Running HEAD: DETERMINANTS OF BLUE OCEAN STRATEGY IN COMMERCIAL BANKS IN KENYA
The Blue Ocean Strategy
Institution
Name
Due date
ABSTRACT
The banking industry in Kenya has achieved tremendous growth over the past years with
most of the banks making abnormal profits in the industry. With heightened competition,
commercial banks are forced to compete on innovation and this is where the application of
blue ocean strategy can be useful. The objectives of this study were to establish the
application of blue ocean strategy among banks and to identify factors influencing the
application of blue ocean strategy among commercial banks in Kenya.
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Running HEAD: DETERMINANTS OF BLUE OCEAN STRATEGY IN COMMERCIAL BANKS IN KENYA
TABLE OF CONTENTS
1.1
Background of the Study ................................................................................................ 3
1.1.1
Concept of Blue Ocean Strategy ............................................................................... 4
1.1.2
Determinants of the Implementation of BOS ......................................................... 4
1.1.3
Overview of Banking Industry in Kenya ..... Ошибка! Закладка не определена.
1.1.2
Research Problem ........................................ Ошибка! Закладка не определена.
1.1.3
Research Objectives ................................................................................................ 5
1.1.4
Value of the Study ....................................... Ошибка! Закладка не определена.
2.1
LITERATURE REVIEW ................................... Ошибка! Закладка не определена.
2.1.2
Theoretical Foundation ................................ Ошибка! Закладка не определена.
2.1.3
Value Innovation Theory ............................. Ошибка! Закладка не определена.
3.1
Empirical Review............................................................................................................ 7
3.1.2
4.1
Summary and Research Gap....................... Ошибка! Закладка не определена.
RESEARCH METHODOLOGY........................ Ошибка! Закладка не определена.
4.1.2
Research Design .......................................... Ошибка! Закладка не определена.
4.1.3 Population of the Study ..................................... Ошибка! Закладка не определена.
4.1.4 Data Collection .................................................. Ошибка! Закладка не определена.
4.1.5
Data Analysis ............................................... Ошибка! Закладка не определена.
5.1 RESULTS AND DATA ANALYSIS ...................... Ошибка! Закладка не определена.
5.1.2 Discussion ......................................................... Ошибка! Закладка не определена.
6.1 APPLICATION OF BLUE OCEAN STRATEGY . Ошибка! Закладка не определена.
6.1.2
Factors Influencing Application of Blue Ocean Strategy .. Ошибка! Закладка не
определена.
7.1
CONCLUSION AND RECOMMENDATIONS Ошибка! Закладка не определена.
7.1.2
Discussion of Findings ................................ Ошибка! Закладка не определена.
7.1.3
Conclusion ................................................... Ошибка! Закладка не определена.
7.1.4
Recommendations ....................................... Ошибка! Закладка не определена.
References: ............................................................................................................................... 18
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Running HEAD: DETERMINANTS OF BLUE OCEAN STRATEGY IN COMMERCIAL BANKS IN KENYA
1.1
Background of the Study
The core concept of strategic management is strategy. Strategic decisions influence the way
organizations respond to their environment. Schendel and Hofer (1979) define strategy in
terms of its function in the organization. They assert that the purpose of strategy is to provide
directional cues to the organization that permit it to achieve its objectives while responding to
the opportunities and threats in the environment.
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Running HEAD: DETERMINANTS OF BLUE OCEAN STRATEGY IN COMMERCIAL BANKS IN KENYA
1.1.1 Concept and importance of Blue Ocean Strategy
As indicated by Hax and Majluf (1991), system chooses the organizations the association is
to be in or is in, decides and uncovers the hierarchical reason as far as long haul goals,
activity projects and asset assignment needs, endeavours to accomplish a long haul
economical favourable position in every one of its organizations by reacting appropriately to
the chances and dangers in the association's condition and the quality.
Every methodology level has an alternate core interest. Corporate system worries about
characterizing the general mission of the firm. This can be inside a similar industry or even in
differing enterprises. The business level procedure offers thoughtfulness regarding how every
one of the company's organizations will contend.
Red Ocean are existing business sector spaces, with known items, systems and contenders.
Low cost and quality is a portion of the variables the challenge depends on. Every one of
entertainers' positions is outstanding and it is practically incomprehensible for new
contestants to settle and contend. Benefit and development are restricted because of the solid
challenge (Guillaume, 2011).
In actuality, as indicated by Kim and Mauborgne (2005), in Blue Ocean rivalry is
insignificant in light of the fact that it is new market space without any limits or guidelines. It
is a key space, where the main participant will make the item, request, standards and it will
on a long haul point of view incredibly helpful for him. In fact, by fixing every one of the
criteria, rivalry will be insignificant.
