Blue Ocean

Don’t know if any of you are interested but here I’ve posted the papers I had to write for my International Strategy course; MNGT 6960. It is all based off this book named Blue Ocean Strategy and its about developing techniques for growing creative product and service offerings divergent from industry’s standards and henceforth opening up “uncontested market space while making the competition irrelevant.” I really enjoyed this course – we had to use this concept in making our business plan for the re-use of the facility here in Gabbro, Italy as a NEW international studies center taking. The NEW coming from our revitalized innovative study abroad delivery vehicle and execution methods described in the papers below.

Blue Ocean Paper #1; Think about La Villa Mirabella. In developing the business plan for Villa Mirabella, how can Villa Mirabella begin operation in a “blue ocean.” How do you see this Villa in terms of value innovation? Consider issues of Focus, Divergence, and Tagline.

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La Villa Mirabella has many opportunities for reuse and development. It is important to consider however when determining the type of operation/product to pursue the type of competition will be encountered. Will you be competing in a “red ocean” or a “blue ocean?” A red ocean is the typical market competition environment in which companies make one of two product focus choices, to compete by differentiation or low-cost. This often leads to ruthless competition to reach the frontiers of both foci; requiring extreme spending to differentiate or price wars to claim the lowest cost. Neither of these foci will lead to real profits. However, if a company tried to create “blue ocean” competition it would strive to find a balance between both differentiation and low-cost by increasing buyer value and decreasing its cost structure simultaneously. This “blue ocean” idea creates a sustainable strategy which will lead to real profits by decreasing competition and making competition nearly irrelevant. In analysis of La Villa Mirabella, redeveloping the property to become an International Studies center focused on “professor led” consultancy projects could generate “blue ocean” competition by focusing on choice, application, and interaction.

La Villa Mirabella can explore new and underdeveloped market space with a professor led consultancy projects center for study abroad students. This type of delivery vehicle for study abroad is generally new concept that is not conventionally seen as the typical methodology. Most programs drive off developed curriculums that are provided at center or professor led core curriculum courses offered both on-campus and abroad. A professor led program would gain the benefit of decreased cost structure from not having to spend on develop curriculum programming. While using consultancy projects found from the community around Gabbro as the study method will increase the consumers value from applicability of their educational experience as well as learning through real-world interaction that is difficult to recreate in a classroom environment. Together real value innovation is achieved by combining increased buyer value and decreased cost structure amid market norm divergence.

Focus is important for strategy in order for its message and purpose to be clearly communicated, executable and successful. La Villa Mirabella should focus on three factors: choice, application and interaction for it to compete in a “blue ocean.” A focus on these factors will allow it to differentiate and diverge from the offerings of most other study abroad formats as well as leave a structure that allows for cost reductions and eliminations where possible. The development of contract alliances and relationship in the community will be the most difficult task to overcome with La Villa Mirabella. They will be strategic in allowing the center to achieve its three focus factors.

Choice in structure can create value while continuing to diverge from study abroad norms. This can be achieved by allowing the consumer to select the structure during the experience at offerings from field of study to food, transportation, and packaged excursions. Choice in offerings will also allow La Villa Mirabella to not have waste capital in determining what the consumer believes returns the most value to them; but now puts these decisions (what is that called) solely in their hands allowing for elimination or reduction of what is perceived to not add real value. Choice offerings in food will involve local catering, which will allow the center to eliminate major kitchen fixed costs as well as variable staff costs, or a consumers executed solution, eating on your own at local restaurants or preparing meals yourself. La Villa Mirabella should in this case offer certain small amenities like a refrigerator, microwave, and hot plate. Choice offerings in transportation will consist of contracted travel by bus, van, or pre-bought train tickets bought through the center or, again, a consumer directed solution. Choice offerings in package excursions will consist of center provided group tours to and around sites of interest or a consumer directed solution. It is wise to allow more choice offerings in cost structure allowing the company to mitigate decision costs towards the consumer. Additionally, it is more common in Europe that small flexible groups can often achieve lower prices than the economies of scale theory, commonly used in the United States, in this situation only. This system should decrease the prospect of incurring failed expectation on part o the consumer that is commonly experienced with study abroad trips since they are creating their self-directed low cost vs. value venture. Furthermore, allowing choice offerings in field of study, through a variety of consultancy project types, the center can limit the amount of customers lost than if it chose to present only a selected group of topics.

