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What Is Blue Ocean Strategy and How It Is Relevant To "The WORKS Gourmet Burger Bistro" Case Study?

The document discusses Blue Ocean Strategy, which was created by W. Chan Kim and Renee Mauborgne. Blue Ocean Strategy involves creating new market space by changing the boundaries of an industry. It makes competitors irrelevant by creating new value for customers. The cornerstone is value innovation, which redefines value for existing and new customers. Blue Ocean Strategy contrasts with Red Ocean Strategy, where competition is fierce and profits decrease. The document provides examples of how a company called Burger Miller could use Blue Ocean Strategy tools like the four actions framework to break out of cutthroat competition in its industry.

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Divya Raghuvanshi
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83 views5 pages

What Is Blue Ocean Strategy and How It Is Relevant To "The WORKS Gourmet Burger Bistro" Case Study?

The document discusses Blue Ocean Strategy, which was created by W. Chan Kim and Renee Mauborgne. Blue Ocean Strategy involves creating new market space by changing the boundaries of an industry. It makes competitors irrelevant by creating new value for customers. The cornerstone is value innovation, which redefines value for existing and new customers. Blue Ocean Strategy contrasts with Red Ocean Strategy, where competition is fierce and profits decrease. The document provides examples of how a company called Burger Miller could use Blue Ocean Strategy tools like the four actions framework to break out of cutthroat competition in its industry.

Uploaded by

Divya Raghuvanshi
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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What is Blue Ocean Strategy and how it is relevant to "The

WORKS Gourmet Burger Bistro" case study?

Who invented Blue Ocean Strategy and why it is called Blue Ocean Strategy?

EMBA Pro Introduction - As a strategy concept Blue Ocean strategy was first
introduced by Renee Mauborgne and W.Chan Kim, INSEAD Business School professors,
in their book - "Blue Ocean Strategy - How to Create Uncontested Market Space &
Make Competition Irrelevant"

It is called Blue Ocean Strategy (BOS) because it provides managers a toolbox to create,
identify uncontested market space instead of competing in the prevalent market with
cut throat competition and decreasing margins.  BOS makes competitors irrelevant &
creates new consumer value propositions.

What is the cornerstone of Blue Ocean Strategy?

The cornerstone of Blue Ocean Strategy is - "Value Innovation". Value Innovation


puts equal emphasis on both Value and Innovation. Burger Miller needs to not only
redefine the value proposition it is providing to existing customers (clients) but also
needs to create new value proposition for target segments (customers) that at present
are not Burger Miller's clients. Value innovation can open up new uncontested market
space for Burger Miller.

Four Critical Factors that Managers at Burger Miller can use for Value Innovation are -

Buyer Utility - It underlines the core values, features or utility Burger Miller's products or
services deliver to the buyer. The benefits can be both perceived and real.
Price - In traditional scenarios competitors compete in the Sales & Marketing following
traditional approach of pricing - ‘Offer customer more for less’. This can provide serious
challenge to company’s bottomline (profitability).

Cost - Managers at Burger Miller can use value innovation to overcome limitations
suggested by Michael Porter (management guru, strategy guru) in his value cost trade-
off as part of competition based strategy. Using Blue Ocean strategy Burger Miller
managers can pursue both differentiation and low cost simultaneously.

Adoption - When innovation is pursued in isolation of the value then it can lead to very
low level of adoption no matter how significant technological breakthrough is.

Red Ocean Vs Blue Ocean Strategy


\

What is the difference between Blue Ocean Strategy and Red Ocean Strategy? How can Burger Miller
break out of the red ocean of bloody competition?

In the current business environment , Red Ocean is often defined as a competitive


environment where industry boundaries are clearly defined, and existing and new
players are trying to out-perform each other using Value-Cost Trade Off. This leads to
cut-throat competition and race to the bottom, resulting in lower profitability and
higher cost structure as component of total price.

Factors that are leading to Red Ocean of bloody competition -

Niche markets and local monopolies that company’s like Burger Miller able to exploit
are fast disappearing. The firms in Sales & Marketing industry are required to
continuously come up with new solutions.

Various product categories in Sales & Marketing are becoming more similar, leaving
firms to compete only through pricing strategy.
Globalization has also opened doors to suppliers from China, India, Indonesia,
Singapore, Vietnam, Turkey, and other emerging economies to compete in the high cost
market such as United States & European Union.

Consumer behavior in the Sales & Marketing is also fast evolving because of
-technological innovationsgreater access to information, market transparency, and
promotional incentives by competitors)

Increasing commoditization of the products and services have also put pressure on
companies such asBurger Miller.

Accelerated technological innovations and advances are improving industrial


productivity, enabling suppliers to produce vast array of products and services.

Breaking out of Red Ocean of Bloody Competition

Examples of how Blue Ocean Strategy can be used for Burger Miller case study

Burger Miller can use following Blue Ocean Strategy (BOS) tools and techniques to
overcome the red ocean of cut throat competition in Sales & Marketing industry.

What is Eliminate-Reduce-Raise-Create Grid?

Eliminate-Reduce-Raise-Create

Mapping Burger Miller on Blue Ocean Strategy Canvas Grid


Eliminate Raise

Which are the factors that Burger Miller can Which factors need to be improved well above the
eliminate that players in industryname industry has industry standards to provide enhanced value to
long competed on? the customers?
Reduce Create

Which factors Burger Miller can reduce well below Which factors needs to be created by the Burger
the industry level to structure costs? Miller that had never been offered by competitors
in the industry

Six Path Framework for Burger Miller

Red Ocean Competition Blue Ocean Creation


Industry Focuses on rivals within Sales & Exploring opportunities & spot
Marketing industry threats across alternative industries
Strategic Group Focuses on competitive position within Looks across strategic groups within
strategic group Sales & Marketing industry
Buyer Group / Target Focuses on better serving the buyer Redefines the industry buyer group.
Segments group It involves redefining the consumer
segments.
Value proposition offered Core objective is to maximize the value Looks across to complementary
by Burger Miller's of product and service offerings within product and service offerings
products and services the established context.
Functional-emotional Strive to improve the price Rethinks or repurpose the
Orientation performance within the functional- functional-emotional orientation of
emotional orientation under prevailing the Sales & Marketing industry
norms.
Time Spend energy & resources on adapting Actively strive to shape external
to external trends. trends over time

Strategy Alignment
Burger Miller BOS should have three critical qualities -- divergence, a compelling
tagline, and focus .

The four actions of Burger Miller strategy canvas should be guided toward enforcing
these critical qualities. Without these critical qualities, Burger Miller strategy is most
likely to be muddled, undifferentiated, and hard to communicate with a significantly
high cost structure.

The four actions of creating a new value curve should be well guided toward building a
company’s strategic profile with these characteristics. These three characteristics serve
as an initial litmus test of the commercial viability of blue ocean ideas

Burger Miller Needs to Avoid these Six Red Ocean Strategy Traps

Trap 1 - Confusing Technology Innovation with Market-Creating Strategies

Trap 2 - Making Existing Customers Happier

Trap 3 - Treating Market-Creating Strategies as Niche Strategies

Trap 4 - Equating Market-Creating Strategies with Low-Cost Strategies

Trap 5 - Equating Market-Creating Strategies with Differentiation

Trap 6 - Equating Creative Destruction with Market Creation

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