1.1.2
Determinants of the Implementation of BOS
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Running HEAD: DETERMINANTS OF BLUE OCEAN STRATEGY IN COMMERCIAL BANKS IN KENYA
The Blue sea system for the most part has the vital idea (Pearson, Gordon, 1999)
quintessence and depends on strategists and director's idea so as to move toward key
arranging exercises and procedures. For an effective swimming in the Red Ocean, it is
constantly expected to get behind the opponents. Red Ocean has consistently been of
significance and is considered as the realities of business life..
In light of the consequences of this examination, the Blue Ocean Strategy highlights were
recognized in including the view of the visitors, the unmistakable gave advancement included
worth, the improvement of new market sections, brand making and reestablishment brand
making, make a one of a kind climate in the lodging, setting up dissemination channels and
make key collusions. (Yang, Jente, 2012).
Dennis Pitta (2009) noticed that so as to depict a perceptual system that have application in
item improvement begin to ponder the Blue Ocean Strategy. He arrived at the resolution that
organizations can utilize the blue sea methodology to restore the structure of their items and
administrations which offer to new clients and can escape from their mechanical opponents.
1.1.3 Overview of Banking Industry in Kenya
As per the Central Bank of Kenya, there are 43 authorized business banks in Kenya. Three of
the banks are open money related organizations with greater part shareholding being the
Government and state partnerships. The rest are private monetary organizations. Of the
private banks, 27 are neighbourhood business banks while 13 are remote business banks
(CBK, 2013).
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Running HEAD: DETERMINANTS OF BLUE OCEAN STRATEGY IN COMMERCIAL BANKS IN KENYA
Bank monetary execution in the ongoing past has altogether improved since 2000.
Information from the Central Bank of Kenya demonstrates a noteworthy development in the
business in all zones including monetary execution (CBK, 2013). The financial business in
Kenya has become throughout the years since the Central Bank of Kenya set up measures to
control the banks to streamline the exercises and all the more so to avoid the breakdown of
the financial business as had been previously.
1.1.2 Research Problem
The Blue Ocean Strategy tries to render rivalry immaterial (Kim and Mauborgne, 2005).
Through applying blue sea methodology, an organization can get an all out new assessment
of old industry and discover new risks. BOS hypothesis was connected in US wine market
and found that the most significant enthusiasm for clients isn't drinking yet fun. They
recognized another market keep away from loaded with wine makers, fun market drawing in
different purchasers from brew and mixed drink showcase.
The financial business in Kenya has accomplished huge development over the previous years
with the vast majority of the banks making strange benefits in the business (Oloo, 2013).
With increased challenge, business banks are compelled to contend on development and this
is the place the utilization of blue sea technique can be valuable. The present investigation
tries to decide the fun market for the banks in Kenya. Other than that, it is imperative to
comprehend whether remote banks apply Blue Ocean Strategy uniquely in contrast to the
indigenous banks in Kenya.
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Running HEAD: DETERMINANTS OF BLUE OCEAN STRATEGY IN COMMERCIAL BANKS IN KENYA
Concentrates on this idea are not many in Kenya given this are another hypothesis which was
presented in 2005. While it was the primary investigation on BOS to be done on Kenya, it
just centred on the broadcast communications area and did not address how firms can utilize
the system to become but instead reported the act of the equivalent in the business.
Nyambane (2012) examined the difficulties of executing BOS in banks and in this manner
was constrained on the degree by the way that it just centred on indigenous banks and not the
whole business.
Further, it just tended to the difficulties of executing BOS and not the use of the system in the
business. The examination was constrained in extension as it was a contextual investigation
as opposed to an overview. Given the constraints of past research on BOS in Kenya, the
present investigation tends to the hole by concentrating on the inquiry: what decides the
utilization of BOS in business banks in Kenya?
1.1.3 Research Objectives
The goals of this examination were:
1
To build up the use of blue sea technique among banks.
2
To recognize variables impacting the utilization of blue sea procedure among business
banks in Kenya.
1.1.4 Value of the Study
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Running HEAD: DETERMINANTS OF BLUE OCEAN STRATEGY IN COMMERCIAL BANKS IN KENYA
This examination will add on to the developing body learning of procedure and particularly
the blue sea technique. Along these lines, the utilization of technique from the financial
segment will educate the application regarding Blue Ocean as a procedure from a creating
country. Further, the examination will give a hypothetical premise to advance vital
administration in associations without rivalry as the principle issue inside which to work.
