BLUE OCEAN

STRATEGY
Prepared by:
Ade Suherlan
 How to Create
Uncontested Market Space
And Make the Competition Irrelevant
Short Brief: BOS
Create
uncontested
Market space

Create Make
and Capture the competition
New Demand Blue Irrelevant
Ocean
Strategy

Align
the whole system Break
of a firm’s activities
the Value-
in pursuit of
differentiation Cost trade-off
and low cost
Case Study
• Hotel Sofyan Jakarta
• Have 2 and 3 star hotel, there are:
a. Hotel Sofyan Betawi 1 : 3 star hotel
b. Hotel Hotel sofyan Tebet : 2 star hotel
c. Hotel Sofyan Cut Meutia (Betawi 2) : 3 star hotel
• Change the concept to “syariah”
• Change atmosphere : services, product (herbal
bar, no alcohol, no pork,
• Create new demand and capture new market
Hotel Sofyan Sebagai Hotel Syariah (Studi
Kasus : Hotel Sofyan Betawi, Tebet dan
Hotel Sofyan Cikini)
Hotel Sofyan merupakan hotel bintang tiga di Jakarta yang dikelola
dengan konsep syariah. Sebagai hotel bintang tiga yang dikelola
dengan konsep syariah, Hotel Sofyan tidak dapat menghindar dari
persaingan hotel bintang tiga di Jakarta. Persaingan hotel yang
ketat membuat Hotel Sofyan harus memiliki strategi yang baik agar
dapat bersaing dengan hotel lainnya. Hotel Sofyan juga harus
menganalisis lingkungan external dan internalnya, menemukan
posisi persaingan dalam industri, dan membuat formulasi strategi
agar berhasil dalam persaingan.

Hasil dari penelitian ini menunjukkan bahwa Hotel Sofyan memiliki

peluang yang besar untuk berkembang dan bersaing, strategi harga
yang dijalankannya mempengaruhi tingkat hunian secara signifikan
meskipun strategi marketingnya tidak mempengaruhi tingkat
hunian, serta nilai Islam yang digunakan oleh Hotel Sofyan dapat
membuat Hotel Sofyan memiliki pendapatan yang lebih baik
daripada sebelum menggunakan nilai Islam
• Menariknya, apa yang dilakukan tersebut
malah meningkatkan kinerja keuangan
hotel sejak konsolidasi penerapan prinsip
syariah pada 2003. Dari 2003-2004
terjadi kenaikan pendapatan operasi
sebesar 15,13%, 2004-2005 naik 14,81%,
sayangnya pada 2006 lalu kenaikan hanya
4,77%. Diterangkan Riyanto, ini
adalah imbas kenaikan harga BBM pada
akhir 2005 yang membuat laju dunia
usaha melambat.
Case 2
• Syariah Insurance “TAKAFUL”
Case 3
• A whole week's worth of amazing activities organized in
such a way as to maximize your time spent in Cape
Town. Please note that at Downhill Adventures, we do
not believe in set, inflexible itineraries but, will gladly put
together packages tailor-made for each individual client.
• The package we offer below is what we feel offers the
best the Cape has to offer in terms of adventure and
site-seeing and is the perfect mix. However, if you would
like to swoop things around, or add any of the activities
we offer- just let us know!
• Please note that many of these adventures are weather
dependant and Mother Nature does throw in the odd
curve ball now and again. We will always Endeavour to
run the activities as per the schedule but, where not
possible, we will normally re-arrange the itinerary to
best suit current conditions.
Short Brief
• Chapter 1: How to creating Blue Ocean Strategy
• Chapter 2: Introduce the analytical tools and
frameworks that are essential for creating and
capturing blue oceans
• Chapter 3: Identifies the path by which you can
systematically create uncontested market space
across diverse industry domains, hence
attenuating search risk.
• Chapter 4: How to design company’s strategic
planning process to go beyond incremental
improvements to create value innovations.
• Chapter 5: How to maximize the size of a blue
ocean (create the greatest market of new
demand)
• Chapter 6: Lay out the design of strategy
(business model risk)
• Chapter 7: Tipping point leadership
(organizational risk)
• Chapter 8: (Fair process and Management risk),
Integration of execution into strategy making,
thus motivating people to act on and execute a
blue ocean strategy in a sustained way deep in
an organization
• Chapter 9: Discuss dynamic aspects of BOS
(issues of sustainability and renewal)
Blue Ocean Strategy
 Blue
Blue Ocean
Ocean Strategy
Strategy vs
vs Red
Red
Ocean
Ocean Strategy
Strategy
RED OCEAN STRATEGY BLUE OCEAN STRATEGY

