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Getting the Strategic Sequence Right

Getting the Strategic Sequence Right. Blue Ocean Strategy, Chapter 6 Paul Shirley Jonathan McLaurin Marsha Swink. The Fourth Principle of Blue Ocean Strategy. Build a robust business model to ensure that you make a healthy profit on your blue ocean idea The Strategy Sequence

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Getting the Strategic Sequence Right

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  1. Getting the Strategic Sequence Right Blue Ocean Strategy, Chapter 6 Paul Shirley Jonathan McLaurin Marsha Swink

  2. The Fourth Principle of Blue Ocean Strategy • Build a robust business model to ensure that you make a healthy profit on your blue ocean idea • The Strategy Sequence • Buyer utility • Price • Cost • Adoption

  3. Buyerutility Is there exceptional buyer utility in your business idea? No- Rethink Yes Revenue side of the business model Price Is your price easily accessibly to the mass of buyers? No- Rethink Yes Cost

  4. 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 Viable Blue Ocean Idea

  5. Buyer Utility • Don’t get caught in the trap! • Use the Buyer Utility Map

  6. Buyer Utility Map The Six Stages of the Buyer Experience Cycle The Six Utility Levers

  7. Buyer Utility Map-Wholesale Store The Six Stages of the Buyer Experience Cycle The Six Utility Levers

  8. Blue Ocean Strategic Pricing • Want and Compelling Ability to Pay • Finding the Right Price • Excludability • Originators or Followers-Imitators • Combine with Exceptional Utility

  9. The Price Corridor of the Mass • Step 1- Identify the Price Corridor • Same Form- Same Products or Services. • Different Form, Same Function- Different look, but same use. 3. Different Form and Function- Completely different, but same overall objective.

  10. The Price Corridor of the Mass • Step 2- Price level within the price corridor • Upper-level Pricing- Many Patents and Asset protection • Mid-level Pricing- Fewer patents and Asset safe- guards • Lower-level Pricing- With out patent protection. Costco- Volume brings cost advantages

  11. Target Costing-The Profit Side • Price Minus Costing- To arrive at a desired profit. • Working Backwards to arrive at the Target Cost. • Support the necessities and still make a profit. • Three Levers to achieve the Target Cost.

  12. Lever One - Streamlining and Cost Innovations • Most effective and efficient ways of achieving the same task • Outsourcing, simplifying, choosing locations • Unconventional means of production.

  13. Lever Two - Partnering • Using other’s expertise • Averret Trucking for Inbound and Outbound shipping • Acquisitions • Vertical and Horizontal Integration

  14. Lever Three – Pricing Innovation • Changing the Price Model • If all else fails, change it! • Using other industry’s price models. • Buying-Leasing-Renting

  15. Main Stakeholders Educate Keys • Employees • Business Partners • General Public • Open discussion for why • Set clear expectations • Explain its merits • Need voices of shareholders to be heard • No surprises

  16. Blue Ocean Idea Index

  17. What’s Next After Passing BOI Index • Shift gears to execution • 5th principle of BOS Overcoming key organizational hurdles

  18. Take Aways • Utility Map • If all else fails, change your price model • BOI Index

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