Porter, E.M. (1996). What is Strategy?, Harvard Business Review, Reprint 96608, November – December 1996.
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Strategic positioning is the ability of a firm to perform entirely different activities from its competitors or to perform the same activities in ways that differ from those that competitors commit.
Operational effectiveness is the ability of a company to utilize the inputs of production in a more efficient way than competitors in the same industry do. This ability results in a competitive advantage for the company and is a vital determinant of the performance of the company and its ability to continue operating in the foreseeable future. The success of Japanese firms at the expense of most Western firms in the 1980s is attributed to their superior operational effectiveness.
These companies were able to perfect their effectiveness in operations in such a way that they could produce superior quality products at the lowest costs. The success of these companies does not largely depend on their strategic positioning but rather on their operational effectiveness.
For the past few decades, managers have been keen on improving their firm’s operational effectiveness to continue lowering their production costs and increase profitability for their firms. To improve the operational effectiveness of their firms, managers focus on various aspects. These aspects are the adoption of programs such as total quality management, benchmarking of business activities, and competition based on real-time production.
The main aim of these efforts is to make sure that activities are performed in such a way that inefficiency is highly minimized or eliminated from the production process, customers are guaranteed satisfaction through superior quality products and the firm attains best practice. All this is done to increase the profitability of the firm.
Strategic positioning, on the other hand, is based on the deliberate choice by a company to carry out entirely different activities from competitors in the quest to deliver quality products. A good example is Southwest Airlines, which departed from the Airline’s Norm and chose to focus on low-cost passengers and short-haul flights. Strategic positioning can be achieved in three different ways.
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These are focusing on the production of only a few products or services in a particular industry, trying to satisfy most or all the needs of a particular market segment or group of customers, and grouping or segmenting customers based on their geographical accessibility. Strategic positioning, therefore, ensures that a firm only focuses on what it does best to increase the chances of sustainability and profitability.