Compete in existing market space Create uncontested market space

Beat the competition Make the competition irrelevant

Exploit existing demand Create and capture new demand

Make the Value-cost trade-off Break the Value-Cost trade-off

Align the whole system of a firm’s Align the whole system of a firm’s
activities with its strategic choice activities in pursuit of
of differentiation or low cost differentiation and low cost
THE RISING IMPERATIVE OF CREATING
BLUE OCEANS
• Supply exceeds demand
• Globalization
• Accelerated commoditization of
products and services
• Increasing price wars
• Shrinking profit margins
• Brands are becoming more similar
• Select based on price
PRINCIPLES
Reconstruct Market Boundaries

Reach beyond existing Demand (go for

uncontested space)

Get the strategic sequence right (value

[innovation] first)
Reconstruct Market Boundaries

Boundaries of Head-to-Head Creating

Competition Competition New Market Space

Focuses on rivals within its Looks across alternative

Industry industries
industry
Looks across strategic groups
Focuses on competitive position
Strategic Group within its industry
within strategic group
Redefines the buyer group of
Focuses on better serving the the industry
Buyer Group
buyer group
Looks across to complementary
Scope of Product Focuses on maximizing the value product and service offerings
and Service of product and service offerings that go beyond the bounds of
Offerings within the bounds of its industry its industry
Functional- Focuses on improving price- Rethinks the functional-
emotional performance with the functional- emotional orientation of its
Orientation of an emotional orientation of this industry
Industry industry Participation in shaping external
trends over time
Focuses on adapting to external
Time/Trends
trends as they occur
 Reach Beyond Existing Demand
(go for uncontested space)

• Core customer
• Non-customer
• Soon-to-be-NC
• Refusing customer
 Get the Strategic Sequence right
Buyer utility
Is there exceptional buyer
utility in your business idea? No  Rethink
YES

Price
Is your price easily accessible to
the mass of buyers? No  Rethink
YES

Cost
Can you attain your cost target to
profit at your strategic price?
No  Rethink
YES
Adoption
What are the adoption hurdles in
actualizing your business idea?
Are you addressing them up
front? No  Rethink
YES
A commercially viable
Blue Ocean Strategy
Market Space
• A Blue Ocean is a market space that is created
by identifying an un-served set of customers,
then delivering to them a compelling new
value proposition.
• The only one way to beat competition is to stop
trying to beta the competition
• Red ocean represent all industries in existence today
(market space); industry boundaries are defined and
accepted, and the competitive rules of the game are
known
• Blue ocean denote all industries not inexistence
today (unknown market space)
Cont’d
• Blue ocean are defined by untapped market
space, demand creation, and the opportunity for
highly profitable growth
• Red ocean will always matter and will always be a
fact of business life
• But with supply exceeding demand in more
industries, competing for a share of contracting
markets, while necessary, will not be sufficient to
sustain high performance.
• Company need to go beyond competing
The Continuing Creation of BOS

• The reality is that industries never stand

still
• Blue ocean are features of business life,
past and present
• In Red Ocean, strategy is about confronting
and opponent and fighting over a given
piece of land that is both limited and
constant.
Cont’d

• History of industry shows that the market

universe has never been continuously
constant; rather, blue ocean have
continuously been created over time
• Blue ocean strategy: the capacity to create
new market space that is uncontested
• Deny the distinctive strength of the
business world
The Impact of Creating Blue Ocean

Business Launch
86% 14%

Revenue Impact
62% 38%

Profit Impact 39% 61%

Launches within red oceans Launches for creating blue oceans

The Rising Imperative of Creating
Blue Ocean
The several driving Force:
• Accelerated technological advances have
substantially improve industrial productivity
and have allowed suppliers to produce an
unprecedented array of products and
services
• Increasing number of industries, supply
exceeds demand
• Globalization
From Company and Industry to
Strategic Move
Value Innovation: the cornerstone
of Blue Ocean Strategy
• 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
saving are made by eliminating and reducing the
factors an industry competes on. Buyer value is
lifted by rising and creating elements the industry
has never offered. Over time, cost are reduced
further as scale economies kick in due to the high
sales volumes that superior value generates.
Value Innovation
Cost

Value
Innovation

Buyer Value

The Simultaneous Pursuit of Differentiation and Low Cost

Example: Boutique Hotel
Boutique Hotel Example

• Kampung Sampireun in Garut West Java

• Grand Mahakam
Formulating and Executing BOS

How to succeed in Blue Ocean Strategy?

How can company systematically maximize
the opportunities while simultaneously
minimizing the risks of formulating and
executing blue ocean strategy?
The Six Principles of BOS
Formulation Principles Risk Factor Each
Principle Attenuates
Reconstruct market boundaries Search risk
Focus on the big picture, not the numbers Planning risk
Reach beyond existing demand Scale risk
Get the strategic sequence right Business model risk
Execution Principle Risk Factor each
principle attenuates
Overcome key organizational hurdles Organizational risk
Build execution into strategy Management risk