Practices of Blue Ocean strategy in mobile financial sector of Bangladesh – A study of bKash

Abstract

In the history of the business world, the practice of rivalry was observed by the organizations to enjoy competitive advantages. In the same way companies, today are simultaneously managing products and services as well as are creating relationships with a targeted audience to enjoy these competitive advantages. The acute situation is similar either it is developed or subsistence economy, everywhere hundreds of thousands of brands with almost the same features and qualities continuously are fighting against each other within the cramped market for capturing their best position. Relief from this severe competitive situation organizations have been searching for the best possible alternatives. Blue Ocean strategy, on the contrary, is beyond this concept of competition rather the practice of this strategy is to stop competition with competitors, wins the competition and make it irrelevant by adding value innovation to the products or services or in both. Blue Ocean strategy helps an organization or person to bypass competition by creating a radical or disruptive innovation. This strategy shows how an organization identifies the pain points of the customers in an industry and then attracts the tier and non-tier customers by eradicating these pain points and creates a strategic canvas where others can’t reach immediately or cannot copy the executed plan. Four action framework with the support of utility map is such a model that helps a person or organization to create a new value curve that ultimately recognize as Blue Ocean. The market of Bangladesh is not beyond this traditional competitive phenomenon where cut-throat competition is going on and the result is a bloody ocean where sales, growth, market area, percentage of profit, everything shrinkages due to the confined boundary of the respective market. However the mobile financial services sector in Bangladesh has been showing revolutionary performance in the financial market by engaging unbanked and underprivileged poor, unbanked in the rural areas and gradually it has been capturing the customers of both urban and rural areas of Bangladesh. Bank-led MFS activities launched in 2011 by some commercial Banks like Rocket, by Dutch Bangla Bank, bKash by Brac Bank Limited, mCash by Islami Bank Limited Ucash by UCB, Sure Cash by Progati Systems Limited and so on. Among the half a dozen MFS operators bKash is being recognized as the giant market leader who has occupied more than 80% market share and thus has shown a remarkable performance that very much resembles with Blue Ocean Strategy. Within five to six years of its operations, the sales volume, growth, profit margin, marketing strategy, more than 50 million customers, more than 0.5 million agents, operational phenomena and continuous new path of investment are the strong elements that closely match with phenomena of Blue Ocean strategy. From this study it has found that the strategies of bKash very much adapted with the principles of Blue Ocean strategy and these “Reconstruction of market boundaries, Reach beyond the existing demand and Overcome key organizational hurdle.”Page -xxvii Being an organization of third world country how bKash has achieved this performance, what variables were playing the role and why other MFS operators couldn’t reach in a very competitive position was really a pertinent issue of the research. Here the exploratory research design was followed primarily as the qualitative part and then it turned to the descriptive design by incorporating quantitative approach. To reach the stated objectives of the study, to know the substantiality of bKash and to know the internal and external environmental position of this organization, SWOT, PESTEL and Porter five forces also have discussed briefly.The tool used for quantitative data analysis was SPSS. PLS model also used for evaluating the four action framework that determines how bKash could follow the features of Blue Ocean strategy in the MFS market of Bangladesh. From the analysis of primary and secondary data it has found that initially 95% MFS activities confined with just Cash In and Cash Out transactions and gradually phase by phase new services were incorporated as per the demand. bKash from the very beginning targeted the unbanked and underprivileged people of rural areas and accordingly decorated all the operational and promotional strategies and conquered the heart of the rural people by providing very easy, informal, convenient, secured, ultra-modern technology, low-cost, all-time service facilities. bKash also got the first-mover and fast-mover advantage though Rocket introduced this service three months before than bKash. However due to some strategic lacking Rocket as well as other three-four MFS operators could not reach their targeted goal though initially they rightly targeted their market segment. Thus an unparallel competition bKash has created with other MFS operators by ensuring low-cost value-added service facilities and this strategy also resembles Porter’s hybrid generic strategy.