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fran cin e fl eiScher
W. Chan Kim is codirector of the INSEAD
Blue Ocean Strategy Institute and The Boston
Consulting Group Bruce D. Henderson Chair
Professor of Strategy and International
Management at INSEAD, France.
bLue oCean STraTegY
The inTernaTionaL
beSTSeLLer noW WiTh
a neW prefaCe, freSh ChapTerS,
and updaTed CaSe STudieS

a beSTSeLLer aCroSS 5 ConTinenTS
more Than 3.5 miLLion CopieS
SoLd WorLdWide
renée mauborgne is the INSEAD
Distinguished Fellow and a professor of
strategy at INSEAD. She is also codirector of
the INSEAD Blue Ocean Strategy Institute.
TranSLaTed inTo 43 LanguageS
a Wall Street Journal,
BuSineSSWeek, and
FaSt Company beSTSeLLer
To learn more about the power of blue ocean
strategy, visit blueoceanstrategy.com.
There you’ll find all the resources you
need—from ideas in practice and cases from
government and private industry, to teaching
materials, mobile apps, real-time updates,
and tips and tools to help you make your
blue ocean journey a success.
Kim | mauborgne
man age me n t
expanded ediTion of The
inTernaTional besTseller
US$32.00 / CAN$37.00
oVer
3.5 Milli
o
Copies s n
old
T
bLue
oCean
STraTegY
how to Create uncontested market Space
and make the Competition irrelevant
ISBN-13: 978-1-62527-449-6
90000
W. Chan Kim | renée mauborgne
ViSit hbr.org
follow @harVardbiz on twitter
find uS on facebook, linkedin, youtube, and google+
hbr.org
9 781625 274496
his global bestseller, embraced
by organizations and industries
worldwide, challenges everything you
thought you knew about the requirements for
strategic success.
Now updated with fresh content from
the authors, Blue Ocean Strategy argues that
cutthroat competition results in nothing but
a bloody red ocean of rivals fighting over a
shrinking profit pool. Based on a study of 150
strategic moves (spanning more than 100
years across 30 industries), the authors argue
that lasting success comes not from battling
competitors but from creating “blue oceans”—
untapped new market spaces ripe for growth.
Blue Ocean Strategy presents a systematic
approach to making the competition
irrelevant and outlines principles and tools
any organization can use to create and capture
their own blue oceans. This expanded edition
includes:



jacket d esi gn: ste phani fi nks
Stay informed. Join the diScuSSion.
The expanded ediTion of The
inTernaTional besTseller
HARVARD BUSINESS REVIEW PRESS
A new preface by the authors: Help! My
Ocean Is Turning Red
Updates on all cases and examples in the
book, bringing their stories up to the present
time
Two new chapters and an expanded third
one—Alignment, Renewal, and Red Ocean
Traps—that address the most pressing
questions readers have asked over the past
10 years
A landmark work that upends traditional
thinking about strategy, this bestselling
book charts a bold new path to winning the
future. Consider this your guide to creating
uncontested market space—and making the
competition irrelevant.
Blue Ocean Strategy
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Blue Ocean
Strategy
How to Create Uncontested Market Space
and Make the Competition Irrelevant
W. Chan Kim
Renée Mauborgne
H A R VA R D B U S I N E S S R E V I E W P R E S S
BOSTON, MASSACHUSETTS
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Copyright 2015 Harvard Business School Publishing Corporation
All rights reserved
No part of this publication may be reproduced, stored in or introduced into a
retrieval system, or transmitted, in any form, or by any means (electronic, mechanical, photocopying, recording, or otherwise), without the prior permission of the
publisher. Requests for permission should be directed to permissions@hbsp.harvard.
edu, or mailed to Permissions, Harvard Business School Publishing, 60 Harvard
Way, Boston, Massachusetts 02163.
The web addresses referenced in this book were live and correct at the time of the
book’s publication but may be subject to change.
Kim, W. Chan.
Blue ocean strategy : how to create uncontested market space and make the
competition irrelevant / W. Chan Kim, Renée Mauborgne. — Expanded edition.
pages cm
Includes bibliographical references and index.
