Corporate Strategy

Unit – II
Syllabus - Environmental scanning techniques- ETOP, QUEST and SWOT (TOWS), Internal Appraisal – The internal environment, organizational capabilities in
various functional areas and Strategic Advantage Profile, Methods and techniques used for organisational appraisal (Value chain analysis, Financial and non
financial analysis, historical analysis, Industry standards and benchmarking, Balanced scorecard and key factor rating). Identification of Critical Success Factors
(CSF).  Strategic step application: Drucker’s theory of business, Blue ocean strategy, resource based view and dynamic view.

The role of environment and its components are very important for business firm as all the objectives and goals of the firm lie in the
environment. The success and achievements of the firm are the outcomes of its interactions with the environment. Better the
interactions better the results and performance of the firm and vice-versa. Better interactions needs better understanding of
environment so that internal capabilities are perfectly matched with external opportunities and threats. The major challenge of
environment to a business firm is its dynamism.

Industry Analysis:
SWOT Analysis (Strength, Weakness, Opportunities and Threats Profile) As the firm operates under dynamic environment and strategic fit of
internal strengths and weaknesses with external opportunities and threats is a must and a matter of constant and regular exercise of the firm.
Without this a firm can not be able to create a perfect match of its capabilities with external demands. The approach to match internal capabilities
with environmental opportunities and threats are known as SWOT analysis. The basic aim of SWOT is to provide an insight to the managers the
abilities of the firm (Strength and Weakness) in terms of handling opportunities and threats. The SWOT provides a framework within which a firm
can develop and alter its strategies and shape the actions of functional and other levels of firms.
Internal analysis reveals the strength and weaknesses of the organization in term of its internal capabilities, competencies, efficiencies, financial
position, track record, experience.
Strengths: are resources, skills or other advantages relative to competitors. Strength is a DC that gives a firm comparative advantage
in the market and competition. For Exp. Financial Resources, image, market leadership etc.
Weaknesses: limitations or deficiencies in resources, skills and capabilities of the firm that seriously affect the firm’s performance
under competition i.e. Disadvantages.
Opportunities: Major favorable situations in the firm’s environments. Opportunities may occur due to poor performance of
competitors, consumer demand shift, government policies, unique raw materials, technological changes, better buyer-supplier
relationships etc.
Threats: major unfavorable situations in the firm’s environment which may affect firm’s current and potentials performance. A
particular threat may be an opportunity for competitor and vice versa.
Strength - Clear vision & Mission ,Better Financial Position - Opportunity- Increasing Income, Better Education, Developed
- Better Track Record , State of Art Technology ,Better Network for Society, Govt. Support, Absence of Strong, Competitors,- Un-served
Marketing Market Segmentation

WEAKNESSES THREATS - Potential Rivalry , High Rate of Tech., MNCs Threats due
- Poor Selling & Marketing Team - Potential Rivalry, Poor Strategies Weak to Policies of Govt.
Customer Services in Future, Poor Understanding with channel members -

ETOP Analysis:
A profile of environmental threats and opportunities is considered to be a very useful device and is a summarized depiction of environmental
factors and their impact on future functions of firm under competitive environment. The environment is a significant source of change
and is highly dynamic in nature. Some organizations become victim of the change and dynamism of environment.
Basic Characteristics of Environment:
1. Uniqueness
2. Dynamic in Nature
3. Variability of Control
4. Environment Carries Risk, Uncertainties and Opportunities
On the basis of impact on a business house we can divide the environment into 4 categories:
1. The Mega Environment or Broader Environment:
a) Demographic Factors
b) Political Factors
c) Legal & Regularity
d) Socio-Cultural
e) Economic
2. The Micro or Immediate Environment or Industry Environment:
This environment and its components are very close to the firm; in fact the firm operates within this environment. Therefore, the
Intensity of negative or positive effects are directly hit the firm and its strategies/decision making. Porter Model of 5 Forces is the
best tool to evaluate this environment.
3. The Technological Environment:
4. Global Environment

Methods and techniques used for organisational appraisal

The Value Chain Approach:

