Methodical approaches to the determination of readiness of introduction of "blue ocean" strategy on the enterprises of food industry

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National University of Food Technologies

Methodical approaches to the determination of readiness of introduction of «blue ocean» strategy on the enterprises of food industry

T. Belova, O. Krainiuchenko,

S. Rozumei, O. Pietukhova

Kyiv, Ukraine

Abstract

Introduction. The aim of the research is the development of methodical approach to the determination the readiness of introduction of blue ocean strategy on the enterprise.

Materials and methods. The methods of systematization for finding out the factors that carry out influence on the position of enterprise on a way to introduction of «blue ocean» strategy were used. For their distribution on success and challenges the method of comparison was used. The evaluation of factors of success- challenges was carried out by expert methods. The state of industry/ enterprise was determined by matrix method.

Results and discussion. Methodology that allows to define readiness of realization of «blue ocean» strategy is offered. General factors that stipulate the necessity of such strategy realization are outlined. Among them are the most substantial ones and qualificators for industry / enterprise are elected. They can be both positive (success) and negative (challenges). Their measuring comes true by finding intersection of average estimation (it is determined by expert method) on a weighting coefficient (it is set on the basis of experience of researchers depending on the degree of factors meaningfulness and their influence on the development of industry). With the aim of interpretation of the given results the estimation of industry/ enterprise situation, the use of offered matrix «success-challenges» that has 4 quadrants is offered.

Depending on what field the values of estimations got after success and challenges, drawn conclusion in relation to that, prepared enterprise to introduction of «blue ocean» strategy or not. There actions that can improve the position of the enterprise on a way to application of this strategy were offered. The worked out methodical approaches on the example of brewing industry of Ukraine and its leading company Private joint stock company «Obolon» were approved and successfully exports the products. The Ukrainian market of brewing industry is the typical representative of environment of red ocean, which is characterized by difficult competition situation with the high level of monopolization, and so for which the application of free market space strategy is actual.

Conclusion. Application of the methodology worked out by authors will allow to define the readiness to the realization of «blue ocean» strategy.

Keywords: success challenges matrix strategy competition

Introduction

The characteristic for the whole world strengthening of competition stipulates the necessity to search new decisions, disengage oneself from existing ones, challenge to fundamental principles of business and redistribute borders, creating new markets and industries [1, 2]. Many researches of scientists from different countries are sanctified to the idea to create such market space where competition will not dominate [11, 33]. It is the best method of development and search of non-standard approaches for business that wants to develop successfully [3, 4, 5].

One of decisions there can be application of «blue ocean» conception as alternatives of «red ocean» strategy (existent business-environment with exhausting competitive activity) [7, 8, 9, 10]. The new market space («blue ocean») can create any type of business, regardless of specific and sizes [33]. The main in the marked conception is persistent aspiration to avoid influence of competitors, to carry conviction in the future [11, 12, 13, 14]. It opens wide possibilities, what the results of activity of numerous companies are testifies [15, 16].

Without regard to advantages, that gives the use of «blue ocean» strategy, its introduction is related to certain difficulties. The unsolved are remained the questions of readiness of the enterprise to this strategy introduction, presence necessary terms for this purpose [15, 17]. Especially sharp is this problem for the enterprises of food industry, the competition dominates on these markets [24]. They are interested in that even on some time to have favourable operating conditions [17, 18].

Therefore, the research aim is the development of the methodical approach determination the readiness of introduction of blue ocean strategy on the enterprise.

For achievement of this aim, it is necessary to decide such tasks:

- To outline general factors that stipulate the necessity of «blue ocean» creation and to go into details taking into account the specific of the enterprises and industries of food industry and market situation;

- To systematize and divide certain factors into positive (success) and negative (challenges);

- To carry out the evaluation of factors of success and challenges;

- To define position of industry/enterprise on matrix «success-challenges» for finding out the readiness to introduction of «blue ocean» strategy;

- To work out the actions sent to the assistance for creation of new market space.