The investigation will be imperative to the administration of different banks incorporated into
the examination. The outcomes will give knowledge into the degree to which the banks have
incorporated blue sea techniques into their activities. The investigation will likewise be
helpful to those keen on doing more examinations to the extent the use of blue sea systems is
concerned. Therefore, future specialists will discover this investigation a helpful guide as it
structures a premise whereupon different examinations will be done on different enterprises
in Kenya.
2.1
LITERATURE REVIEW
This section exhibits an audit of writing. To start with, the section gives a hypothetical survey
of Blue Ocean methodology. This is trailed by a survey of earlier investigations on blue sea
procedures. Ultimately, the section closes by giving a rundown of the part and an
examination hole.
2.1.2 Theoretical Foundation
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Running HEAD: DETERMINANTS OF BLUE OCEAN STRATEGY IN COMMERCIAL BANKS IN KENYA
Various speculations in system have been contrived to clarify why and how procedure is
connected in associations to contend in the market. In such manner, speculations, for
example, Miles and Snow typology and Porter's focused hypothesis have been concocted. Be
that as it may, with the presentation of Blue Ocean Strategy, rivalry is rendered immaterial.
Along these lines, this area gives a synopsis of the two hypotheses of contending in the
market and why these two speculations are not important for application in Blue Ocean
Strategy.
2.1.3 Value Innovation Theory
Worth advancement, the foundation of blue sea technique is the synchronous quest for
separation and ease, making a jump in an incentive for the two purchasers and the
organization (Amit and Zott, 2012). Since incentive to purchasers originates from the
offering's utility less its cost, and on the grounds that incentive to the organization is
produced from the offering's value less its cost, esteem advancement is accomplished just
when the entire arrangement of utility, cost, and cost is adjusted.
This should be possible by responding to the accompanying inquiries: what components can
be wiped out that the business has underestimated? What variables can be decreased well
underneath the business' standard? What variables can be raised well over the business'
standard? What variables can be made that the business has never advertised?
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Running HEAD: DETERMINANTS OF BLUE OCEAN STRATEGY IN COMMERCIAL BANKS IN KENYA
To essentially move the procedure canvas of an industry, an organization must start by
reorienting its key concentration from contenders to options, and from clients to
noncustomers of the business. The methodology canvas contains two sections, a
demonstrative and an activity system. The last one is a four activity structures can be utilized
to figure another blue sea for organizations in existing business sector (Amit and Zott, 2012).
To start with, dispose of variables ought to be killed well underneath the business' standard.
These elements are those the organizations spent a great deal expenses to contend in for quite
a while however has less importance for organizations' intensity and bring no benefits.
Second, decrease variables ought to be diminished well beneath the business' standard. They
carry a lot of worry to organizations' cost structure that organizations can increase little from
these overdesigned administrations (Kim and Mauborgne, 2005). Third, raise elements ought
to be raised well over the business' standard. These elements are those have significant
importance for clients yet overlook by organizations in their opposition. Fourth, make
elements ought to be made that the business has never advertised. These components allude
to those variables which can make new interest for clients and new advertise for
organizations. The framework can be effectively comprehended by supervisors and help
organizations discover new market space increasingly conservative (Amit and Zott, 2012).
Blue sea system is an absolutely new procedure which lead organizations to leave momentum
showcase and go into an obscure market to decrease their expenses and catch new clients
from different enterprises in this way improve organizations' aggressiveness. This new
showcase really existed before however disregarded by the vast majority of the
administrators. Customary methodologies and hypotheses misleadingly differentiate the
outskirt of industry and help a ton for organizations' opposition in current market.
3.1
Empirical Review
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Running HEAD: DETERMINANTS OF BLUE OCEAN STRATEGY IN COMMERCIAL BANKS IN KENYA
Blue sea system has been treated by numerous researchers as a decent methodology for
organizations to make uncontested market in which rivalry is insignificant. (Layton, 2005;
Azar, 2008). Dahl (2005) demonstrates that blue sea technique is broadly utilized by fruitful
organizations. Incense (2009) looks at blue sea system and just better approach and discover
Blue Ocean has advantage in recognizing an all the more unmistakably showcase since
essentially better approach is absence of considering impacts from buyers' requests.
A few scientists found that there is a commonly fortifying connection between Blue Ocean
system and advancement. Colman and Buckley (2005) prompt that organizations make Blue
Ocean through worth advancement. Meyer (2005), Kim and Mauborgne (2005) finds that
blue sea system help associations to improve and put up new items for sale to the public. Toll
(2005) demonstrates pressing together blue sea leads organizations to make more esteem.