The value chain approach to diagnose firm’s key strengths and weakness was developed by Michael Porter. Value chain is an excellent framework by
which a firm can determine its strengths and weaknesses through parts of its operations that create value and those do not. A firm can earn above-
average return only when the value it creates is greater than the costs incurred to create that value. The value chain analysis is a systematic way to
analyze the series of activities a firm perform to provide a product to its customers. The value chain disaggregates a firm into its activities in order to
understand the behavior of the firm cost and its existing or potential source of differentiation (competitive edge over competitors). The disaggregated
activities are called as “Key internal factors” – more cheaper or better than its competitors. As shown in the figure the firm value chain is divided into two
types of activities.
1. Primary Activities: These activities are involved in products physical creation, its sales and distribution to customers, marketing, and after sales
support.
2. Support Activities: Which provide inputs, infrastructure and assistance to primary activities to take place.

a) Inbound Logistics are activities concerned with receiving, storing anddistributing the inputs to the product or service. They include materials
handling,stock control, transport etc.
b) Operations Transform these various inputs into the final product or service –machining, packaging, assembly testing etc.
c) Outbound Logistics collect, store and distribute the product to customers. For tangible products this would be warehousing, materials
handling, transportation
etc. In the case of services they may be more concerned with arrangements for bringing customers to the service if it is a fixed location (e.g.
entertainment show).
d) Marketing and Sales makes consumers/ users aware of the product or service sothat they are able to purchase it. This includes sales
administration, advertising,
selling and so on.
e) Services activities helps improving the effectiveness or efficiency of primary
activities.

Each of the groups of primary activities is linked to support activities which are as follows:
a) Procurement: This is a process for acquiring the various resource inputs to the primary activities and this is present in many parts of the organization.
b) Technology Development: There are key technologies attached to different activities which may be directly linked with the product or with processes or with
Resource inputs.
c) Human Resource Management: This is an area involved with recruiting, managing, training, developing and rewarding people within the
Organization. This categorization of the activities as primary or support may be found true for organizations in general, however it is always better to have
One’s own judgment in identifying activities for particular firms in consideration.

Select guiding points for evaluating primary Select guiding points for evaluating Support
activities activities
a) Inbound Logistics Firm Infrastructure
l Soundness of material and inventory control systems l Coordination and integration
l Efficiency of raw material warehousing activities
l Level of Information system
b) Operations l Quality of planning system
l Productivity of equipment compared to that of key competitors
l Timely and accurate information on environment
l Appropriate automation of production processes
l Effectiveness of control systems to improve quality and reduce cost
Human Resource Management
l Effectiveness of recruitment, training procedures
l Efficiency of plant layout and work flow design
c) Outbound Logistics l Appropriateness of reward systems

l Timeliness and efficiency of delivery of finished goods and services l Relationship with trade unions

l Efficiency of finished goods warehousing activities l Level of employee motivation and job satisfaction
d) Marketing and Sales Technology Development
l Effectiveness of market research to identify customer segments and needs l Success of R & D environment
l Innovation in sales promotion and advertising
l Quality of laboratories and other facilities
l Evaluation of alternate distribution channels
l Ability of work environment
l Motivation and competence of sales force
l Qualification and experience of technical hands
l Development of an image of quality and a favourite reputation
l Extent of market dominance within the market segment or overall market
Procurement
l Sources of raw material – time, cost, quality
e) Customer Service
l Means to solicit customer input for product improvements l Procedures for procurements

l Promptness of attention to customer complaints l Relationships with reliable suppliers

l Appropriateness of warranty and guarantee policies

l Ability to provide replacement parts and repair services

The value chain shows how the raw materials are converted into final products and marketed. It is vary apparent that human skills, knowledge and
willingness in involved at every part of the chain.
Using value chain analysis a firm can identify its strengths in terms of “ Core Competencies”, Key Result Areas (KRAs), and DCs.
The term margin which covers both primary activities and supportive activities in the figure denotes how an organization is capable to generate profit
margin with the linkage of both the activities.
How to Use the Tool:
Value Chain Analysis is a three-step process:
1. Activity Analysis: First, you identify the activities you undertake to deliver your product or service;
2. Value Analysis: Second, for each activity, you think through what you would do to add the greatest value
for your customer; and
3. Evaluation and Planning: Thirdly, you evaluate whether it is worth making changes, and then plan for
action.
We follow these through one-by-one:
Step 1 – Activity Analysis
The first step to take is to brainstorm the activities that you, your team or your company undertakes that in some way contribute towards your
customer's experience. At an organizational level, this will include the step-by-step business processes that you use to serve the customer. These will
include marketing of your products or services; sales and order-taking; operational processes; delivery; support; and so on (this may also involve many
other steps or processes specific to your industry).