A focus on application, finding applicable educational consultancy project, can again add value without, relatively, raising costs. The most difficult part of the classroom setting is to create applicable project that build of the subject material being studied that can be put into direct situational use. Education constantly drives to tackle how to best provide application in their curriculums. The place in which it is most often embed is during most curricula’s capstone courses that summarize the instruction taught. It would be wise for La Villa Mirabella to strongly market toward this market segment as they are most interested in application of education. With the smaller community relative to most locations of many study abroad centers it should be easier for the center to find interesting applicable consultancy projects. Smaller communities typically have fewer resources than larger cities as well as being more open to outside help and assistance.

Another difficult task to recreate in the classroom is interaction. Especially to imitate the type of interaction that is required when working on projects in a real-world environment. Classroom group work, while useful, still falls short of real-world settings because in the classroom you only risk your grade and not money. If a group member fails to pull their end of the workload little recourse is available. When working with outside companies, during consultancy work, a closer replication of the operating world achieved through a coached classroom setting. This sort of interaction is highly valued by both students and professors. A strong focus on interaction should be a goal for all projects submitted by Villa Mirabella to professors. Furthermore, the value of interaction to be stimulating is another possible point of exploitation and marketable byproduct for Villa Mirabella. Many capstone students struggle with the long duration of their projects, while applicable, because they lack additional cerebral stimulation. Again, the smaller community is an asset in regards to this focus factor because interaction is commonly perceived to be easier with smaller clusters.

Using a focus on choice, application, and interaction will create value innovation through increasing buyer value while decreasing cost structure but also together create divergence across the important factors the industry competes and invests in. A tag-line for Villa Mirabella, recruiting capstone students, could be “capstone projects with real-world management experience in stimulating environments.” The scenario of Villa Mirabella’s small town environment also increases its rarity while decreasing it possibility of imitation allowing for the opportunity of some sustained competitive advantage. This competitive advantage comes from the creation of a “blue ocean” that creates and exploits news, underdeveloped and uncontested market space while making the competition in the study abroad industry relatively irrelevant.

Strategy Map; Showing Market Divergence

Strategy Map; Showing Market Divergence

Blue Ocean Paper #2; Look at the Six Path Frame. Pick two of the paths and come up with ways that Villa Mirabella can break out of the accepted boundaries on how they compete. Elaborate on this.

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There are many ways in which Villa Mirabella could potentially break out of the accepted boundaries of competition within the study abroad industry. In order to accomplish this task it is necessary to redraw or reconstruct the current perceived market boundaries. “Red ocean” competition exists within these boundaries but “blue ocean” competition will diverge from the commonalities shared in respect to industry focus, strategic group target, buyer group service, scope & product offerings, functional-emotional orientation, and time. Two factors that Villa Mirabella could radically reconstruct horizons are in emotional-functional orientation and time. Although in development of the overall “blue ocean” focus, divergence, and tagline all six paths framework must be considered.

Villa Mirabella can break out of the accepted industry functional and emotional orientation by considering the balance between price value and utility value. The current study abroad direction carries much weight on emotional appeal in regards to comfort, planned programs and excursions, as well as packaged meals. The point is to convey the feeling of safety, control, direction. Although as the world becomes more global and young adults are becoming more comfortable being independent, especially in travel, these emotional orientations are becoming less important and some believe they execute more efficiently themselves. While these emotional appeals definitely serve some functional purpose they come at a high cost with typically high premiums because of the emotional disposition. Villa Mirabella could eliminate much of the emotional extras that add price without relatively enhancing functionality and allow its consumers to use their own “choices” to maximize their own functionality to meet their emotional needs. Most of these offerings can be easily managed and implemented on the part of the consumer themselves. On the other hand Villa Mirabella can add emotional appeal without much increase to the operating cost structure while garnering a premium by focusing on “interaction.” Interaction could help combat Villa Mirabella’s weaknesses from size. At its largest the center could likely only contain 40-50 students, based on the interests of the Vice Sindaco of its Comune. This small size is a small disadvantage as there are only so many people to interact with and could give the consumer a “confined” feeling very quickly. Using its, hopeful, strong relationships within the community the center could offer a multitude of opportunities in “mixer” events. Wedging itself with the local youth would be the best target for these mixers, as both would benefit by growing culturally and experiencing global awareness by both groups. This could reduce the confining feeling while growing a unique study abroad experience. This idea jives well with the Vice Sindaco’s idea for the Villa to be heavily involved with community life.

