Week 2: Six Paths analysis

Question 1

Objective of “six path analysis”

Answer 1

Help managers and entrepreneurs avoid “head to head” competition, suggest six paths to create a new market space.
“Mitigate” from RED OCEAN–>BLUE OCEAN

Question 2

Red Ocean

Answer 2

Current market space dominated by strong incumbent competitors.
controlled by strong “industry recipes”- dominant way of doing business, may be impossible to get away.

Question 3

Blue Ocean

Answer 3

Uncontested market space where competition do not exist yet.
“industry recipes” not crystallised yet, allows entrepreneurial firms and migrant firms bigger freedom of movement.

Question 4

Goal and way to get from red ocean to blue ocean

Answer 4

Need to use value innovation.

Challenge generic strategies- use either competitive differentiation or low-cost strategy.
Many firms can’t decide and are stuck in the middle.

Do not have to choose between 2 extremes, can reduce cost and improve value at the same time.

Question 5

Questions to ask for planning to choose 1 strategy

Answer 5

• On the COST side:
  – Which factors can be ELIMINATED that the industry simply takes for granted?
  – Which factors can be REDUCED to well below the industry’s standard?
• On the BUYER value side:
  – Which factors can be RAISED well above the industry’s standard?
  – What factors can be CREATED that the industry has never offered?

Question 6

Name six paths in the analysis

Answer 6

*Industry
*Strategic group
*Buyer group
*Scope of product or service offered
*Functional-emotional orientation
*Time