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BLUE OCEAN STRATEGY SIMULATION

Entertainment | Strategy | United Kingdom

Challenge:

As a group, we had to manage a fictitious game console company and improve its share index over number of years. Using blue ocean strategy theories, tools and frameworks, we needed to break away from the competition and create a profitable new blue ocean of market space for our company's offerings. 

Situational Context:

The simulation is broken into two sections: Red Round and Blue Round, with each section consisting of multiple rounds and challenges. 

Round Red

The objective of Round Red is to compete in the Red Ocean and outperform competitors. To do this, we needed to familiarise ourselves with the market and industry; with the organisation and its history; and with the customers and competitors. 

We needed to form a strategy and execute it through multiple decisions: 

  • Innovation and R&D; Corporate Projects; Production; Segmentation Strategy; Marketing; Geographical Expansion and Distribution Coverage; Finance. 

 

 

 

 

 

 

 

 

 

 

 

As competition was limited to the existing market, the key objective here was to increase the market share and gain economies of scale. We discovered that the key success factors in Round Red were:

  • Identifying and targeting the most attractive consumer groups

  • Data-driven analysis based on traditional market research

  • Continuously optimising the product for fast changing consumer needs

  • Compete on price

At the end of the Round, the team was able to increase our company's share price from our initial position.

Round Blue

This was the stage where we had to develop a new offering that would appeal to prospective groups of non-customers. To do this, we needed to draw the current industry value curves, discuss the shapes of the curves and draw a conclusion about the industry's overall value curve; this process was called 'Value Awakening'.

Next we read the transcripts from the executive team's finding on the potential non-customers. From this, we had to decide which factors of our offering needed to be Eliminated, Reduced, Raised, or Created. 

Only then could we create a Blue Ocean product, deciding on what level to offer the existing or created competing factors. 

The key takeaways from this section were: 

  • By reconstructing market boundaries and focusing on the 4 Framework Actions of Elimination, Reducing, Raising, and Creating, companies are able to achieve differentiation and low cost innovations. 

  • In reality, organisations many not get the strategy canvas right the first time, due to companies traditionally "raising" and "reducing" their offering level along the traditional factors of competition.

  • The importance of strategic: it is crucial to set the right price at the moment of market entry to capture the mass of buyers. Failure to do so will lead to demand being locked. 

  • Organisations will traditionally price too high when they have an innovation of any sort, believing that their innovation has created a differentiation desired in the market. 

Once again, the team was able to increase the share index of the company and effectively succeed in the business simulation. 

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