Morris (2007) exhibits associations utilizing blue sea methodology to address the difficulty of
advancement will carry themselves generously focal points with their development. Kim,
Baik, Kazman and Han (2008) recommend that numerous new systems can't help a ton for in
current profoundly focused markets however contribute a lot to those potential markets where
rivalry doesn't exist.
Kyengo (2009) overviewed the selection of Blue Ocean technique by portable substance
suppliers in Kenya. Through meeting chiefs in four portable organizations, the examination
noticed that there was proof of blue sea methodology direction among the organizations and
reasoned that challenge couldn't be completely overlooked in the part. While it was the
primary examination on BOS to be done on Kenya, it just centred around the broadcast
communications division and did not address how firms can utilize the system to become but
instead reported the act of the equivalent in the business.
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Running HEAD: DETERMINANTS OF BLUE OCEAN STRATEGY IN COMMERCIAL BANKS IN KENYA
Further, it just tended to the difficulties of executing BOS and not the use of the procedure in
the business. Abishua (2010) considered the procedures that Equity bank uses to contend.
The examination utilized optional information and found that the bank various systems
including blue sea procedure to contend in the business. The examination was restricted in
extension as it was a contextual investigation instead of a study. Being a contextual analysis,
it can't be summed up to the whole business.
3.1.2
Summary and Research Gap
The examinations above unmistakably demonstrate that there is a hole that still should be
tended to the extent the utilization of blue sea methodology in the financial business is
concerned. Given the restricted roads to contend on utilizing the customary strategies, the
Blue sea technique offers a road through which banks can make uncontested markets to
serve.
4.1
RESEARCH METHODOLOGY
This part portrays the technique that was utilized in the gathering of information appropriate
in responding to the examination questions explicitly research structure, populace and test
plan, information accumulation, and information investigation strategies.
4.1.2
Research Design
This was a cross-sectional study of business banks in Kenya. A cross-sectional study looks to
analyze an issue over a populace of firms at a specific point in time. The point of the
examination was to investigate the utilization of blue sea procedure in business banks in
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Running HEAD: DETERMINANTS OF BLUE OCEAN STRATEGY IN COMMERCIAL BANKS IN KENYA
Kenya. Given the targets the investigation tried to accomplish, clear study is most appropriate
for the examination.
4.1.3
Population of the Study
The number of inhabitants in this investigation was 43 business banks as of now enlisted by
the Central Bank of Kenya as at 30th June 2013. Since the quantity of banks as of now
working in Kenya isn't so enormous, the examination focused on all the 43 business banks for
the example. In this way, this was an enumeration study of business banks in Kenya.
4.1.4
Data Collection
Essential information was gathered in this examination utilizing surveys. The surveys were
managed by the specialist to the respondents so as to get precise outcomes and upgrade the
nature of information gathered. The respondents were the head supervisors in every one of
the 43 focused on business banks. These were chosen since they were increasingly acquainted
with vital issues in their banks.
4.1.5 Data Analysis
Since the greater part of the information gathered in this examination were quantitative, the
information was investigated utilizing enlightening insights (frequencies, mean, and standard
deviation). The investigation was performed to recognize the remarkable components
impacting use of BOS just as look at the use of BOS in banks. Thusly, the outcomes are
sorted out on the two destinations.
5.1
RESULTS AND DATA ANALYSIS
5.1.2 Discussion
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Running HEAD: DETERMINANTS OF BLUE OCEAN STRATEGY IN COMMERCIAL BANKS IN KENYA
This section introduces the outcomes and elucidation of discoveries. The section is composed
as pursues. The main area introduces the outcomes on bio-information. This will demonstrate
the operational time of the banks and the responsibility for. The subsequent segment exhibits
the consequences of spellbinding and factor investigation on the utilization of blue sea
procedure in the financial business.
6.1
APPLICATION OF BLUE OCEAN STRATEGY
The respondents were solicited whether they knew from the idea of Blue Ocean technique.
This recommends there is a larger amount of mindfulness among business banks as respects
the idea considered here. Given the way this is another idea in system which was presented in
2005; it very well may be justifiable why 28% of the respondents did not have an idea about
what this idea was about.
This area displays the outcomes on the utilization of blue sea procedure in banks. The
outcomes are introduced dependent on the unmistakable examination through rates, mean
scores, and standard deviations. The outcomes are displayed in pie outlines and tables where
important.
6.1.2
Factors Influencing Application of Blue Ocean Strategy
The respondents were approached to express the degree to which they concurred with various
components affecting the utilization of blue sea system in banks. To do this, the examination
was finished utilizing mean scores, standard deviations and rates so as to show the
components as they had been conceived by the investigation in the surveys. The engaging
outcomes are appeared in Table.
