Marvel Hbs Blue Ocean Strategy Case Analysis

STRT 4501

Professor Hugh Courtney

Fangyun Li (Beatrice)

HBS “The Marvel Way: Restoring a Blue Ocean” Case Analysis

-  Define the four “generic business strategies” and provide an example of each one of the strategies (provide your examples rather than examples already presented in the textbook or case study).

      The four generic business strategies Porter stated are “Cost Leadership” (low cost); “Differentiation” (unique and outstanding product or services); “Cost Focus” (Low/minimize cost in a focused market/industry); “Differentiation focus” (Unique service or product strategic differentiation in a focused market/industry ).

      My understanding for cost leadership strategy is to minimize the cost of making/delivering the products or services, offering low/competitive price but remain profitabilities by containing large sales amount/market share. In order to achieve this strategy, a company needs to maintain high efficiency- both in logistics and production. Therefore, they have to invest more in new logistic and production technologies that both enhance efficiency and lower cost. Besides, factors of marginal cost such as materials, factory and labor cost should also include into consideration.
      Companies I have known that success through cost leadership is IKEA (As a student in Boston, I am not looking for high-end furniture for a permanent home. Most of my furniture is from IKEA because of the lower price/concise style but well designed/explicit assembly instruction and fast pick up option. IKEA is lowering product base cost by providing self-assemble compression wood furniture; reducing logistic cost by building distribution center right below the showrooms). However, the potential weakness for this one might be the chance of imitation from others. If your cost leadership strategy is simple enough to be copied, other companies may be using the strategy but a lower price to grab market share from you.

       My understanding of Differentiation strategy is building up a unique, more attractive product line or services compares to your competitors’. In order to do this, a company needs to pay more attention to product/service development research. They can reach this goal by maintaining high-quality goods or excellent customer services. Besides, they should also be doing better customer’s data analytics to make sure they have the correct marketing/sale strategy.
      My example for this will be our school- Northeastern University. I think our school’s COOP    program is unique enough to different us from other schools in the US. Our school’s employment rate after graduation is always the top one within the country. Besides, Neu’s whole classroom style is more practical than other schools. For instance, I have the simulation game in MKTG 2201 might not happen in other schools.

       My understanding of the two Focus strategy will be: using related strategy(either using lower cost or unique, differentiated product/service) to create brand loyalty in just one particular market/industry. More specifically, Cost Focus is using a competitive low-cost strategy for one niche market; Differentiation Focus is the company having product/service developed for a specific segment.
      My example for Cost Focus and Differentiation Focus will be Mcdonald (Providing low price food and being outstanding in the fast food industry) and Wholefood(supermarket that is providing organic, healthy high quality but high price product).

-  What is “Value Innovation,” what are the factors that define it, and why is it rare? What are the downside consequences of “Value Innovation” attempts that fail?

      My understanding of “Value Innovation” is the process of reaching the goal of providing both differentiated and low price product/service. Factor for value innovation will be “Cost” and “Buyer value.” For a company, the value of the product/services is the sale price minus cost; but for the buyer, the value is its utility cost for them minus the sale price. The reason that this happened rarely is value innovation only achieved when a company balance the cost, sale price and the utility of the product.

      It is undoubtedly true that the alignment of cost, price, and utility is hard. From my perspective, “value Innovation” usually failed when the cost of innovation is over weighing its real benefit(utility value) since most research is not a guarantee of gaining profit in the future. Also, R&D is requiring high investment at the beginning cycle which requires a higher rate of return. With no guaranteeing of high yield, the risk of value innovation is also relatively high.

-  Was Marvel ever “stuck in the middle?” Explain why or why not.

      Yes, with the experiences of Marvel being trading over companies/owners/Investment banks, the fact that they have applied to bankrupt, Marvel absolutely ”stuck in the middle.” The first blue ocean for Marvel is around 1960s, while Marvel and DC are the two major comic book publisher. Because of the fact, the DC purchased Marvel’s distribution arm to limited the number of book Marvel can distribute, DC forced Marvel to produce a strategy to attract noncustomers. Therefore, they adopted a new strategy to create a new blue ocean and jump out of the red ocean competition. To achieve this goal, they had changed their storytelling to superhero were all ordinary people first and they transformed into superhero accidentally. By introducing this “The Marvel Method,” they had successfully targeted college student-a slightly older but more sophisticated segment. From my perspective, Marvel had achieved value creation for their product utility side.

      However, after Marvel has been sold to conglomerate Cadence Industries. Cadence owned print distribution arm but do not know anything about publishing a comic book. With lousy management (Letting executives against each other so that they can do better), Marvel’s chief cartoonist soon quit and signed a contract with Marvel’s competitor DC. Since the blue ocean strategy (value innovation) required alignment of value, profit, and people. Even though Marvel’s comic book is high quality, the company’s poor management could also damage the whole company’s image, unmotivated people and eventually lead to less profit.