In summary, Porter state that a company implements operational effectiveness when it performs similar activities better than its competitors do, achieving this way, a competitive advantage and a level of differentiation. Porter emphasizes the importance of reaching Operational Effectiveness, and explains how a company needs to be efficient when producing and delivering its product or service. However, like Porter explains, being efficient doesn’t mean being effective. A company is efficient when it performs in the best possible way with the least waste of time and effort, but being effective also means to accomplish its goal by producing the intended result. The Japanese were able to achieve operational effectiveness by providing better quality with lower cost than competitors. It is important to understand that OE it is different from Strategy, but necessary because a company can have the best strategy but if it is not at least as good at what it does as competitors, the best strategy wont be enough to take it anywhere.
Porter explains the difference between performing activities better and performing activities different. He affirms that a competitive strategy can only be implemented by consciously choosing a different way to provide value to the customers. A company needs to develop a product or service that offers a unique value, something the customer see as better than or different from what the competitors offer. The two examples cited explain clearly what does it mean. Southwest provides low cost flights ion specific routes within the U.S. It doesn’t offers, like its competitors, first class, baggage transfer, meals, or seat assignment. So, it provide air transportation like the other airlines but its activities where fitted to be able to offer value at low cost. Ikea chose a low cost position by offering a self-serving model and extra services like extended hours and in-store child care, unique services that are very valued by its type of customers.
An interesting element of a company’s strategy are trade-offs. Porter explain that only with the optimal mix of activities a company will be able to maintain a sustainable advantage. But that optimal mix is only possible by