Factors Influencing Application of Blue Ocean Strategy
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Running HEAD: DETERMINANTS OF BLUE OCEAN STRATEGY IN COMMERCIAL BANKS IN KENYA
Factor
Agree Mean
SD
(%)
Creating non-competitive market space
52
3.62
0.12
Making no sense of competition
40
2.94
0.62
Creating and capturing new demands
84
4.51
0.14
Breaking the replacement of the value-cost
72
4.05
0.22
Integration of total system activities of the organization to
60
3.95
0.41
3.81
0.30
realize the simultaneous distinctions and low cost
Average
The outcomes in Table above, demonstrate that most (84%) of the respondents refered to
creation and catching new requests pursued by breaking the substitution of the worth cost
(72%), and reconciliation of complete framework exercises of the association (60%). The
mean qualities additionally demonstrate that every one of the components with the exception
of comprehending rivalry were the principle determinants of use of Blue Ocean Strategy in
the banks. Generally speaking, these components significantly affected the use of Blue Ocean
system in the banks as appeared by the mean score of 3.81.
7.1
CONCLUSION AND RECOMMENDATIONS
7.1.2 Discussion of Findings
The investigation tried to set up the utilization of blue sea system among banks. The
outcomes demonstrated that the variables that ought to be diminished well beneath the
financial business' standard were time taken on lines, working expenses, and overheads and
backhanded expenses. The investigation likewise found that various components were
underestimated by the financial business and ought to be wiped out. These were expensive
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Running HEAD: DETERMINANTS OF BLUE OCEAN STRATEGY IN COMMERCIAL BANKS IN KENYA
exercises, operational exercises, and projects. It was additionally noticed that the elements
which the respondents felt that should have been raised over the financial business' standard
were consumer loyalty, improving client assistance, quality and new items. The outcomes
additionally demonstrated that the variables which ought to be made in the financial business
which have not been offered before included better client connections, new items, consumer
loyalty, long financial hours and administration.
The discoveries above propose that the financial business is at a place that it can make
uncontested markets to serve subsequently rendering challenge insignificant by applying the
blue sea methodology. These discoveries are steady with Meyer (2005) and Kim and
Mauborgne (2005) who found that that blue sea technique help associations to improve and
put up new items for sale to the public. Business banks in Kenya have been observed to be
creative in giving new items in the market. This is to be sure reliable with Leavy (2005) who
demonstrated that pressing together Blue Ocean leads organizations to make more esteem.
7.1.3 Conclusion
Most banks know about the idea of blue sea methodology which is a decent sign given this is
another idea in the field of key administration. The examination reasons that elements which
the financial business needs to decrease are time taken on lines, working expenses, and
overheads and aberrant expenses. Then again, factors which ought to be dispensed with are
exorbitant exercises, operational exercises, and projects.
The investigation likewise reasons that the variables impacting the use of blue sea procedure
in banks are creation and catching new requests, breaking the substitution of the worth
expense, and combination of absolute framework exercises of the association. These
variables significantly affect the utilization of Blue Ocean methodology in the banks.
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Running HEAD: DETERMINANTS OF BLUE OCEAN STRATEGY IN COMMERCIAL BANKS IN KENYA
7.1.4 Recommendations
The investigation prescribes that banks should take comprehension of the elements
distinguished here in the event that they have to get rid of rivalry and make it immaterial. In
particular, banks need to lessen time taken on lines, working expenses, and overheads and
backhanded expenses. For example, time taken on lines can be decreased by an unmistakable
operational arrangement that comprehends the bustling occasions in the financial lobbies and
benefit more orderlies from the back-office to serve at the counters. As is as of now the
standard in
Further, the examination suggests that business banks should concentrate on raising consumer
loyalty, improving client care, quality and new items. By improving operational hitches in
banks and along these lines improving consumer loyalty, the organization can be headed to
better execution as it will have made a specialty advertise for itself where no one else will
most likely contend with it.
The investigation likewise prescribes that banks need to make better client connections, new
items, consumer loyalty, long financial hours and administration. These elements have to do
with make the client experience superior to other people. Knowing the elements of work-life
in Kenya, longer financial hours for banks would accomplish a blue sea advertise where those
that work longer than the rest, and even on days generally saw as rest days, for example,
Sundays, would be a blue sea market to the banks that try to go that way.
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Running HEAD: DETERMINANTS OF BLUE OCEAN STRATEGY IN COMMERCIAL BANKS IN KENYA
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Running HEAD: DETERMINANTS OF BLUE OCEAN STRATEGY IN COMMERCIAL BANKS IN KENYA
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