ASSESMENT OF THE LANDSCAPE FOR ADOPTION OF BLUE OCEAN STRATEGY AT CONSTRUCTION AND BUSINESS BANK

Abstract

The banking business started in Ethiopia when the first modern Bank of Abysinia was established in 1906. Since then the industry has been developing slowly in to the present period of 19 commercial banks. Despite the recent modernization and expansion effort, the country is still rated as low financial inclusion by the IMF Country Report number 13/308 with only 8% of the population having access to any form of financial institution service. The existing banks are mainly competing on the industry standards instead of reaching out to the majority of unbanked society through creating a new demand. This study focuses on the recent Blue Ocean Strategy concept devised by W.Chan Kim and Renee Mauborgne as a tool to reach out for new demand and uncontested market space by redefining the common standards that banks compete on to secure more of the shrinking profit pool. Therefore, the study attempted to assess the landscape to adopt the BOS at CBB with an objective of assessing the level of awareness on the new BOS concept, the prevalence of practices stemming out of BOS blended with the current strategy of CBB, and explain the challenges CBB is facing to adopt the BOS. To arrive at its objectives, the study employed a descriptive and exploratory design using closed ended questionnaires as an instrument of obtaining the primary data from sample employees on managerial and professional positions. The data obtained in such manner is entered in to SPSS where various descriptive statistics were applied. The result of the study proved that there is low level of awareness of the BOS concept among the employee of CBB at management and professional level. Furthermore, it unveiled that the currently implemented strategy has no activities attributed to BOS and that it is of pure Red Ocean. The study identified lack of experience and training to conceive a noble idea, poor organizational culture to adopt change swiftly, lack of leadership skill to bring about change in a short time, shortage of resources (capital & expertise), poor project implementation record and dealing with poorly motivated employees as more likely to challenge the effort to adopt the new concept as a strategy. The study concludes that neither the BOS concept is familiar to most of the respondents nor related activities are found within the current strategy of CBB. In addition, it noted several challenges that impede its implementation. Consequently, the study recommends the management to raise its awareness to recent business strategies like BOS and encourage an out of the box thinking which more often than not help to emerge uniquely by focusing away from competing on the existing industry standards to create a new demand than going after shrinking profit pool.