Business Strategy Monday–American Giant

Today’s

Vocabulary

(1) Blue ocean: A strategy that results in little competition

It’s difficult to find a blue ocean in the banking industry.

(2) Sacrifice: To let go of something that’s important in order to get something else.

Let’s sacrifice the show in Florida and use the money to give everyone a raise.

(3) To compete on price: To use price as the reason for buying your product.

Big stores like Costco compete on price more than anything else.

Today’s

Questions

1. Why might it be a good idea to make low quality medical equipment?

a. So you can make more

b. So you can have a low price

c. So you can sell more

2. What strategy do most clothing companies have?

a. High price, High quality

b. Medium price, medium quality

c. Low price, medium quality

3. What is American Giant’s most important value?

a. Speed

b. American-ness

c. Quality

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BUSINESS STRATEGY MONDAY

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By Jeremy Schaar

Last week on the blog, I presented blue ocean strategy and discussed value curves. Today, I’ll review those concepts and present a company that has a great blue ocean strategy.

Blue ocean strategy means changing your values. A blue ocean is a set of values that other companies aren’t using. That’s why there’s no competition.

For example, let’s say that you make medical equipment. Everyone in your industry really values high-quality equipment because it will save more lives. You don’t value a low price because you would need to sacrifice quality. It’s a red ocean. There are many competitors trying to make higher quality equipment.

But there’s an opportunity. In some places, they can’t buy the high-quality equipment. They want a company that values a low price. If you start making low-quality and low-cost equipment, you’ll find yourself in a blue ocean.

A real example of blue ocean strategy is American Giant. American Giant makes hooded sweatshirts. Most clothing companies try to produce a pretty good shirt at a really low cost. This usually meant production in a country like China or Vietnam. They then sell it in their store or at a partner store. This is a red ocean. Everyone produces similar quality shirts and competes on price.

American Giant

American Giant

American Giant decided to make the highest quality shirt in the world. It’s produced in San Francisco. It’s more expensive (~$75), but it’s incredibly comfortable and will last forever. You can only buy it on their website. By focusing on quality, they created a product without competition. That’s a blue ocean.

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CHECK YOUR ANSWERS!

Answers To Today’s Questions

B, C, C

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You Can Do It All Yourself But You Dont Have To

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