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Value Innovation
Blue ocean strategy is about revolutionary
value innovation.
Value innovation is created in the region where
a company’s actions favorably affect both its cost structure and its
value proposition to buyers. Cost savings are made by eliminating and
reducing the factors an industry competes on. Buyer value is lifted by
raising and creating elements the industry has never offered. Over time,
costs are reduced further as scale economies kick in due to the high sales
volumes that superior value generates.
Red Ocean Strategy
In the red ocean (Head-To-Head competition
area),
differentiation costs because firms
compete with the same
best-practice principle. Here, the strategic choices for firms are to pursue
either differentiation or low cost.
The focus is on rivals within an industry,
competitive
position within a strategic group; better
serving the buyer group, maximizing the value of product or service
offerings within the bounds of its industry, and adapting to external trends
as they occur.
Blue Ocean Strategy
In case of revolutionary value innovation (radical
innovation), the strategic aim is to create new best-practice rules by
breaking the existing value-cost trade-off and thereby creating blue ocean.
To define a blue ocean strategy, you should
look across alternative industries, look across strategic group within
industry, redefine the industry buyer group, look across to complementary
product and service offerings, and participate in shaping external trends
over time. You need to
stand
apart in the marketplace. So, your strategy must deviate from
me-too-ism, and your value curve must diverge from industry standards.
Venture Strategies and Blue Ocean Strategy
“Blue Ocean Strategy” is quite synonymous to
the well-known term “Venture
Strategy.” Venture strategies have been being practiced by many
market
leaders for decades. The difference between “Venture Strategies” and
“Blue Ocean Strategies” is as follows. Venture strategies deal specifically
with technology innovation that
must be brought to the market
very
fast.. "Blue Ocean Strategy" talks about
value innovation in general; speed-to-market is not emphasized.
The Six Principles of Blue Ocean Strategy
The six principles drive the successful
formulation and
execution of Blue Ocean Strategy.
These principles attenuate the six risks...
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