“what Is Strategy” by Michael E. Porter

SANTOS, Ma. Sarah Katrina F.                                                                 STRATMA K39

“What is Strategy” by Michael E. Porter

        In my own understanding, operational effectiveness (OE) is merely the management tools needed to trigger profitability. Operational Effectiveness is the utilization of any practice to improve business functions and maximize its resources. While OE triggers profitability, strategy sustains profitability. A business can be profitable at the start but the real challenge lies in maintaining its profitability. That is where strategy takes place. Many companies can imitate each other to obtain operational effectiveness by using the same management techniques such as total quality management. However, the strategy of one company has to be different from its competitors to have its real advantage and to sustain profitability. Strategy is delivering a unique value proposition to combat rivals while operational effectiveness is doing the same business function but even better to stay in the competition. Operational effectiveness alone is not sufficient but it is necessary to effective strategy formulation and implementation. Strategy is doing different things but these activities have first to prove its operational effectiveness. An example will be a manager who ensures zero-defect performance to prove operational effectiveness. From there, he will be able to formulate a strategy to sustain high-quality products by giving incentives to the employees who are able to maintain zero-defects.

        Elaborating on strategy, an example is Southwest Airlines Company which “serves price- and convenience-sensitive travelers.” This is achieved by offering short-haul, low-cost and point-to-point service between small airports. A full-service airline flies to far destinations with connecting flights, serves meal and offers business-class flight service. In contrast, Southwest Airlines do it differently by sticking to small airports to avoid congestion in large airports. They offer low fares because they have frequent departures with a small number of aircrafts. The airlines avoid any delays and have fast turnarounds at the gates for only 15 minutes. They also use a standardized fleet to be efficient in their maintenance. Automated ticketing for customers also reduces their cost for hiring travel agents who will normally be present in a full-service airline. After all, strategy is about choosing to be different and making trade-offs.