1. New products. 2. Market segmentation.
HF5415.153.K53 2015
658.8’02—dc23
I. Mauborgne, Renée.
II. Title.
2014032847
eISBN 978-1-62527-450-2
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To friendship and to our families,
who make our worlds
more meaningful
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Contents
Help! My Ocean Is Turning Red
ix
Preface to the Original Edition
xxi
Acknowledgments
xxv
Part One: Blue Ocean Strategy
1
Creating Blue Oceans
2
Analytical Tools and Frameworks
3
25
Part Two: Formulating Blue Ocean Strategy
3
Reconstruct Market Boundaries
49
4
Focus on the Big Picture, Not the Numbers
83
5
Reach Beyond Existing Demand
103
6
Get the Strategic Sequence Right
117
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Contents
viii
Part Three: Executing Blue Ocean Strategy
7 Overcome Key Organizational Hurdles
147
8 Build Execution into Strategy
171
9 Align Value, Profit, and People Propositions
189
10 Renew Blue Oceans
203
11 Avoid Red Ocean Traps
215
Appendix A
225
Appendix B
245
Appendix C
249
Notes
253
Bibliography
263
Index
271
About the Authors
285
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Help! My Ocean Is Turning Red
H

captures the sentiment echoed so frequently by managers around the
world. More and more people, whether managers of companies,
heads of nonprofits, or leaders of government, find themselves up
against an ocean of bloody competition and want to get out. Maybe
your business is seeing its margins shrink. Maybe competition is
getting more intense, driving commoditization of your offering and
rising costs. Maybe you know you are going to announce that salary increases won’t be coming. That’s not a situation any one of us
wants to face. And yet that’s a situation that so many do face.
How can you address this challenge? The lessons, tools, and
frameworks of Blue Ocean Strategy will help you to meet this challenge, whatever industry or economic sector you are in. It shows
how you can get out of a red ocean of bloody competition and into
a blue ocean of uncontested market space characterized by new
demand and strong profitable growth.
When we wrote Blue Ocean Strategy, we used the metaphor
of red and blue oceans because red oceans seemed to capture the
reality that organizations increasingly face, while blue oceans
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ELP! MY OCEAN IS TURNING RED”
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x
Help! My Ocean Is Turning Red
captured the endless possibility that organizations could create, as
industry history has borne out since its inception. Today, ten years
later, more than 3.5 million copies of the book have been sold. It
has become a bestseller across five continents. It has been translated into a record-breaking forty-three languages. And the term
“blue ocean” has entered the business vernacular. Over four thousand articles and blog posts on blue ocean strategy have come out,
with new articles continuing to appear daily worldwide.
The stories they contain are fascinating. There are articles from
small business owners and individuals across the globe that discuss how the book fundamentally changed their perspectives on
life and took their professional successes to all new levels. In other
articles, executives speak of how blue ocean strategy provided the
insight to take their business out of the red ocean and create all
new demand. And yet other articles detail how government leaders
have applied blue ocean strategy to achieve high impact at low cost
with rapid execution in areas of social importance ranging from
enhancing the quality of rural and urban lives, to strengthening
internal and external securities, to breaking down ministerial and
regional silos.1
As we have reached out to organizations that have applied the
ideas and have worked with many directly since the publication
of the original edition of Blue Ocean Strategy, we have learned a
lot by watching the journey people have made with these ideas.
Their most pressing questions in executing their blue ocean strategies are: How do we align all of our activities around our blue
ocean strategy? What do we do when our blue ocean has become
red? How can we avoid the strong gravitational pulls of “red ocean
thinking”—we call them “red ocean traps”—even as we’re pursuing a blue ocean strategy? These are the very questions that have
motivated this expanded edition. In this new preface, we first outline what’s new here. We then briefly summarize the key points
that define and distinguish blue ocean strategy and address why
we believe blue ocean strategy is more needed and relevant than
ever before.
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Help! My Ocean Is Turning Red
xi
What’s New in This Expanded Edition?
This edition adds two new chapters and expands a third. Here are
the highlights that show the gist of managers’ key challenges and
trouble spots and how we address them.