Going further, with Villa Mirabella being located in a small town, travel around Italy will be extremely important for its customers. To diverge from competition the center should not provide regularly scheduled excursions (unless requested), but however it can break typical market offerings while tackling one of the most difficult portions of traveling abroad; where to go, what to do, and where’s the fun. Europe has much to do during the day as far as historical sites, museums, and events but approaching the evening is when navigating new places that match visitor’s interests becomes increasingly difficult. Especially in the study abroad industry, young-adults place much importance on find their perceived “fun and comforts.” Villa Mirabella could grow a complex guide to European cities, especially in Italy, as far as which hostels/hotels to stay in, what restaurants, clubs, bars, shopping and local peculiarities are worth experiencing; including cities maps locating these attractions as well as the best travel routes/schedules. This information could be garnered by using one of the best but largely unused resources in the industry; past study abroad students who really enjoyed their trip and want more opportunities. Past students who have experienced and passionately overcome these problems are out there and for a “horse-trade” swap could be convinced to stay/work the Villa Mirabella; free-lodging and a small allowance in exchange for light managerial and blue-collar work around the center while creating this travel database. Additionally, it could be requested of them to travel with students, possibly all expenses paid, using the consumers’ mode of transportation. The customers would likely be more the interested in going around with someone who knows their way and what to do, while these resident counselors would receive benefits of continued chance to travel. At almost all “stay-away/camp” style formats counselors/leaders are usually a favorite among its “campers,” and typically are quite entertaining. Finding great “RC’s” would be pivotal to success. A similar trend is used at the Santa Chiara Study Center in Castiglion Fiorentino but could be more utilized. This valuable resource is rare as well as not easily imitable and at some level proprietary. There are books offerings these options but can be largely off-target from my experiences. Using resident counselors can save on operating costs while bolstering emotional appeal and better balancing functionality of offerings. This will allow Villa Mirabella to offer a price at and possibly much below its competitors whilst diverging from conventional functional-emotional orientation. Granted, the students will spend more on these extra-curricular costs on the weekend travel their perceived value of these trips will be enhanced and therefore its emotional/functional appeal. It may even possibly warrant a premium equaling trips including excursions, but with a reduced operating costs and therefore greater profits.

Consideration of time is another framework to analyze content in which Villa Mirabella can diverge from its competitors. The needs of consumers over time are largely shaped by externalities and trends over time. The content and outputs of a center for study abroad must recognize how its offerings participate with external conceptions directed by time trends. Three points when analyzing time are to distinguish if trends are decisive, irreversible, and have a clear trajectory. With the current globalizing world across culture, economy, and politics companies are looking for potential employees that have international, practical and applicable experience on projects outside the “normal” classroom setting. This is extremely hard for most students to receive while trying to rush through college as quickly as possible; racing towards the workplace only to find they are missing this important competency. Some study abroad markets have realized this trend in the needs from companies and students and has begun to implement internship and work-study abroad programs, but these sometimes lengthen graduation durations. Furthermore, some professors are leading research-work projects abroad, occasionally in consultation formats, to develop these experiences/competencies. Incorporating this decisive irreversible trend with a clear trajectory will continue Villa Mirabella to stay on the horizon of offerings while being divergent from competitors. Although an important consideration is to realize while catering towards the experience “needs” is not the current industry trend, at some point in the future others will realize its importance and likely adapt to this trends as it’s become commonly accepted.