Step 2 – Value Analysis

Now, for each activity you've identified, list the "Value Factors" – the things that your customers' value in the way that each activity is conducted. For
example, if you're thinking about a telephone order-taking process, your customer will value a quick answer to his or her call; a polite manner; efficient
taking of order details; fast and knowledgeable answering of questions; and an efficient and quick resolution to any problems that arise. If you're
thinking about delivery of a professional service, your customer will most likely value an accurate and correct solution; a solution based on completely
up-to-date information; a solution that is clearly expressed and easily actionable; and so on.

Next to each activity you've identified, write down these Value Factors. And next to these, write down what needs to be done or changed to provide great
value for each Value Factor.

Step 3 – Evaluate Changes and Plan for Action

By the time you've completed your Value Analysis, you'll probably be fired up for action: you'll have generated plenty of ideas for increasing the value you
deliver to customers. And if you could deliver all of these, your service could be fabulous!

Resource Based Approach of Internal Analysis

(Care: Before Value Chain)
Success of a business firm heavily depend how well firm have a set resources which are significantly different from those of its competitors. For a
successful corporate strategy a firm has to identify resources that systematically distinguished the firm in a way that no other competitor can easily
imitate or duplicate (assets, skills, technologies, capabilities etc.). The resources based approach to analyze firm’s suggest that the available resources
must be unique in term of:
1) Quantity, quality, durability
2) Not easy to imitate or duplicate
3) Highly specialized and durable (such as brand name and patent)
Such a unique mix of resources provides long term sustainability and competitive edge over its competitors. Following figure shows the Resources
Competencies Framework which enables a firm to show its strategic capabilities and competencies over competitors.

Financial and non financial analysis

QUANTITATIVE ASSESSMENT
As mentioned above, financial data is only the most basic and universally accepted approach in assessing a firm. However we must understand that such
an analysis is only the beginning for a thorough internal analysis. It is often found useful to go beyond the financial analysis to fully quantify
organization’s strengths and weaknesses and therefore it is discussed in detail here.
Financial Quantitative Analysis
Traditionally financial analysis emphasizes on the study of financial ratios which is commonly known as ratio analysis.
i) Profitability ratios provide information regarding a firm’s overall economic performance.
ii) Liquidity ratios measure a firm’s capacity to meet its short term financial obligations
iii) Leverage ratios indicate a firm’s financial risk that is the relative proposition of its debt to its equity.
The first enables to assess the financial returns of a firm and the associated risk with it is assessed by its financial liabilities or debt. The latter is
measured by liquidity or leverage ratios.
iv) Activity ratios reflect a firm’s efficient or inefficient use of its resources. The operational part is analyzed by the activity ratios.
Inspite of their wide acceptability, financial analysis does not provide insights into aspects like development time for new products or brand recall value
which are also important in understanding strengths and weaknesses from other perspectives. Few of such non-financial quantitative meaures can be
listed as – number of patents; quality assessment; new product development; customer complaints; employees turnover, etc

The following gives a brief list of different ratios used under Ratio Analysis by managers for their organization. However, for their right kind of
interpretation and analytical references you are recommended to refer to Chapter on Ratio

Analysis from texts on Financial Management.

Ratio analysis evaluates a set of financial ratios, looks at trends in those ratios and compares them to the average values for other companies in the
industry.
1. Liquidity Ratio – measures the ability of a company to meet its imminent financial obligations known as liquidity. This indicates how the
company is
assured in meeting its obligations and is protected from any technical insolvency.
Two such ratios are:
Current Ratios: Current Assets/Current Liabilities
Quick Ratios: Current Assets – Inventory/Current Liabilities

2. Activity Ratio – measures organizations’ efficiency in generating sales and making collections.
Inventory Turnover = Sales/Inventory
Average Collection Period = Accounts Receivables/Sales Per day
Total Asset Turnover = Sales/Total Sales
Fixed Asset Turnover = Sales/Net Fixed Assets

3. Leverage Ratio – indicates the amount of financing provided by the owners.

These ratios evaluate default risk in debt payments.
Debt ration = Total Liabilities/Total Assets
Debt on Equity = Total Liability/Total Common Equity
 4. Profitability Ratio – the ability to generate profits is a key measure of the
managerial success. Some important profit ratios are –
Profit Margins = Net Income/Sales
Return on Assets = Net Income/Assets
Return on Equity = Net Income/Total Common Equity

