Blue Ocean Strategy Summary

Blue Ocean Strategy was first used by W. Chan Kim and Renee Mauborgne in their co-authored book “Blue Ocean Strategy” published in the year 2005. According to Kim and Mauborgne, it is not necessary to do what the competition is doing or not to take head on with competition, not to be beginner where competition is already established and becomes bloody thus the term of Red Oceans. Both the authors suggest to move where there is no competition, create Blue Oceans of Demand and sail in waters where no one has sailed so far thus making the competition irrelevant.
Kim and Mauborgne divided market in two parts: Red and Blue Oceans. Red Ocean are existing markets, known places, oversaturated, having fierce competition, running for survival, and

All this is causing Red Oceans to shrink at much faster rate, niche markets and monopoly heavens are disappearing at the same time. Demand in already developed markets is either standing still or declining as U.N. survey shows declining population in these markets. This has resulted into supplies overtaking demand, price wars, fierce competition to keep afloat and shrinking margins. People no longer ask for Tide as washing powder or Colgate as tooth paste when multiple choices are available. Now the biggest criterion has become to drive down the costs. As a result, more and more outsourcing is taking place to low cost countries like India and China but it is not a very long term solution as ultimately it is going to affect manufacturing and service sectors of particular geography if it remains dependent on outsourcing. Even recent speeches of President Obama on sentiments of American manufacturing sector and generation of jobs within the country are glaring examples of complicated problems being faced through continued

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Blue Ocean Strategy at Indophil

Brief History of Indophil Indophil is a textile spinning mill located at Marilao, Bulacan, Philippines. It belongs to a Multinational Aditya Birla Group of India. Indophil was set-up in 1975 with small capacity of 15,000 spindles churning out polyester/rayon blended yarns. The capacity grew slowly to 91,000 spindles by the year 1994. In 1995, Indophil installed captive power plant of 24.8MW so as to supply continuous power to its spinning machines.

Statement of Problem As many as 59 textile spinning mills were operational in the Philippines during early 80s till the beginning of the new millennium. But slowly they closed shutters mainly due to high power lost in the Philippines. Textile spinning mill is a power intensive industry consuming an average of 3.5KW power per kilogram of yarn production. Hence USC 16/KW power lost in the Philippines is one of the highest in Asia if not in the world. Thus power lost/kg of yarn production comes out to be USC 56 or 22% of total manufacturing cost. Other details of cost break up are as seen below:
Raw Materials 58%
Power 22%
Wages 9%
Repair and Maintenance 4%
Salaries 3%
Packing 2%
Overheads