Overall, using the six path framework is an excellent way to help develop thoughts to lead to creative thinking about pushing beyond accepted market boundaries. Reconstructing commonly perceived offerings to cater towards different balances in utility and price is an excellent way to create “blue oceans” with uncontested market space. Villa Mirabella can shape its offerings to efficiently utilize the emotional-functional interests of this consumers segment which is recognized from insights into today’s observable trends; the “do-it yourselfer,” dynamic student wanting real-world resume-ready experience.

Blue Ocean Paper #3; Using the Buyer Utility map how can Villa Mirabella remove any current blocks to utility? I want you to specifically use the buyer utility map in your answer.

La Villa Mirabella can remove many blocks on the study abroad industry buyer utility map. Currently, the study abroad industry competes mainly in 10 blocks of the 36 buyer utility options. Much of the study abroad industry is concerned with the utility levers of simplicity, convenience, and risk in the buyer experience stages of purchase, delivery and supplements. This focus is made in an attempt to eliminate much of the frustration and uncertainty in planning and purchasing. The problem with this spotlight is it lacks the needed utility wanted by the present collegian population who are looking for attention to value in consumer productivity across the buyer experience cycles. The change in direction has followed with the winds of globalization causing the world to become more and more accessible with information readily available about almost anywhere and anything. Students are no longer apprehensive about the uncertainties of a study abroad trip because they have a better opportunity with the existing technology to find concrete answers themselves. Their main concern now lies with the functional purpose their study abroad voyage will provide. La Villa Mirabella could divergently align itself into less than half the blocks, four, while increasing buyer utility in addition to sending a clearer direct and focused message about its services and offerings. The competitive blocks for both the current study abroad industry and potential La Villa Mirabella program are noted below.

Utility-Map

The general study abroad industry pays heavy attention to four main utility levers in the purchasing buyer experience categories. The types of trips offered are canned to be almost “idiot proof,” where the study abroad programs essentially act as outsourced labor for the purchase process. These packaged affairs move in large groups that from personal experience and research I have learned are often not cost effective on the or returns the best experienced scenario. This is especially true for the continent of Europe. Furthermore, these programs do not necessarily keep personal development and growth in education on the students previously scheduled track but act mainly as horizons/cultural awareness programs. There is little choice involved to allow for individual preferences in utility value of program supplements and functional offerings. However, the format does accomplish its goal of being simple, convenient and easily understandable. This sort of format helps decrease the risk factor from any uncertainty in the returned outputs. These programs pride/sell themselves on their ability to take on the time intensive burden of undertaking planning and purchasing of program curriculum/itineraries. The industry tries to provide guaranteed trips in which you know what you’re getting, ensuring fun and a positive experience image. All of this of course comes at a premium for the buyer. It is very clear and direct in its offerings of pre-packaged trips which the industry has assumed most everyone in their target market is interested in. That is the so called “trap” the current industry has fallen into. Their goal of providing high simplicity and easy convenience in the decision making process of choosing and purchasing a study program does not match the concerns of today’s students. La Villa Mirabella could remove most of the blocks in the purchasing buyer experience phase while keeping only consumer productivity.

With information so readily available this decade, from the advent of internet resources, I believe now that many young-adult aged students are more prepared and equipped to handle the planning and purchasing stages themselves without outsourcing the majority of the labor. Collegians are now looking for increased customer productivity with efficiencies in cost/utility value. No longer is the perceived value solely in the opportunity to experience foreign cultures but to also not interrupt their personal growth pace in their current educational path. They are willing to spend time in research and planning extra-curricular activities and excursions to create their own personal type of fun and positive trip image while expecting a curriculum that maximizes cerebral development through practical and applicable experiences.

This format in the purchase phase dictates much of the remaining buyer utility map blocks. The current purchase arrangement predicates that same focus in both the delivery and supplements buyer experience cycles. Delivery, in the case of the study abroad industry, is the system or vehicle in which the educational curriculum is deployed to the student. Although for this scenario it is important to also consider supplements as well in discussing the delivery, or even use, buyer experience cycles. The decision process of study abroad utility value is heavily based around its supplements which include; lodging, food, transportation, extra-curricular activities, excursions, communication, essential needs, and cultural events. Many of these factors are included in the education curriculum of international studies, but in reality are supplements to the core purpose of studying abroad.