QUALITATIVE ASSESSMENT
Often it has been found that quantitative analysis alone is not sufficient to understand any organization’s strengths and weaknesses. Particularly the
factors related to human resources, organizational culture and its temperament towards creativity and innovation are few which can be understood only
through qualitative information. Qualitative information also supplements quantitative data in uderstanding basic concepts of what customer’s value and
how they feel about a given product. The exhibit provides you with few relevant guiding points to assess a broad range of important qualitative factors

Comparative Analysis
Industry Norms
The industry norms compare the performance of an organization in the same industry or sector against a set of agreed performance indicators. Data on
industry norms are widely available and can be found from several published sources. Using such data and comparing an organization against others in
its industry helps the organization understand its true position. In case of the healthcare sector, such indicators can be mortality index, doctors per 100
beds, nurses per 100 beds, waiting time per inpatient’s treatment, waiting time per outpatient treatment, patient’s trust in doctors.
The danger of industry norms comparison is that the whole industry may be performing badly and losing out competitively to other industries. Another
problem with such comparisons may also arise as the boundaries of industries are coming down through competitive activity and industry convergence.
For example publishing houses are evolving into multiple media groups working around the infotainment industry.
Moreover talking of industry norms, it is an average indictor and organizations must endeavour in beating them rather meeting them. In order to
understand how they have been doing so it is always suggested that industry norm comparisons are supplemented with analysis on organization’s own
historical performance.

Historical Comparisons
Historical comparisons look at the performance of an organization in relation to previous years in order to identify significant changes. Organizations must
endeavour to improve their performance over time in order to remain competitive and overpower the performance of comeptitors. It must try to beat its own best in
future, which would call for continuous improvement.
However in case of the historical comparison it also entails scope for complacency since the organizations compare their rate of improvement over years with that
of competitors and it is possible that the latter may itself be operating at a relatively lower average. Such historical trends can even be misleading when they entail
changes made on a very small base.

Benchmarking
Benchmarking compares an organization’s performance against ‘best in class’ performance wherever that is found. Managers seek out the best examples of a
particular practice in other companies as part of an effort to improve the corresponding practice in their own firm. When the search for best practices is limited to
competitors, the process is called competitive benchmarking. Other times managers may seek out the best practices regardless of what industry they are in, called
functional benchmarking.
Benchmarking provides the motivation annd the means many firms need to seriously rethink how their organizations perform certain tasks. A comprehensive
internal analysis of an organization’s strengths and weaknesses must however utilize all three types of comprison standards. For instance, an organization
can study industry norms to assess where it stands in terms of number of complaints generated regarding defects during guarantee period of a product. Then it
couldbenchmark the organization that is best at controlling the defects. Based on the benchmarking results it could implement major new programmes and track
improvements in these programmes over time using, historical comparisons.

Balanced scorecard
Kaplan and Norton describe the innovation of the balanced scorecard as follows:
"The balanced scorecard retains traditional financial measures. But financial measures tell the story of past events, an adequate story for
industrial age companies for which investments in long-term capabilities and customer relationships were not critical for success. These
financial measures are inadequate, however, for guiding and evaluating the journey that information age companies must make to create
future value through investment in customers, suppliers, employees, processes, technology, and innovation."
Looking at the flow chart we can very well understand that performance as assessed in one perspective supports performance in other areas and
therefore we need to consider all four perspectives in carrying out a complete internal analysis.

Adapted from Robert S. Kaplan and David P. Norton, “Using the Balanced Scorecard as a Strategic Management System,” Harvard Business Review (January-February 1996): 76.

Perspectives
The balanced scorecard suggests that we view the organization from four perspectives, and to develop metrics, collect data and analyze it
relative to each of these perspectives:
The Learning & Growth Perspective
This perspective includes employee training and corporate cultural attitudes related to both individual and corporate self-improvement. In a
knowledge-worker organization, people -- the only repository of knowledge -- are the main resource. In the current climate of rapid
technological change, it is becoming necessary for knowledge workers to be in a continuous learning mode. Metrics can be put into place to
guide managers in focusing training funds where they can help the most. In any case, learning and growth constitute the essential foundation
for success of any knowledge-worker organization.
Kaplan and Norton emphasize that 'learning' is more than 'training'; it also includes things like mentors and tutors within the organization,
as well as that ease of communication among workers that allows them to readily get help on a problem when it is needed. It also includes
technological tools; what the Baldrige criteria call "high performance work systems."
The Business Process Perspective

This perspective refers to internal business processes. Metrics based on this perspective allow the managers to know how well their
business is running, and whether its products and services conform to customer requirements (the mission). These metrics have to be
carefully designed by those who know these processes most intimately; with our unique missions these are not something that can be
developed by outside consultants.