Alignment: What it means, why it’s essential, and how to
achieve it. A challenge we have been told about and have seen
organizations struggle with is how they can align their system of
activities—including a potential web of external partners—to create a sustainable blue ocean strategy in practice. Is there a simple
yet comprehensive method to ensure that the key components of
an organization, from value to profit to people, are aligned to support the strategic shift blue ocean strategy requires? This is important as companies all too often focus on certain dimensions of their
organizations, paying less heed to other dimensions that must support the strategy to make it a sustainable success. In recognition,
this expanded edition expressly explores the issue of alignment in
the context of blue oceans. We present cases of success and failure in
alignment to show not only how it is achieved in action but also how
it can be missed. Chapter 9 addresses this alignment challenge.
Renewal: When and how to renew blue oceans over time.
All companies rise and fall based on the strategic moves they make
or don’t make. A challenge organizations face is how to renew blue
oceans over time, as every blue ocean will eventually be imitated
and turn red. Understanding the process of renewal is key to
ensure that the creation of blue oceans is not a one-off occurrence
but can be institutionalized as a repeatable process in an organization. In this expanded edition, we tackle how leaders can turn the
creation of blue oceans from a static achievement into a dynamic
renewal process both at the business level and at the corporate
level for multibusiness firms. Here we articulate the dynamic
renewal process for creating sustainable economic performance
both for a single business that has reached for a blue ocean and for
a multibusiness organization that has to balance both red and blue
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Help! My Ocean Is Turning Red
xii
ocean initiatives. In so doing, we also highlight the complementary roles that red and blue ocean strategies play in managing a
company’s profit for today while building strong growth and brand
value for tomorrow. Chapter 10 addresses this renewal challenge.
Red Ocean Traps: What they are and why they should be
avoided. Lastly, we show the ten most-common red ocean traps
we see companies fall into as they put blue ocean strategy into
practice. These traps keep companies anchored in the red even as
they attempt to set sail for the blue. Addressing these traps is critical to getting people’s framing right to create blue oceans. With
the proper grasp of the concept, one can avoid the traps and apply
its associated tools and methodologies with accuracy so that right
strategic actions can be produced to sail toward clear blue waters.
Chapter 11 addresses the challenge of red ocean traps.
What Are the Main Points of Distinction?
The aim of blue ocean strategy was straightforward: to allow any
organization—large or small, new or incumbent—to step up to the
challenge of creating blue oceans in an opportunity-maximizing,
risk-minimizing way. The book challenges several long-held beliefs
in the field of strategy. If we had to zoom in on five key points of
distinction that make the book worthy of consideration, it would
be these.
Competition should not occupy the center of strategic
thinking. Too many companies let competition drive their strategies. What blue ocean strategy brings to life, however, is that this
focus on the competition all too often keeps companies anchored in
the red ocean. It puts the competition, not the customer, at the core
of strategy. As a result, companies’ time and attention get focused on
benchmarking rivals and responding to their strategic moves, rather
than on understanding how to deliver a leap in value to buyers—
which is not the same thing.
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xiii
Blue ocean strategy breaks from the stranglehold of competition. At the book’s core is the notion of a shift from competing to
creating new market space and hence making the competition
irrelevant. We first made this point all the way back in 1997 in
“Value Innovation,” the first of our series of Harvard Business
Review articles that form the basis of this book.2 We observed that
companies that break away from the competition pay little heed
to matching or beating rivals or carving out a favorable competitive position. Their aim was not to outperform competitors. It was
to offer a quantum leap in value that made the competition irrelevant. The focus on innovating at value, not positioning against
competitors, drives companies to challenge all the factors an
industry competes on and to not assume that just because the competition is doing something means it is connected to buyer value.
In this way, blue ocean strategy makes sense of the strategic
paradox many organizations face: the more they focus on coping
with the competition, and striving to match and beat their advantages, the more they ironically tend to look like the competition. To
which blue ocean strategy would respond, stop looking to the competition. Value-innovate and let the competition worry about you.