In the present study abroad industry, delivery and supplements buyer experience cycles are also canned to present high simplicity with easy convenience at low risk of uncertainty. Again, it is an “idiot proof” delivery method where once you are on your program you must only follow instruction. There is little personal thought involved in the daily decision making tasks or implementation, much less any choice involved. This creates extremely low flexibility in the program design, a characteristic becoming more and more frowned upon as the world becomes more accessible, global and fluid. Supplements to the program study have been chosen, months in advance, previous to departure and must only be executed upon arrival, leaving out the opportunity for use of information gained in the recent past.

Industry has missed the changing mind frame of collegians. Students in this decade are, now more than ever, interested in tackling these issues of planning and preparation of supplements themselves while desiring an increased focus on customer productivity in the use experience cycles. The reasoning stemming from the same reasons mentioned in the purchasing phase of the buyer experience cycle. This trend will only increase with a struggling economy as monetary costs become progressively more important. The consumer will be willing to spend personal time and endure higher frustration levels in planning and purchasing to avoid out sourcing premiums; knowing that the information is available and after some period can be found. Together, the current environment is making utility values shift towards personal preferential choice in supplements with better consumer productivity in individual growth through use over simplicity, convenience and low risk.

Consumer Productivity can be lifted through practical, engaging and applicable study delivery methods. Professor led group project programs, from the students native university, which incorporate a variety of their needed courses is a better way to keep students on their schedule track while expanding the education curriculum. This should be the heart of La Villa Mirabella’s focus in the buyer experience cycles of purchase, use and supplements and would be consistent with Blue Ocean strategies, being divergent and focused. More customizable options for buyer groups will allow for better efficiencies in use utility and cost by a professor led program during the purchase phase. It will add longer-term benefits in the use cycle through an applicable resume worthy experience with this increased consumer productivity output. Supplements will be more personalized reaching more equality between utility and expected cost. Simultaneously these blocks on the buyer utility map will increase the utility in the fun and image/use block by maximizing each individual’s specific consumer profit space.

Blue Ocean Paper #4; What have you done in the this business plan that addresses; Issues of Pricing, Overcoming Hurdles and Sustainability?

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There are three key concerns necessary to consider for La Villa Mirabella business plan to make the presentation a viable study abroad center. These concerns include issues of pricing, overcoming hurdles and sustainability. Issues are pricing center around what type of pricing scheme and level is warranted by the utility value offered in the business plan. Overcoming hurdles includes problems arising from cognitive, resource, motivational and political opposition. Sustainability encompasses the long term standing power to remain an innovator being aware of barriers to entry and realizing when blue ocean positions are lost and when to return to re-strategizing your value innovative concepts. These have been strong considerations especially in recognition of our product positioning within the study abroad industry.

Strategic pricing is vital in order to place a product in front of its potential consumers. It is often one of the first considerations in the purchase decision making process to determine if it should even remain within the buyers ballpark as well one of the last contributors in sifting process of similar product offerings. Setting the “right” price is necessary to secure the needed forecasted revenue streams. Failure can often lead to disastrous implications to a company’s financials as well as possibly lead to closure. Using the “Price Corridor of Mass” we followed the 2 step process for determining pricing scheme. We used our analysis of prices from products having the same form (professor led study abroad), different form with same function (independently attending foreign universities/programs), and different form as well as function but the same objective (independently travelling abroad to obtain a growing cultural experience). It was also important to consider the three levels of offerings that our study abroad center will provide; short-term, mid-term and long-term. These will require separate pricing platforms from each other with interpolated external considerations of the marketplace and its competitors. Through creating a database of researched and tracked programs over a host of offerings it was possible to find the price corridor, the price point in which the mass of target buyers remained.