The Customer Perspective

Recent management philosophy has shown an increasing realization of the importance of customer focus and customer satisfaction in any
business. These are leading indicators: if customers are not satisfied, they will eventually find other suppliers that will meet their needs.
Poor performance from this perspective is thus a leading indicator of future decline, even though the current financial picture may look
good.
In developing metrics for satisfaction, customers should be analyzed in terms of kinds of customers and the kinds of processes for which we
are providing a product or service to those customer groups.

The Financial Perspective

Kaplan and Norton do not disregard the traditional need for financial data. Timely and accurate funding data will always be a priority, and
managers will do whatever necessary to provide it. In fact, often there is more than enough handling and processing of financial data. With
the implementation of a corporate database, it is hoped that more of the processing can be centralized and automated. But the point is that
the current emphasis on financials leads to the "unbalanced" situation with regard to other perspectives. There is perhaps a need to include
additional financial-related data, such as risk assessment and cost-benefit data, in this category.

Strategy Mapping
Strategy maps are communication tools used to tell a story of how value is created for the organization. They show a logical, step-by-step
connection between strategic objectives (shown as ovals on the map) in the form of a cause-and-effect chain. Generally speaking, improving
performance in the objectives found in the Learning & Growth perspective (the bottom row) enables the organization to improve its Internal
Process perspective Objectives (the next row up), which in turn enables the organization to create desirable results in the Customer and
Financial perspectives (the top two rows).
The Theory of the Business (Drucker’s ‘Theory of the Business’ and Organisations)

Not in a very long time—not, perhaps, since the late 1940s or early 1950s—have there been as many new major management techniques as
there are today: downsizing, out-sourcing, total quality management, economic value analysis, benchmarking, reengineering. Each is a
powerful tool. But, with the exceptions of outsourcing and reengineering, these tools are designed primarily to do differently what is already
being done. They are “how to do” tools.

Yet “what to do” is increasingly becoming the central challenge facing managements, especially those of big companies that have enjoyed
long-term success. The story is a familiar one: a company that was a superstar only yesterday finds itself stagnating and frustrated, in
trouble and, often, in a seemingly unmanageable crisis. This phenomenon is by no means confined to the United States. It has become
common in Japan and Germany, the Netherlands and France, Italy and Sweden. And it occurs just as often outside business—in labor unions,
government agencies, hospitals, museums, and churches. In fact, it seems even less tractable in those areas.

The key issues of the Theory of Business revolve around linking the three main components (reality, business focus, and organizational
competency) together.

Keep the following points in mind and you can keep your Theory of Business relevant today and tomorrow:

Reality is defined by the marketplace and goes wherever it wishes. Successful organizations study these changes and realize that
the key to success is their ability to determine what the customer is willing to pay for today and will most likely be willing to pay for
in the future.

Focus is achieved when the organization aligns itself with reality. Very few enterprises are powerful enough to shape reality.
Therefore, if they wish to remain successful, they pay close attention to the shifts in the marketplace (what the customer is willing to
pay for) and adjust their businesses to serve those needs.

Once an organization is aware of the changes required, it must identify and develop the skills and competencies required to
prosper over the long term.
 The New Business Advisory Context

• “A very clear, powerful tool for looking forensically at the new business in terms of growth potential”.
• “A very effective means of helping the entrepreneur see what they cannot see – the tentative, almost speculative nature of business!”.
• “Looking at new firms as new theories is a unique contribution to the small firms field – well done!”.
• “As Drucker said, „every practice rests on theory – even if the practitioners themselves are unaware of it‟ - this method is a great way of
getting the serious growth-minded entrepreneur to really think about what s/he is doing – and really think about what s/he is thinking!”.

Blue Ocean Strategy

Blue Ocean Strategy is a book published in 2005 and written by W. Chan Kim and Renée Mauborgne, Professors at INSEAD and Co-
Directors of the INSEAD Blue Ocean Strategy Institute. Based on a study of 150 strategic moves spanning more than a hundred years and
thirty industries, Kim & Mauborgne show that companies can succeed not by battling competitors, but rather by creating ″blue oceans″ of
uncontested market space. These strategic moves create a leap in value for the company, its buyers, and its employees, while unlocking new
demand and making the competition irrelevant. The book presents analytical frameworks and tools to foster organization's ability to
systematically create and capture blue oceans.