Methods and materials

Materials

The object of the research are the factors that determine readiness of introduction of «blue ocean» strategy on the enterprises of food industry. The subject of the research is: finding out and evaluation of factors of success and challenges that will allow to define the degree of readiness of the enterprise to realization of this strategy; brewing industry of Ukraine and its state; Private joint stock company «Obolon» as the enterprise that works at the market of brewing industry.

Characteristics of Private joint stock company «Obolon» as the subject of the research

Private joint stock company «Obolon» is in five of leaders of brewing industry. It is the most progressive private enterprise of beer production, by the national company that is known in the world. The brand portfolio counts over 16 sorts of beer.

Private joint stock company «Obolon» at the Ukrainian beer market is the founder of packing segment by PAT by capacity of 1 l and 2 l and 30-l kegs with the capacity of one liter for restaurant business. Three basic competitors of the company are: Private joint stock company «Carlsberg Ukraine», and Limited Liability Company «Persha Pryvatna Broviarnia».

Private joint stock company «Obolon» exports the products to many foreign countries: Canada, Panama, Chile, Great Britain, Japan, Singapore, Vietnam, UАЕ, Turkey, Germany, France, Switzerland and others [23, 24].

Infobase scientific sources served as [7, 8, 9, 11, 16, 18] and the results of brewing industry market researches [19, 20, 21, 22, 23, 24].

Methods of research

Scientific and special methods were used in researches [25].

With the aim, finding out the factors that stipulate the necessity of «blue ocean» creation, that have the influence on industry and enterprise, determine readiness to strategy realization, conducted review of scientific sources. In combination with the method of systematization and comparison, it allowed to distinguish exactly from many possible factors only those that provide success of industry or challenges for it [26, 27, 28].

Method of expert estimations

Expert methods for evaluation of factors that represented the state of industry and enterprise were used. For all factors there was a certain estimation at 5 scale: «5» - very high, «4» - high, «3» - moderate, «2» - weak, «1» - very weak.

In the role of experts leading specialists in this field were invited. The choice of circle and amount of experts came true by determination of establishments that engage in the development of alike questions, and acquaintance, with the publications of leading specialists on issue that is examined.

We made list of specialists, that acquaintances with the state of industry and have corresponding researches. According to this list were selected those who were quailified [29, 30].

Matrix method

Matrix methods are taken to the construction of two- or multivariable matrices [32]. They were used for finding out of brewing industry position and the enterprise in the system of coordinates «challenges-success». In the offered matrix on vertical wasp the values of quantitative estimation index of success are put aside, and on horizontal are sizes of quantitative estimation index of challenges. Every quadrant of matrix answer certain position of industry/ enterprise. With the help of this matrix recommendations were developed to introduction of «blue ocean» strategy.

Methodology of determination the readiness of introduction of blue ocean strategy on the enterprises of food industry

Detailed analysis of existent theoretical researches in relation to introduction of «blue ocean» conception educed an urgent requirement in the lineation of factors, that inform about inevitability of changes for business, and practical actions that will assist creation of new market space [2, 3, 4, 5, 6]. The basic methodical approaches determination the readiness of realization of blue ocean strategy on the enterprises of food industry, that are based on marketing researches were offered by us. Within the framework of this methodology we suggest to carry out such steps.

The first step provides the quality of questioning conditions to define factors that predetermine the necessity of introduction of «blue ocean» strategy. To the number of such factors belong: deceleration or reduction the potential for further development of business; threatening changes in consumer environment; strengthening of competition; exceeding supply of commodities/services above demand; distribution and strengthening of processes of globalization; development of technologies for production of plenty of commodities/services; strengthening of price wars; tendency to the increase of production charges [3, 4, 6, 11, 15, 16]. Presence even one of them signals about the necessity of development and passing to new market space. Going out from the situation that was folded in industry and on the enterprise, the list of such factors is formed. They must be gone into detail thus, to take into account the specific of the enterprises and industries of food industry and market situation.

Next step is systematization and division of certain factors on positive and negative that in future will name accordingly as success and challenges. The high level of authenticity of the conducted analysis must be provided by taking into account of greater amount of terms as possible [10, 15, 22].