Industry structure is not given; it can be shaped. The field
of strategy has long assumed that industry structure is given. With
industry structure seen as fixed, firms are driven to build their
strategies based on it. And so strategy, as is commonly practiced,
tees off with industry analysis—think five forces or its distant precursor SWOT analysis—where strategy is about matching a company’s strengths and weaknesses to the opportunities and threats
present in the existing industry. Here strategy perforce becomes
a zero-sum game where one company’s gain is another company’s
loss, as firms are bound by existing market space.
Blue ocean strategy, by contrast, shows how strategy can shape
structure in an organization’s favor to create new market space. It
is based on the view that market boundaries and industry structure are not given and can be reconstructed by the actions and
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xiv
Help! My Ocean Is Turning Red
beliefs of industry players. As industry history shows, new market spaces are being created every day and are fluid with imagination. Buyers prove that as they trade across alternative industries,
refusing to see or be constrained by the cognitive boundaries
industries impose upon themselves. And firms prove that as they
invent and reinvent industries, collapsing, altering, and going
beyond existing market boundaries to create all new demand. In
this way, strategy moves from a zero-sum to a non-zero-sum game,
and even an unattractive industry can be made attractive by companies’ conscious efforts. Which is to say a red ocean need not stay
red. This brings us to a third point of distinction.
Strategic creativity can be unlocked systematically. Ever
since Schumpeter’s vision of the lone and creative entrepreneur,
innovation and creativity have been essentially viewed as a black
box, unknowable and random.3 Not surprisingly, with innovation
and creativity viewed as such, the field of strategy predominantly
focused on how to compete in established markets, creating an arsenal of analytic tools and frameworks to skillfully achieve this.
But is creativity a black box? When it comes to artistic creativity
or scientific breakthroughs—think Gaudi’s majestic art or Marie
Curie’s radium discovery—the answer may be yes. But is the same
true for strategic creativity that drives value innovation that opens
up new market spaces? Think Ford’s Model T in autos, Starbucks in
coffee, or Salesforce.com in CRM software. Our research suggests
no. It revealed common strategic patterns behind the successful
creation of blue oceans. These patterns allowed us to develop underlying analytic frameworks, tools, and methodologies to systematically link innovation to value and reconstruct industry boundaries
in an opportunity-maximizing, risk-minimizing way. While luck, of
course, will always play a role, as it does with all strategies, these
tools—like the strategy canvas, four actions framework, and six
paths to reconstruct market boundaries—bring structure to what
has historically been an unstructured problem in strategy, informing organizations’ ability to create blue oceans systematically.
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xv
Execution can be built into strategy formulation. Blue
ocean strategy is a strategy that joins analytics with the human
dimension of organizations. It recognizes and pays respect to the
importance of aligning people’s minds and hearts with a new strategy so that at the level of the individual, people embrace it of their
own accord and willingly go beyond compulsory execution to voluntary cooperation in carrying it out. To achieve this, blue ocean
strategy does not separate strategy formulation from execution.
Although this disconnect may be a hallmark of most companies’
practices, our research shows it is also a hallmark of slow and
questionable implementation and mechanical follow-through at
best. Instead, blue ocean strategy builds execution into strategy
from the start through the practice of fair process in the making
and rolling out of strategy.
Over twenty-five years, we have written about the impact of fair
process on the quality of execution of decisions through many academic and managerial publications.4 As blue ocean strategy brings
to light, fair process prepares the ground for implementation by
invoking the most fundamental basis of action: trust, commitment,
and the voluntary cooperation of people deep in an organization.
Commitment, trust, and voluntary cooperation are not merely
attitudes or behaviors. They are intangible capital. They allow
companies to stand apart in the speed, quality, and consistency of
their execution and to implement strategic shifts fast at low cost.
A step-by-step model for creating strategy. The field of strategy has produced a wealth of knowledge on the content of strategy.
However, what it has remained virtually silent on is the key question of how to create a strategy to begin with. Of course, we know
how to produce plans. But, as we all know, the planning process
doesn’t produce strategy. In short, we don’t have a theory of strategy creation.
While there are many theories that explain why companies fail
and succeed, the …
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