blue Ocean Strategy @ UBS

How to get out of Bloody RED Ocean?

Rivals are fighting over a shrinking profit pool

Vijay Tandon on Blue Ocean Strategy @ UBS

Your choice: Live in a red ocean of aggressive competitors

Or move to a blue ocean & make competition irrelevantVijay Tandon on Blue Ocean Strategy @ UBS

Strategic Choice

BLUE OCEAN

Vijay Tandon on Blue Ocean Strategy @ UBS

Make your competition irrelevant

Don’t compete

Vijay Tandon on Blue Ocean Strategy @ UBS

Value Innovation - The cornerstone of BOS

Cost savings are made by Eliminating & Reducing competing factors

Buyer value is lifted by Raising & creating new elements the industry has never offered

Driving costs down while simultaneouslydriving value up for buyers

Imagination is more important than knowledge – Albert Einstein Vijay Tandon on Blue Ocean Strategy @ UBS

01 02 03 04

BLUE OCEAN STRATGEYThe four actions framework

ELIMINATE REDUCE RAISE CREATE

Vijay Tandon on Blue Ocean Strategy @ UBS

The four actions framework(BLUE OCEAN MATRIX)

1

24

3

ELIMINATE

REDUCE

CREATE RAISE

What can we ELIMINATE?

What can weRAISE?

What can we REDUCE?

What can we CREATE?

Vijay Tandon on Blue Ocean Strategy @ UBS

The four actions framework

E RCR

• Factors industry takes for granted should be eliminated

Eliminate

• Which factors should be reduced well below industry’s standard

Reduce

• Which factors should be raised well above industry’s standards

Raise

• Which factors should be created that industry has never offered

Create

New value curve

Vijay Tandon on Blue Ocean Strategy @ UBS

Structuralist view vs Reconstructionist view

Conventional vs Unconventional thinking

Market boundaries & industry structure are not given & can be RECONSTRUCTED

Vijay Tandon on Blue Ocean Strategy @ UBS

How to surf in the BLUE OCEANThe key challenges

Vijay Tandon on Blue Ocean Strategy @ UBS

Companies that successfully createdBLUE OCEANS

Vijay Tandon on Blue Ocean Strategy @ UBS

Companies that successfully createdBLUE OCEANS

Vijay Tandon on Blue Ocean Strategy @ UBS

How Yellow tail wines an Australian wine makerCreated their BLUE OCEAN in the USA

FROM A MATURE MARKET TO ABLUE OCEAN

Vijay Tandon on Blue Ocean Strategy @ UBS

From an occasional drink to aSOCIAL DRINK….

Vijay Tandon on Blue Ocean Strategy @ UBS

Broke the strategic profile

Vijay Tandon on Blue Ocean Strategy @ UBS

Instead of offering Wine as a Wine. Casella created a social drink accessible to everyone

How Yellow tail used the 4 framework BLUE OCEAN

• Raised

• Eliminated

• Reduced

• Created

Four Pillars

Vijay Tandon on Blue Ocean Strategy @ UBS

MADE THEIR COMPETITIONIRRELEVANT

FROM A MATURE MARKET TO A BLUE OCEAN

ELIMINATED: Oenological terminology & distinctions, aging qualities & above the line marketing

REDUCED: Wine complexity, wine range, vineyard prestige

RAISED: Price versus budget wines, simplicity of retail store environment, enthusiasm of sales people

CREATED: Easy drinking, ease of selection, sense of fun & adventure

Fastest growing brand in the histories of both Australian and US wine industriesVijay Tandon on Blue Ocean Strategy @ UBS

Don’t use competition as the benchmarkFollow strategic logic – VALUE INNOVATION

The right strategic move opens doors to BLUE OCEANVijay Tandon on Blue Ocean Strategy @ UBS

TIER I“Soon-to- be”

Tier IIRefusing

Tier IIIUnexplored

Soon to be non-customers who are on the edge of your market waiting to jump ship

Refusing non-customers who consciously choose against your market

Unexplored non-customers who are in market distant from yours

3 Tiers of Non-customers

Reach beyond existing demand

Go for the largest catchment of non-customers Vijay Tandon on Blue Ocean Strategy @ UBS

The only way to beat the competition isstop trying to beat the competitionRENEE MAUBORGNE & W Chan Kim

Vijay Tandon on Blue Ocean Strategy @ UBS

If you try to remain unique, you will be the only one

If you try to be the best, you will be number one

Vijay Tandon on Blue Ocean Strategy @ UBS

If you will compete, you will be number one, but if you create you will be the only one.

Vijay Tandon on Blue Ocean Strategy @ UBS

BLUE OCEANIs the

Vijay Tandon on Blue Ocean Strategy @ UBS

THANK YOU

Vijay Tandon on Blue Ocean Strategy @ UBS