Part 1 Flashcards
First fill the blank
… Is Not Strategy
Operational Effectiveness Is Not Strategy
Some rules managers have been learning in two decades following 1970
just to mention few
Just read Thrice
Companies must be flexible to respond rapidly to competitive and market changes.
They must benchmark continuously to achieve best practice.
They must outsource aggressively to gain efficiencies.
They must nurture a few core competencies in the race to stay ahead of rivals.
What was once the heart of strategy
Is it still considered as the heart of strategy?
Positioning was once the heart of strategy
it is currently rejected as too static for today’s dynamic markets and changing technologies
What is the root of problem in this case?
where companies fall into path of mutually destructive competition
The root of the problem is the failure to distinguish between operational effectiveness and strategy
Is operational effectiveness necessary comparing to strategy?
Necessary but Not Sufficient
Operational effectiveness and strategy are both essential to superior performance, which, after all, is the primary goal of any enterprise
How a company can outperform rivals?
describe with an example.
A company can outperform rivals only if it can establish a difference that it can preserve
It must deliver greater value to customers or create comparable value at a lower cost, or do both
delivering greater value to customers or creating comparable value at lower price
how do they result in superior effectiveness?
delivering greater value allows a company to charge higher average unit prices
greater efficiency results in lower average unit costs
Cost is generated by ……. and cost advantage arises from ……..
Cost is generated by performing activities, and cost advantage arises from performing particular activities more efficiently than competitors
where does the differentiation of activities come from?
Differentiation arises from both the choice of activities and how they are performed
what are basic units of competitive advantage
Activities
Overall advantage or disadvantage results from all a company’s activities, not only a few.
definition of OE
Operational effectiveness (OE) means performing similar activities better than rivals perform them. ***it allows companies to utilize it inputs better***
Some examples of OE
reducing defects in products
or developing better products faster
compare OE to strategy
Operational effectiveness (OE) means performing similar activities better than rivals perform them Strategic positioning means performing different activities from rivals' or performing similar activities in different ways
An actual business example of differences in operational effectiveness in 1980s
Differences in operational effectiveness were at the heart of the Japanese challenge to Western companies in the 1980s.
The Japanese were so far ahead of rivals in operational effectiveness that they could offer lower cost and superior quality at the same time
Is constant improvement in operational effectiveness necessary to achieve superior profitability?
It is necessary to achieve superior profitability. However, it is not usually sufficient. Few companies have competed successfully on the basis of operational effectiveness over an extended period, and staying ahead of rivals gets harder every day.