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.