Blue ocean strategy : how to create uncontested market space by W Chan Kim; Renée Mauborgne

By W Chan Kim; Renée Mauborgne

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Blue Ocean Strategy: How to Create Uncontested Market Space and Make Competition Irrelevant

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Champion created a blue ocean by offering the decisive advantages of both strategic groups. Its prefabricated houses are quick to build and benefit from tremendous economies of scale and lower costs, but Champion also allows buyers to choose such high-end finishing touches as fireplaces, skylights, and even vaulted ceilings to give the homes a personal feel. In essence, Champion has changed the definition of prefabricated housing. As a result, far more lowerto middle-income buyers have become interested in purchasing pre- Reconstruct Market Boundaries 61 fabricated housing rather than renting or buying an apartment, and even some affluent people are being drawn into the market.

Path 1: Look Across Alternative Industries In the broadest sense, a company competes not only with the other firms in its own industry but also with companies in those other industries that produce alternative products or services. Alternatives are broader than substitutes. Products or services that have different forms but offer the same functionality or core utility are often substitutes for each other. On the other hand, alternatives include products or services that have different functions and forms but the same purpose.

The time from your car to takeoff is measured in minutes instead of hours. 3 NetJets offers substantial cost savings in total travel time. Perhaps most appealing, your jet is always available with only four hours’ notice. If a jet is not available, NetJets will charter one for you. Last but not least, NetJets dramatically reduces issues related to security threats and offers clients customized in-flight service, such as having your favorite food and beverages ready for you when you board. By offering the best of commercial travel and private jets and eliminating and reducing everything else, NetJets opened up a multibillion-dollar blue ocean wherein customers get the convenience and speed of a private jet with a low fixed cost and the low variable cost of commercial airline travel (see figure 3-1).

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