Assignment 1 - I. Operational Effectiveness & Strategy Michael Porter makes the distinction PDF

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Eric Metselaar Professor SPK SCMG 332 Operations Management September 10, 2018 Assignment #1 I.

Operational Effectiveness & Strategy

Michael Porter makes the distinction between operational effectiveness and strategy because he believes that companies and technology evolve too quickly for operational effectiveness to be the main component of a company’s strategy. He describes how a firm that focuses on perfecting operational effectiveness with face two main problems. Firstly, even with motivation through competition, it becomes very difficult to maintain continuous improvements to an operation every year. Eventually, they will hit some kind of asymptote and be unable create meaningful innovations at the same rate as before. Equally problematic is the rate at which information can be shared and discovered even without the consent or knowledge of an industry leading firm. So, the innovations that set leaders apart can quickly be analyzed and implemented similarly by the competition. Therefore, Porter maintains that it is entirely ineffective to equate operational effectiveness to strategy because OE can be replicated efficiently by the competition. It is clear that Porter believes the best approach to strategy is to have a unique and clear focus that prevails throughout the organization. Though this article was written in 1996, the points that Porter brings up have only become more prevalent more than two decades later. Companies and technology continue to move at an unprecedented pace thus require a fundamental rethinking of the methodology behind the strategy. To do this, companies must undertake and maintain a very specific focus and continue to move in directions that help them achieve that goal rather than being distracted by another company’s operations. If organizations can maintain focus on a specific consumer, they are less susceptible to be weakened by the unending demands from other consumer segments not within their scope. I believe this is a weakness that almost all modern companies are struggling with. Some of the problem arises through good intentions. Believing that every complaint matter makes sense when dealing with severe problems such as human rights but would be a major waste of recourse for a company. Many modern organizations have realized this and will create social media profiles to address the issues that arise through public opinion, however this is almost always incredibly superficial and focused on boosting PR rather than solving prevalent issues. Take for example, the recent case of racial discrimination at Starbucks. The initial public reaction was very threatening towards their public image and a reaction was definitely necessary however without a strategic goal in mind their solution was quite pathetic. It is clear that the racism was not a problem only at that specific Starbucks. However, instead of making necessary changes to the company culture and hiring practices, a half-day of “racial sensitivity training” was enough of a remedy for the public opinion. However, the problems will continue to arise for Starbucks, and even though it will not draw as much public drama, the loss of resources that comes through using a half-measure instead of a formal and focused strategy

continue to harm Starbucks. Because the strategy for Starbucks seems to be to maintain a brand image, this struggle will only continue. Now it has evolved to include public opinions about recycling and plastic. Ultimately, focusing on a specific strategy could have saved them from many of these problems from the start. II.

Competitive convergence

This idea is closely related to the points made about strategy previously. The main difference between 1996 and 2018 would be the internet innumerous applications. This has only made his point about competitive convergence more pronounced. If companies maintain and continue to generate large amounts of data related to their operations, this data can become a blueprint for your competition. Though there may be stricter international regulations on intellectual property the enforcement tends to be weak. Furthermore, many of the operations that can be considered a strategic advantage are not eligible to copy right and therefore, though the internet and the ease of access to information can duplicated and further improved upon by the competition. Ultimately, this molds the consumer’s perception of your organization because the competing final products are intentionally very similar and difficult to distinguish between. This harms an organizations brand and identity. III.

Strategic Positioning

One company that comes to mind when thinking about Porter’s description of strategic positioning is the Tesla Motor Company. Lead by Elon Musk, they have a clear a specific objective, “to make electric cars desirable and affordable.” This clear focus has allowed for them to achieve a lot of success in relation to their focus. The cost of electric vehicles and large batteries has dropped dramatically since Tesla’s inception and the public opinion of electric powered cars was changed though the success of their products. It was quickly evident that electric cars were not “slower” or “less efficient” and the debate basically ended there. This has allowed for the company to grow and gain market share quickly. However, now problems are arising on the operations end and unfortunately, because of the their trailblazing, there are no companies with proven operational efficiency from which to learn from....