The metaphor of red and blue oceans describes the market universe.

Red oceans represent all the industries in existence today – the known market space. In the red oceans, industry boundaries are
defined and accepted, and the competitive rules of the game are known. Here companies try to outperform their rivals to grab a
greater share of product or service demand. As the market space gets crowded, prospects for profits and growth are reduced.
Products become commodities or niche, and cutthroat competition turns the ocean bloody; hence, the term red oceans.

Blue oceans, in contrast, denote all the industries not in existence today – the unknown market space, untainted by competition. In
blue oceans, demand is created rather than fought over. There is ample opportunity for growth that is both profitable and rapid. In
blue oceans, competition is irrelevant because the rules of the game are waiting to be set. Blue ocean is an analogy to describe the
wider, deeper potential of market space that is not yet explored.

The cornerstone of Blue Ocean Strategy is 'Value Innovation', a concept originally outlined in Kim & Mauborgne's 1997 article "Value
Innovation - The Strategic Logic of High Growth" (Harvard Business Review 75, January–February 103-112). Value innovation is the
simultaneous pursuit of differentiation and low cost, creating value for both the buyer, the company, and its employees, thereby opening up
new and uncontested market space. The aim of value innovation, as articulated in the article, is not to compete, but to make the competition
irrelevant by changing the playing field of strategy. The strategic move must raise and create value for the market, while simultaneously
reducing or eliminating features or services that are less valued by the current or future market. The Four Actions Framework is used to help
create value innovation and break the value-cost trade-off. Value innovation challenges Michael Porter's idea that successful businesses are
either low-cost providers or niche-players. Instead, blue ocean strategy proposes finding value that crosses conventional market
segmentation and offering value and lower cost. Educator Charles W. L. Hill proposed a similar idea in 1988 and claimed that Porter's model
was flawed because differentiation can be a means for firms to achieve low cost. He proposed that a combination of differentiation and low
cost might be necessary for firms to achieve a sustainable competitive advantage.

To help find the elusive "blue ocean," Kim and Mauborgne argue that businesses and entrepreneurs must consider what they call the "Four
Actions Framework." According to the authors, the "Four Actions Framework" is used to reconstruct buyer value elements in crafting a new
value curve. To break the trade-off between differentiation and low cost and to create a new value curve, the framework poses four key
questions:

Raise: What factors should be raised well above the industry's standard?
Eliminate: Which factors that the industry has long competed on should be eliminated?
Reduce: Which factors should be reduced well below the industry's standard?
Create: Which factors should be created that the industry has never offered?

