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As proposed by Kim et al. (2005, pg19), there are three important analytical tools and frameworks used to identify, create or capture of the Blue Ocean, namely, the Strategy Canvas, the Four Action Framework as well as the Eliminate-Reduce-Raise-Create Grid. In this context, we will employ these analytical tools to confirm and justify if the two companies that we identified are indeed applying a Blue Ocean Strategy in their businesses, in which enable them to outperform by venturing into an uncontested market space. The three important Blue Ocean tools and frameworks are discussed in the following section:

Tool #1: Strategy Canvas. Strategy canvas is a diagnostic and action framework for building the Blue Ocean Strategy. It enables us to understand the current known market space where on the horizontal axis one would list down the 6 to 8 most important factors of the industry the company competes on and invest in (buyer value elements). The vertical axis captures the level of offering that buyers are receiving on these key factors in the form of a high score or low score. From the value curve, we will be able to judge if a particular company is competing face-to-face with the other competitors or not. Companies that have the same value curve, defined as the ‘convergence of value curve’ by W. Chan Kim, are said to be stuck in the Red Ocean (i.e., they are all different in the same way as they are competing on the same factors). In contrast, a differing value curve as opposed to the other players’ value curve in the industry is an indication that the company is not competing face-to-face with competitors. Company that has a differing value curve, derived based on the 6 principles of Blue Ocean Strategy, is said to be operating in the Blue Ocean (an uncontested market space), where competition is irrelevant. Figure 1 depicts the Strategy Canvas of the wines industry. It is interesting to note how the value curve of ‘Yellow Tail’ differs from the other players in the industry, which enable the company to operate in Blue Ocean.

Figure 1: Strategy Canvas of the Wines Industry.

Source: Blue Ocean Strategy (Kim et al., 2005, pg32)

Tool #2: Four Actions Framework. To reconstruct buyer value elements in crafting a new value curve, the Four Actions Framework was developed. As shown in Figure 2, in order to break the trade-off between differentiation and low cost and to create a new value curve, there are four key questions to challenge an industry’s strategic logic and business model:

1. Which factors the industry takes for granted to be eliminated?
2. Which factors should be reduced well below industry?
3. Which factors should be raised well above industry?
4. Which factors should be created that the industry never offered?

This helps position the mindset to challenge the industry norms and business model to chart a new value curve. In fact, this framework will enable us to justify if the companies analyzed in the following section if they are competing on factors commonly focused by the industry, or are they intelligently focus on a new value curve by applying the four actions: eliminated, reduce, raise and create to enable a ‘leap in value’ for the buyers and the company itself.

Figure 2: The Four Actions Framework.

Source: Blue Ocean Strategy (Kim et al., 2005, pg29).

Tool #3: The Eliminate-Reduce-Raise-Create Grid. The Eliminate-Reduce-Raise-Create Grid forces one to not only ask the questions raised in the Four Actions Framework but also to formulate actions/strategies to all four questions in the grid. It is a model that supplements the Four Actions Framework mentioned above. In our analysis of the two Malaysian companies, the Eliminate-Reduce-Raise-Create Gird for each of the company is employed to justify the company actions. For illustration purpose, an example of the Eliminate-Reduce-Raise-Create Grid is shown in Figure 3 below.

Figure 3: The Eliminate-Reduce-Raise-Create Grid for ‘Yellow Tail’

Source: Blue Ocean Strategy (Kim et al., 2005, pg53).

A good Blue Ocean Strategy. Aided by the 3 important tools mentioned above, we will be able to judge if a particular company strategy conforms to the Blue Ocean Strategy. A Blue Ocean Strategy should have the following three characteristics: (1) the value curve has focus; so the company does not diffuse its efforts across all key factors of competition, (2) the value curve diverges from other players, and (3) the company has a compelling tagline; to create superior brand name recognition at the start of the venture. Without these qualities, a company’s strategy will likely to be muddled, undifferentiated and hard to communicate as well as suffer from a high cost structure (Kim et al., 2005).

The six principles of Blue Ocean Strategy. Lastly, it is also worth to mention the six principles used to formulate and execute the Blue Ocean Strategy. In our analysis of the companies, the six principles are used to compared to the actions taken by those companies, and from that, we will be able to justify if these companies being analyzed are truly Blue Ocean Companies. The descriptions on the six principles of Blue Ocean Strategy are shown in Figure 4 below.

Figure 4: The six principles of Blue Ocean Strategy.

Source: Blue Ocean Strategy (Kim et al., 2005, pg38)

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