How do you interpret operational effectiveness versus
strategic positioning? Please elaborate each of the dimensions of the graph and
explain the nature and direction of the curve?
Operational effectiveness is to perform better activities than your rivals whereas
strategic positioning means to do similar activities in different way which is
efficient and profitable for the company.
possibility curve shows the maximum output of two goods, inputs (resources,
factors). In this PPC the inputs are assumed as efficient. In the graph of
operational effective versus strategic positioning graph the costs is on x-axis
while the non-price buyers is on y-axis. Some companies are able to get more
out of their inputs because their wasted materials is less and they convert
their waste material in some product, advanced technology can cause a positive
effect on operational effectiveness against their rivals. The productivity
frontier can apply to individual activities, to groups or linked activities
such as manufacturing or to an entire company’s activity.
As you can
see in the graph the productivity frontier curve is constantly shifting
outwards as because of new technology, new management approaches are developed
or new cheap but high quality input is available. For e.g. (petrol’s substitute
cng) which lowers the cost. The production frontier curve is the sum of all the
best combination inputs. The graph show the relative cost is low whereas the
value they giving to the customer is high. The line is not straight it has an
outward curve. It is because the opportunity cost is high i.e. in order to
achieve something you have to sacrifice in something, if the organization needs
to invest in the advanced technology therefore they have to sacrifice their
money from somewhere else to invest in the latest technology. According to the
graph High quality high cost, the curve is bending downwards showing that low
value will have a low cost. It is outward because
as the quantity of production increases, the quantity of production of that
particular good decrease, which will create a curve.