How do you interpret operational effectiveness versusstrategic positioning? Please elaborate each of the dimensions of the graph andexplain the nature and direction of the curve? Ans-Operational effectiveness is to perform better activities than your rivals whereasstrategic positioning means to do similar activities in different way which isefficient and profitable for the company.
Productionpossibility curve shows the maximum output of two goods, inputs (resources,factors). In this PPC the inputs are assumed as efficient. In the graph ofoperational effective versus strategic positioning graph the costs is on x-axiswhile the non-price buyers is on y-axis. Some companies are able to get moreout of their inputs because their wasted materials is less and they converttheir waste material in some product, advanced technology can cause a positiveeffect on operational effectiveness against their rivals. The productivityfrontier can apply to individual activities, to groups or linked activitiessuch as manufacturing or to an entire company’s activity. As you cansee in the graph the productivity frontier curve is constantly shiftingoutwards as because of new technology, new management approaches are developedor new cheap but high quality input is available.
For e.g. (petrol’s substitutecng) which lowers the cost. The production frontier curve is the sum of all thebest combination inputs. The graph show the relative cost is low whereas thevalue they giving to the customer is high. The line is not straight it has anoutward curve. It is because the opportunity cost is high i.
e. in order toachieve something you have to sacrifice in something, if the organization needsto invest in the advanced technology therefore they have to sacrifice theirmoney from somewhere else to invest in the latest technology. According to thegraph High quality high cost, the curve is bending downwards showing that lowvalue will have a low cost. It is outward becauseas the quantity of production increases, the quantity of production of thatparticular good decrease, which will create a curve.