Eliminate-reduce-raise-create grid

Definition

The eliminate-reduce-raise-create grid is a strategic tool used to develop a blue ocean strategy by identifying how to create new market space. This framework helps businesses think creatively about what factors to eliminate or reduce in their industry, while also determining which factors to raise above industry standards and what new factors to create that the industry has never offered. It provides a structured way to reframe competition and innovate value propositions.

5 Must Know Facts For Your Next Test

1. The grid consists of four action categories: eliminate, reduce, raise, and create, which guide companies in rethinking their business models.
2. By identifying which elements of an industry can be eliminated or reduced, companies can lower costs while simultaneously increasing value.
3. Raising factors above the industry's standard can help distinguish a business from its competitors, creating a unique value proposition.
4. Creating entirely new factors that have not been offered before opens up fresh avenues for growth and customer engagement.
5. Utilizing this grid allows businesses to transition from competing in crowded markets to exploring untapped opportunities for innovation.

Review Questions

• How does the eliminate-reduce-raise-create grid facilitate the development of a blue ocean strategy?
  • The eliminate-reduce-raise-create grid facilitates the development of a blue ocean strategy by encouraging businesses to rethink traditional competitive factors. It prompts them to identify which elements can be eliminated or reduced to cut costs, while also highlighting areas where they can raise performance or create new offerings that are not available in the current market. This comprehensive approach enables companies to discover unique value propositions and innovate effectively.
• Discuss the impact of each action category (eliminate, reduce, raise, create) on a company's market positioning.
  • Each action category in the eliminate-reduce-raise-create grid has a significant impact on a company's market positioning. By eliminating certain factors, a company can streamline operations and reduce costs, allowing it to compete on price. Reducing aspects that are not valued by customers can enhance overall efficiency. Conversely, raising certain factors can elevate the company's brand perception and attract customers looking for higher quality. Finally, creating new factors that differentiate the business leads to unique offerings that can capture new customer segments and create demand where none previously existed.
• Evaluate how applying the eliminate-reduce-raise-create grid can lead to sustainable competitive advantages in emerging markets.
  • Applying the eliminate-reduce-raise-create grid in emerging markets can lead to sustainable competitive advantages by allowing businesses to tailor their strategies to local needs while differentiating themselves from established competitors. By systematically analyzing market conditions through this grid, companies can identify specific factors that resonate with local consumers and adjust their offerings accordingly. This strategic alignment with customer preferences, combined with innovative approaches from the grid's framework, helps build brand loyalty and establishes a foothold in rapidly changing environments where traditional competitors may overlook opportunities.

Related terms

Blue Ocean Strategy: A business strategy that focuses on creating new, uncontested market space instead of competing in existing markets, thereby making the competition irrelevant.

Value Innovation: The simultaneous pursuit of differentiation and low cost, which creates a leap in value for both the company and its customers.

Strategic Canvas: A visual representation of a company’s relative performance across the industry's key competitive factors, used to identify gaps and opportunities for value innovation.