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BLUE OCEAN STRATEGYGROUP 5:

1. VŨ THỊ PHƯƠNG THANH2. KIỀU THỊ THU TRANG3. NGUYỄN THỊ THU TRANG4. MAI THỊ HOÀ

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Contents

Background Knowledge

World’s Cases

Vietnam’s Cases

Misconceptions

Conclusion

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What is the BLUE OCEAN?Blue oceans denote all industries NOT in existence today

The Unknown market space

Untainted by competition

In Blue Oceans, demand is created not fought overIn Blue Oceans, growth is profitable and rapid

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Red Ocean vs. Blue Ocean

• Compete in existing market space

• Beat the competition

• Exploit existing demand

• Make the value/cost trade-off

• Align the whole system of company’s activities with its strategic choice of differentiation OR low cost

• Create uncontested market space

• Make the competition irrelevant

• Create and capture new demand

• Break the value/cost trade-off

• Align the whole system of a company’s activities in pursuit of differentiation AND low cost

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Two ways to create a BLUE OCEAN

Give rise to complete new

industries

EBAY(online auction

industry)

Create WITHIN a Red Ocean when a

company alters the boundaries of an existing company

Cirque du Soleil

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Automobile industry

Chrysler’s Minivan (1984)

Japanese Car (1970s)

GM (1924)

Ford Model T (1908)

Presenter: Vũ Thị Phương Thanh

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Historical Situation (1890s)

The horse and buggy was the primary means of US transportation

Auto manufacturers built custom-made automobiles

Autos were an unreliable and luxury novelty

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FORD MODEL T

Horseless carriage

Reliable

Highly affordable

Durable

Highly standardized

Easy to be fixed

FORD MODEL T

“Watch the Ford Go By, High Priced Quality in a Low Priced Car.”

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Results

1Ford’s market share surged from 9 percent in 1908 to 61 percent in 1921

2By 1923, a majority of American households owned an automobile

3Model T replaced the horse-drawn carriage as the primary means of transport in the United States

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General Motors

Comfortable

Fun

Fashionable

Exciting

“A car for every purse and purpose”

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Results1

From 1926 to 1950, the total number of cars sold in theUS increased from 2 million to 7 million a year

2

General Motors increased its overall market share from 20% to 50%

3

GM became one of three biggest automobile companies, together with Ford and Chrysler, accounted for 90% market share

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SMALL AND FUEL-EFFICIENT JAPANESE CARS

RUTHLESS QUALITY

SMALL SIZE

NEW UTILITY OF HIGHLY GAS-EFFICIENT

BLUE OCEAN

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Results

Almost overnight the Japanese became heroes in consumers’ minds

Making BIG THREE to loss 4b dollars in 1980

US manufacturers captured only 60% market shares

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CHRYSLER’S MINIVANBreaking the boundary between car and van: Smaller than the traditional van and yet more spacious than the station wagon

Built on the Chrysler K car chassis, the minivan drove like a car but provided more interior room and could still fit in the family garage

Within three years, Chrysler gained $1.5 billion from the minivan’s introduction alone

By 1998, total sales of new light trucks (minivans, SUVs, and pickups) reached 7.5 million, nearly matching the 8.2 million new car sales

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Case: Bloomberg

Industry: Business information provider

Strategy: Reconstruct market boundaries

Approach: Look across the chain of customer

Presenter: Kiều Thị Thu Trang

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Look across the chain of customer

- Shifting focus upstream from purchasers (IT managers) to users (traders and analysts)

- Designing system to offer users better value with a easy-to-use, broker-friendly computer system

- Adding information and purchasing services to enhance users’ personal lives

the traders & analysts exert their powers within the firm to drive IT managers to purchase from Bloomberg

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Results & Lessons

One of the largest and most profitable businessinformation providers in the world.

Look Across the Chain of Buyers… Challenging an industry’s conventional understanding about which buyer

group to target can lead to the discovery of new blue ocean. By looking across buyer groups, companies can gain new insights into how

to redesign their value curves to focus on a previously overlooked set of buyers.

Should ask:• What is the chain of buyers in your industry?• Which buyer group does your industry typically focus on? • If you shifted the buyer group of your industry, how could you unlock new

value?

RESULT

LESSONS

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Cases in Vietnam

Pho 24

Bedded coach

Shampoo for men

Soft drink with fresh tea favor

Presenter: Mai Thị Hoà

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Nam An Group

RAISE Food safety standards, customer services

ELIMINATEChemical seasoning

not good for health

CREATEAttractive restaurant

space design

REDUCESalt, sugar

VALUE

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How far has Pho24 been swimming?After finding its blue ocean, the company quickly franchised the brand Pho24 and raised market share.

Pho24 plans to open more stores in all major cities of Vietnam as well as in overseas markets, where there are extensive Asian populations.

By June 2010, Pho24 has opened 77 outlets in:

Big Cities in Vietnam: Ho Chi Minh City, Ha Noi, Da Nang, Vung Tau, Nha Trang, Binh Duong

Asia Countries: Jakarta (Indonesia), Manila (Philippines), Seoul (Korea), Phnom Penh (Cambodia), Sydney (Australia) and Hong Kong.

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Ladies, do you want your man to be more confident, manlier and everything that a real man should be?

Guys, have you been searching for that special type of personal care products that are created just for you?

The real man

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Values created by X-men

RAISE Men’s

confidence and style

ELIMINATEMen’s habit of

using the same

shampoo with women

CREATEConsumer behaviour, customer

awareness

REDUCENeedless chemicals

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How can X-men swim in the men’s shampoo market?

Strategy of product

diversification

X-men for boss

Teen-XX-men sport

Although there are many other products like X-men Facial Foam, deodorant, perfume, it still focuses on marketing campaigns for shampoo, esp. the X-Mission

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Key factsMarketing budget for X-men is only 599.000USD in 2006

X-men accounts for 7% of the shampoo market share in Vietnam => Top 5 shampoos in Vietnam

The leading men’s personal care brand since Dec 2003 (over 60% of market share in this segmentation)

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BLUE OCEAN STRATEGY MISCONCEPTIONS

Presenter: Nguyễn Thị Thu Trang

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Misconception 1: Blue Ocean is about new products, new technologies

or diversification beyond a company’s core business. Not about extension of existing product lines, nor about technology innovations per se.

Failure Case: Motorola

Exceptional value creation to capture new demand, with or without new technology.

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Misconception 2: Blue Ocean Strategy asks companies to evade the

competition

• Together with red oceans form a continuum

• Equally important in business practice

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Misconception 3: Blue Ocean is only wishful thinking, as any blue

ocean created usually turns red rapidly

• a process rather than a market outcome• Excellent utilities => strategic price => cost driven down => imitation

barrier

Eg: Swatch $80 -> $40 => mass market buyers

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Misconception 4: Blue Ocean Strategy is like an old wine in a new

bottle, as it is just a modified version of differentiation strategy

Not about a trade-off between differentiation and low cost, but breaking it.

Leverages existing resources to achieve breakthroughs in value.

Case: Southwest Airlines

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CONCLUSIONBalance blue ocean and red ocean.

Achieve sustainability

Need not only enthusiasm and passion but also a systematic analytical approach and an effective process of strategy formulation and execution.