Realizing this harmonized price frequency the next step was determining at which level within the price corridor would give exceptional utility to the consumers while trying to discourage imitation necessary to defend our blue ocean concept. In the case of the La Villa Mirabella Study Center low excludability or high immitability is one of the largest obstacles to protecting our Blue Ocean concepts as well as the low control over the use of our ideas; meaning our concept is also not rare. While our idea is innovative (raising buyer utility while decreasing cost), returning exceptional value, we do not have an offering that is either protected legally through patents or copyrights or an exclusive asset/core capability that can’t be easily reproduced by competitors. These sentiments pushed our designed utility into the Lower-level pricing plot.

With a pricing plan existing overcoming organizational hurdles must be also addressed to obtain a valid blue ocean model. There are cognitive, resource, political, and motivational hurdles to be crossed to allow execution of a professor-led high function low-cost study abroad center an attainable service. Cognitive hurdles, La Villa Mirabella’s biggest, are making our market positioning message clear to buyers and making that this divergent shift from the generally accepted offerings will provide exceptional utility. The developed professor led project idea was created largely from a focus on looking across time by using observable insights in current trends to make conclusions about buyer desires realizing these logical conclusions. Therefore sending this forethought through to the consumers, that likely retain the current vision of excepted study abroad formats, will be achieved by using a U.S. based Development Officer. This outreach officer will attack directly the first consumer, professors, which must buy into the idea in order to capture the rest of our secondary purchasers. Once successful efforts have been made and sold on our concept, together further efforts to break the cognitive wall in order to liberate the main buyers, the students themselves.

Resource hurdles is the other major wall to successful execution of our blue ocean strategy. In order to provide interesting, applicable and interactive consultancy projects, a La Villa Mirabella resource, outreach efforts must find a plethora of opportunities in the Rosignano Martittimo community. Without a constantly growing and changing list of options for professor to choose from across a variety of market sectors that the center can successfully market to professors worthy of making a pilgrimage to Gabbro with their students. This problem again will be alleviated through the use of an Italian local Outreach Coordinator to create contacts with key personnel in the area to forge lasting symbiotic relationships. Motivational and political hurdles are mostly only undertones to the cognitive and resource based hurdles and will require excellent convincing skills of our outreach efforts so that our formula is given serious consideration and excite our consumers about the benefit-cost values.

With a corner of the study abroad market entrenched, our vision perceived and understood by our consumers, sustainability of the competitive advantage against rivals, like any market, will become imperative. These potential implications were considered in the development of the professor-led delivery method and format by realizing the advantage of extremely divergent offerings in creating barriers to entry. Barriers to entry are a useful tool in raising the difficulty to imitate a product or service. In the study abroad industry La Villa Mirabella will be able to create strong obstacles, particularly, for current competitors that are deeply established. Brand image conflicts will prevent many of companies from imitating because imitation would invalidate many current models focused on providing curriculum and experience. It would also block those that are satisfied with the state of their current market share and consumer base making value innovation unnecessary to the company’s conventional logic. Additionally, for many of these long-standing established rivals, the substantial change to their existing business practices, politics, and culture could prevent entry into the professor led market space through the challenges of overcoming their own operational and cognitive organizational hurdles. Issues abounding, La Villa Mirabella could potentially go without multiple credible challengers for years growing the center barrier to challenger entries. In this period it could be possible to leverage a loyal following of professors and universities. It will be vital in the initial years to be sure all purchasing groups leave with a positive experience along with retainment of the post-experience professor base. The potential associated “word of mouth” marketing will create brand buzz that could help keep La Villa Mirabella the coined leader for the long term, especially in our respective Central Italian region; hopefully shunning competitors.

The professor led high-function low-cost oriented was grown to make a product offering in the study abroad industry that would create uncontested market space while making impending competition irrelevant. The goal being to reconstruct market boundaries return exception utility through value innovation. Nevertheless, without addressing and considering during the development/design stages the execution obstacles and concerns on pricing issues, overcoming hurdles and sustainability it would be pointless to try the strategic methodology surrendered in W. Chan Kim and Renee Mauborgne’s book Blue Ocean Strategy. Great ideas and dreams can lead to phenomenal opportunities, however if unexecutable their potential likely will never unfold.

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