Yap, Donn EJ P.

K39
Strategy vs. Operational Effectiveness

Operational effectiveness is doing activities better than competitors coupled with the ability to
maximize the given inputs to produce an optimal amount of outputs thereby achieving a low cost
advantage or creating the ability to price goods higher. Operational effectiveness is an essential
component in a companys success due to competition, but not sufficient to the same. Strategy, on the
other hand, is doing certain activities in a system or value-chain differently which gives rise to added
value of a companys products to customers. Strategy is what creates value for a company and sets them
apart from other competitors or players in a certain industry. A great strategy or strategic positioning
move by a company is best achieved when all of the subcomponents of the system work efficiently and
effectively. Therefore, operational effectiveness is an important prerequisite to an effective strategy
formulation.
Taking into example is the strategy of Southwest airlines which displays exemplary strategic
positioning. The company employs a self-service ticketing system and does away with highly-specialized
sales agents as well as high-class passenger service in order to eliminate heavy costs associated with such.
Doing so will also lessen the time and costs with maintaining facilities for meals and sales agents.
Additionally, Southwest Airlines avoids having to land in congested airports/a citys main airports and
chooses to land their airplanes in secondary airports or rural areas instead This allows them to lessen
delayed departure time and have their aircrafts flying more frequently as compared to major airlines
which greatly enhances the convenience factor for convenience-sensitive customers. The company
therefore focuses its services towards price and convenience-sensitive consumers who would exchange
pleasure for low-priced fares. Southwest employed an excellent variation of trade-offs and fits within
their system of activities to acquire the low-cost service they provide and still maintain profitability
growth. All of the activities Southwest applies contribute to the profitability and growth the company
experienced.
Strategy requires certain activities to produce and deliver not only to be done in a better manner
but most importantly in a different way. Being different sets a strategic position for a company which will
differentiate them from the rest of the competitors. Second, there must always be the recognition of tradeoffs. Trade-offs are what sets the necessary limitations and grounds the company to their strategy thereby
creating the sustainability factor of the strategic position. Third, companies and managers must set
activities in a given chain that fit or complement with each other such that one activity may lessen the
cost or time to perform the second set of activities. These 3 components are necessary to produce an
effective and efficient strategy for a company; in addition, leadership is necessary to instill and sustain the
strategy set by the company so as to not deviate from the same strategy initially set.