Question;How do you interpret operationeffectiveness versus strategic positioning graph please elaborate eachdimensions of the graph and clearly explains nature and direction of the curve?Answer: Operational effectiveness:Operationaleffectiveness is basically defined as performing similar activities better thanrivals perform them. Operational effectiveness includes effectiveness but isnot limited to effectiveness .it includes any possible activity for a companyto better utilize its inputs.Strategic positioning:Incontrast to operational effectiveness strategic positioning means performingdifferent activities comparative to rivals or performing similar activities indifferent ways.Interpretation of graph:As in graph there are twoattributes value and relative cost position and these are considered as thebest activities of the firm. These attributes combine to form a productivityfrontier.
Productivity frontier basically shows the best practices of the firmand the effectiveness of unique attributes as compared to competitors’ .Thisgraph basically shows the maximum value that a company delivering a particularproduct or its services can create at a given cost using its best practicesusing its best skills ‘management systems and purchased inputs.The more the curve is in outerdirection it means that company uses best practices available at that time orit has improved its operational activities so in this graph it shows thatcompany is performing well and it has improved its activities mostly it meansthat strategic position of the company has changed and it was improved.whemevernew technologies or skills or management system are available as inputs theproductivity cure moves outwards On other hand the outwardmovement of cure shows that competition is quiet severe so company needs toimprove its operation in order to remain competitive so it also need to makestrategic position it may have to decide at a time to do different activitiesor do activities in a different way by using operational activities liketechnologies .management systems etc.
Organizations learn from theproductivity frontier graphs which basically helps organizations to decideeither to pivot or to accelerate.This graph basically shows thatat what particular cost which company is bearing to bring that particularproduct in the market and ultimately to customers is delivering how much valveto customers. Ultimate purpose of company is to deliver higher value tocustomers by keeping their costs very low Company has a strategic position which is todeliver high value to customers but in return it is maximizing its operationeffectiveness by using various technologies .skills and techniques to minimizetheir costs.Y axis of the graph shows highvalue attribute and x axis shows low cost relative to that particular valuewhich is being delivered to customers by company .as graph shows that curve isfar from the origin and is outward so it means that company is providing highvalue to customers by keeping its costs low .