By success/ challenges for industry and enterprise it is possible to consider: political stability/instability in the country; favorable/difficult macroeconomic situation; increase/falling of production and consumption of products volumes; stability/instability of national currency; presence/absence of government control of market; small/large concentration of market; subzero/high entrance barriers in industry; large/small prospects of business development; presence/absence of information technologies; large/small stake of innovative products in general production of industry volume; presence/absence of new technologies of products making; stable/unstable demand on the products of industry; falling/increase of price on raw material and others [22, 23, 24].

On the next stage for determination the readiness to realization of strategy, position of industry/company through the quantitative measuring of success - challenges by the method of expert estimations is determined.

Leading branch workers that know problems and situation at the corresponding market are attracted for this purpose. Experts estimate influence of every factor on the state of industry/enterprise at 5 scale from «1» (very weak) to «5» (very strong). The average value accounts on the basis of the proposed expert estimations [29, 30].

Depending on the degree of meaningfulness of factors and their influence on development of industry (negative or positive), the coefficients of importance (matter from 0,01 to 0,99, and their sum must be equal 1) are determined. Thus, the special operating of industry conditions, state of economy of the country and political situation, are taken into account [22, 23, 24].

Finding the sum of products of average experts' estimation on the coefficient of its importance the general estimations of of challenges and success factors are determined. With the aim of interpretation of the got results of assessing the situation of industry and enterprise it was worked out and offered the matrix «success-challenge» (Figure 1).

Figure 1. Matrix «success-challenges», designed by the authors

At the place of location of industry/company on the field of matrix determine their position in accordance with offered descriptions of each of four zones of matrix «success- challenges».

Quadrant of matrix «Calm» is the position that is characterized by insignificant success of industry/company at small challenges. Specifies on weak development status and necessity of defense of existent position at the market. For industries/companies that got to the zone «Calm», selective development of those directions that can be effective in the future is offered. It can be strengthening of possibilities for rendering of challenges, but efficiency of these actions is small. The necessity of changes and readiness to them are estimated as remote.

Zone of matrix «Breeze» characterizes position with great successes at insignificant challenges. It is necessary to be concentrated on those prospects that is given by industry/company, and to develop them. At these favorable terms, passing to the «blue ocean» is estimated as the most comfortable. Besides, success in course of time can pass and lot upon them is impossible.

The quadrant of matrix «Hurricane» specifies on the high achievements of industry/company at very large challenges. It warning that maximal success that it attained, is under threat. Changes must be taken place necessarily. It is time, when future position depends on the produced actions. Operating is necessary immediately, while operating conditions are yet comfortable, but they can be quickly finished. And then passing to new reality can be riskier.

Zone of matrix «Gale» is positions that are characterized by very large challenges at small success. The marked position of industry/company abandons not enough chances on providing of comfort transition from the existent state to more perspective. Even at such difficult situation it is needed to search the ways of improvement of development. Passing to the «blue ocean» will take place, however, more time will be passed and terms will be not such advantageous that they could be on the stage «Breeze» or «Hurricane».

It should be noted that at the place of location on matrix «success-challenges» position of industry, by comparison with position of company, can substantially differ. Accordingly, actions that is needed for successful transition from «red» to «blue ocean» will differ (Table 1).

Table 1

Recommended actions for introduction of «blue ocean» strategy after the matrix «success-challenge, developed by authors

Results and discussions

Determination of factors of success and challenges

Approbation of offered methodology came true on the example of brewing industry of Ukraine, but can be used for any industry in other countries.

For determination of factors that have an influence on industry, were taken for basis reviews of brewing products markets and statistical information on their development [19, 20, 21]. The conducted analysis allowed to define challenges and success, and also execute their quantitative evaluation [19, 20, 21, 22, 24]. It is appeared, that industry had 13 factors of success and 19 factors that stipulated challenges for it (Table 2).

Table 2

According to the factors of industry, given in table 2 and by factors recommended for the enterprise, the state of each factors by questioning of experts was appraised. 5 leading specialists of brewing industry and Private Joint Stock «Obolon» came forward is the state of factors.

The experts' opinions got as the result of questioning were average, and also checked for coordination by means of coefficient of variation, that in relation to the challenges of industry is confirmed by Table 3.

Table 3