Some Examples of Indian Companies that succeeded in creating Blue Ocean by

extending the Known Boundaries of Red Ocean Market Space

Maruti-Suzuki
Maruti Udyog Limited (MUL) was established in the year 1991 as a joint venture between the Government of India and Suzuki Motors. The
company launched first small car in India, Maruti-800 in the year 1983. Maruti 800 was based on Suzuki Alto Kei car. With the launch of
Maruti-800, MUL was able to create a Blue Ocean with the known four wheeler automobile market space. At that time the known or existing
competition in four wheeler market space in India was from only two companies ‘Hindustan Ambassadors’ and ‘Premier Padmini’. Both the
competitors were offering to the customers outdated technology and models. Thus Maruti 800 was successful in creating a revolution in the
Indian car market. It was able to offer to the customers what they wanted with suitable innovation in the Indian car market. Maruti-800 soon
became the largest selling car in India and the company (Maruti Suzuki India Limited) became the largest player in the Indian four wheeler
automobile market space. The company, till date, on account of the value innovation it introduced, is still the company with the largest
market share in the four wheeler automobile category in India.
ICICI Bank
ICICI bank was promoted by ICICI Limited, an Indian Financial Institution, in the year 1994 as wholly owned subsidiary of ICICI. The
shareholding of ICICI in the ICICI bank was reduced to 48% by a public offering of shares of the Bank in the year 1998. In the decade of 2000,
ICICI and ICICI bank in wake of emerging opportunity to create Universal banking entity, decided to merge ICICI with ICICI Bank. The
Process of merger was completed by the year 2002, resulting in emergence of first Universal bank in India. Varied operations of ICICI and
ICICI and ICICI bank, whether wholesale or retail were thus brought under one entity ICICI bank. ICICI Bank, thus became, first Universal
bank in India which also revolutionized the concept of banking in India. ICICI bank besides offering number of banking services under one
umbrella also became first bank in India that pushed the concept of internet banking very aggressively in the Indian market space. ICICI
Bank had an internet banking platform in place since 1994 which it used effectively to gain dominant position in the Indian Banking space. It
also became the first bank in India that focused aggressively on Retail loan portfolio to build up business opportunities for the bank. On
account of its stance and innovation like installing machines like ‘Cash Acceptor’, its branchless banking initiative known as ‘B2’, its
technology product like ‘Money to
India’ which now is known as ‘Money to the World’, its mobile banking initiative ‘iMobile’ etc, ICICI bank has not only been able to become
but also retain its position as largest private sector bank in India.
TATA Motors
Ratan Tata shocked Indian automobile sector with his announcement to introduce in Indian market, a car costing only 1, 00,000 Indian
rupees. TATA Motors delivered its promise by subsequently launching basic version of Nano at 1, 00, 000 Indian rupees on 23rd March,
2009. Nano is most inexpensive car in the world. The company was able to deliver its promise on account of the considerable innovations it
was able to introduce. Company was able to create a car model which used less steel in the car body and engine. The company ensured that
car design ensured ample seating space for four adults in the car. The company was also able to ensure good fuel efficiency in the Nano.
TATA Motors subsequentlyfiled for 34 patents associated with the design of Nano.TATA Motors instead of focusing on top 15% to 20% of
Indian population (in terms of their income capabilities) focused on that section of population that travelled by two wheelers and had low
spending capability. The company was able to meet the dream of Indian masses to own a four wheeler vehicle. TATA Nano, in Indian market
today is being hailed as ‘People’s Car’. At the time of launch, Nano was able to create the same magic which was created by Maruti 800 post
its launch in the year 1983. Now, it is another story that post launch of Nano and its initial few months of being there in the market, Nano
is finding it hard to push up its sales further. For the same, the company is now coming out with innovative marketing strategies and
financing schemes in India

Shaadi.com
Shaadi.com was started by Anupam Mittal on account of his chance encounter with a marriage broker. Anupam Mittal understood that
success of a marriage broker was dependent on his/her ability to match matrimony requirement of parties or families based far and apart
from each other. A chance of good match making was dependent on the ability of the marriage broker to travel and communicate far and
wide. It was also dependent on hi or her social clout. Mr. Mittal, thus, decided to use internet as a medium to do such ‘match making’
thereby removing the geographical barriers applicable on regular marriage broker or match maker. Today, Shaadi.com is the largest
matrimonial website in the world with over 20 million registered users. Shaadi.com is a unique company and has succeeded in creating Blue
Ocean in the unknown market space never tried before.

The Challenge of Blue Ocean Strategy in General

The biggest challenge in front of the companies that have been successful in creating Blue Ocean is to ensure that ‘Blue Ocean’ stays Blue.
This is because success of products of such companies is generally replicated by other companies over a period of time. To quote certain
examples, dominance of Maruti-Suzuki was challenged by Hyundai in the 1990’s. By the year 2009-10, Maruti also had to deal with the
challenge posed by other car companies like Volkswagen, Ford, GM, Nissan etc. Similarly, Deccan Airways was soon challenged by
companies/products like Spicejet, Kingfisher, Jetlite, GoAir etc. In the banking sector, ICICI is being challenged by other new age private
sector banks like HDFC Bank, Yes Bank, Axis Bank etc in terms of their technology innovations and products. Success of Shaadi.com resulted
in growth of similar websites like Bharatmatrimony.com, jeevansaathi.com etc. Successful products of Apple Computers like iPhone, iPad,
iPod etc were quickly copied by other known companies in the market.
This means that a company that has been successful in creating Blue Ocean has to ensure through regular value innovations that market of
its products continues to stay blue. In words of Kim and Mauborgne “Creating Blue Ocean is not a static achievement but a dynamic process.
Once a company creates a blue ocean and its powerful performance is known, sooner or later imitators appear on horizon”. Thus biggest
challenge for a company that has been successful in creating Blue Ocean is to ensure that it continues to introduce regular value innovation
other wise there is always a possibility that the company will fail in the market soon. It is on account of the above, that Orkut was challenged
by Facebook and Facebook still stands tall while Orkut is now dead.