By Kimberly W.
Introduction
Business is all about strategy: companies are constantly developing ways to appeal to more customers and outshine competitors. Different strategies are constantly implemented to ensure a business’s success. A common assumption is that, if businesses copy the strategies of their rivals, the competitive advantage — when a business is more profitable than its rivals — is temporary. However, this belief is often misleading and can result in hypercompetition as businesses try to outdo each other.
What is Operational Effectiveness?
Operational effectiveness focuses on achieving excellence in individual activities and business functions. It prioritizes achieving and extending the best practices of management. However, operational effectiveness includes but is not limited to efficiency. It can refer to any kind of practice or strategy a company can make to utilize its inputs, such as reducing defects in products or developing better products at a faster rate.
Operational effectiveness varies in different companies because each business faces their own set of strengths and weaknesses. For example, some companies can achieve better productivity by eliminating more waste, implementing and having access to better technology and employees, or better management with certain activities. Because of this, operational effectiveness is an important set of differences in profitability among competitors. Through business analyses, operational effectiveness determines costs and levels of differentiation.
What is Strategic Positioning?
Strategic positioning emphasizes combining activities or tasks to increase efficiency. It is the decision between performing different activities from competitors or performing similar activities in different ways.
Many business managers determine strategic positioning in terms of their customers. The concept of strategy is choosing to perform activities differently than rivals do. Without planning activities and deciding how to stand out from competitors, strategy is nothing more than a marketing slogan that will not be able to surpass competition. Strategic positions can be determined by the needs and accessibility of customers, or the variety of a company's products or services.
Conclusion
Many business owners fail to recognize the difference between operational effectiveness and strategic positioning. Both relate to the goal of a business’s best performance, but they are not the same. Operational effectiveness focuses on the profits and resources of a business, while strategic positioning emphasizes what products and strategies should be implemented to appeal to more customers. By recognizing the differences between these two concepts, business owners can prepare stronger strategies to make their overall business operations smooth and successful.
Sources
Porter, Michael E. “What Is Strategy?” Harvard Business Review, Harvard Business Publishing, April 4, 2023, hbr.org/1996/11/what-is-strategy
Indeed Editorial Team. “What Is Operational Effectiveness?” Indeed, 23 Mar. 2023, uk.indeed.com/career-advice/career-development/operational-effectiveness.
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