Explain the difference between operational effectiveness and strategy

Topics: Customer, Better, Difference Pages: 3 (998 words) Published: April 22, 2015
Explain the difference between operational effectiveness and strategy? Operational effectiveness and strategy are both essential to superior performance, which after all is the primary goal of any enterprise. A company can outperform rivals only if it can establish a difference that it can preserve. It must deliver great value to customers or create comparable value at lower cost, or do both. Delivering greater value allows a company to charge higher average unit price, greater efficiency results in lower average unit costs. Operational effectiveness means performing similar activities better than rivals perform them. Operational effectiveness includes but not limited to efficiency. It refer to any number of practices that allow a company to better utilize its input by, for example, reducing defects in products, developing better product faster. In contrast strategic positioning means performing different activities form rivals’ or performing similar activities in different way. Managers have been preoccupied with improving operational effectiveness. Through programs such as TQM, time based competition and bench marking, they have charged how they perform activities in order to eliminate inefficiencies, improve customer satisfaction, and achieve best practices. Few companies have competed successfully on the basis of operational effectiveness over an extended period, and staying ahead of rivals get harder every day. The most obvious reason for that is the rapid diffusion of best practices. Competitors can quickly imitate management techniques; new technologies input improvement, and superior way of meeting customer needs. Competitive convergence is more subtle and insidious. The more benchmarking companies do, the more they look alike. The more that rivals outsource activities to efficient third parties, often the same one, the more generic those activities become. As rival imitate, or supplier partnerships, strategies converge and competition become a series...
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