The impact of the Blue ocean strategy on the performance of Bamburi Cement Limited in Kenya
Abstract
The visionary companies of the 21 st century possess unique strategic capabilities that
enable them to achieve superior organizational performance by continually challenging
and expanding their industry boundaries. These organizations do not merely benchmark
against competitive standards with the goal of outperforming existing competitors, they
reconstruct market boundaries by developing distinctive value innovations that advance
superior customer value and consequently increase organizational value. The blue ocean
strategy postulates that companies can create new growth opportunities by shifting focus
from strategies aimed at outperforming or beating existing competition, to strategies
targeted at developing uncontested market spaces with expansive boundaries and
potential. These strategies seek to render existing competition irrelevant by creating new
demand. It is against this strategic focus that this study sought to determine the impact of
the blue ocean strategy on the performance of the leading cement producer in the East
African region. The study relied on both primary and secondary data to determine the
relationship between the blue ocean strategy implemented by Bamburi Cement Limited
and the performance of the company over a fifteen year period. Interviews with the
company’s top management revealed that the value innovations developed and
implemented eleven years earlier had indeed pushed the company’s performance to new
heights. The study established that the aggressive implementation of new value
innovations did strengthen the organization’s strategic position. Nevertheless, it was also
determined that whereas the blue ocean strategy did enhance the organization’s growth
potential, it was insufficient when applied in a rapidly evolving competitive environment.
The study noted that the negative trend in Bamburi Cement Limited’s recent
performance, with respect to decreasing operating margin and significant drop in market
share regionally as a result of competitive pressures, pointed to the necessity of
combining the blue ocean strategy with strong competitive, red-ocean strategies to protect
existing market dominance. The study noted that an organization must relentlessly
maintain strategic awareness of the dynamics evolving in its industry and remote external
environment, even while implementing the blue ocean strategy.
Publisher
University of Nairobi
Description
Thesis