Your Role during Round Red

You and your teammates are now managing Blue Buddies.  We are January 1^st, Year 41 of the video game console era, as shown below:

You need to make strategic decisions regarding how much to produce, how much to spend and how to target your investments in Marketing and in Sales.  You will also be allowed to innovate and upgrade your existing product in order to better serve your customers – this will naturally create R&D expenditure.  You are also allowed to select from a range of Corporate Projects which can really impact your financial performance.  The investment categories requiring strategic decisions are thus:

•   Innovation and R&D:  The level of investment is determined by the extent of product development you specify, and upon which product dimensions

•   Production:  The number of units needed to be produced each year, taking into account the evolution of the market, the moves of your competitors as well as you own plan of actions 

•   Segmentation Strategy:  Deciding which market segments you will target

•   Marketing mix:  The day-to-day operational marketing decisions such as your product’s price, how much you will spend on marketing communication/promotion and how much you will invest in geographic expansion and on which channels you will focus your sales force.

•   Corporate Projects:  Investment in internal projects aimed at improving the organization’s capabilities, which can have a strong impact on the bottom line if well timed and well chosen

•   Finance:  Adjusting investment decisions to meet the allocated budget, since you are responsible for the financial performance and you must manage Blue Buddies profitably, taking into account the financial impact of all your decisions.  An important decision is also determining the level of investment you will make in the Red Ocean product versus the Blue Ocean product.

You will probably find that creating value in the Red Ocean is very difficult for a number of reasons: market decline, tough competitors, cost increases, and price pressure.

Note: Your professor may have decided to skip the Red round as it is not mandatory to fully understand the Blue Ocean Strategy concepts.

The following sections describe the decisions you will have to make each year as well as the reports and market studies that will be available for you to make those decisions. Before making dramatic changes, you should try to get a feel for the behavior of the market.  Try to avoid hastily jumping to conclusions and bear in mind that obvious solutions may be based on an incomplete analysis.  To reach more robust decisions, use the information from the studies to review your situation and past competitive behavior.

Prior to reading this chapter, we suggest that you sign in the BOSS application as explained in the last section of the Participant Handbook. You will then be able to browse through all the charts described in the next section.