Dissertation On Operational Effectiveness

Dissertation On Operational Effectiveness-75
Are both these aspects equally important or one is more important as compared to the other?Porter clearly explains these two aspects “Strategic positioning attempts to achieve sustainable competitive advantage by preserving what is distinctive about a company.

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This requires a lot of rigor and continuous effort rather than an annual planning exercise followed by execution focus throughout the year.“Itis important to understand what increases the value of the company vs.

what will help it to stay afloat”While Operational Effectivenessinitiatives can bring about discipline, avoid process waste and enable cost reduction, it cannot lead to a sustainable competitive advantage.

This is not different from how a company manages its house by setting a budget and then deploying operational lever to manage expenditurethereby reducing budget variance as much as possible.

But is it good enough to be operationally efficient? The simple answer is NO.“When your topline is at risk, any effort to reduce cost is a diversion of organizational priorities”Time and again companies have been disrupted by competitors and changing market trends catching them off-guard and throwing them out of business.

A lot of value gets destroyed when acquisitions are made without much synergy but mainly for the purpose of diversification.

The question one should be ready to answer is “Will it help me find my sweet spot in the marketplace? Learn from Competition: You can be the market leader or a challenger, it doesn’t matter till you are watching your competition and learning from them.

”In Figure 1, we saw the market capitalization of these five companies grew substantially over the last five years.

This is mainly due to strategic interventions made time and again helping these companies to create a strong strategic positioning making investors believe in higher earnings potential compared to rivals.

OCF is the cash flow a company generates from usual business activities and a positive OCF provides the company with the ability to invest in the business and expand its asset base through Cap Ex.

A company can generate more OCF and thereby more FCF by boosting its Earnings as well as by reducing its Working Capital.“It is the potential Future Earnings that makes a company valuable”The potential Future Earnings hinges on how robust is the company Strategy and whether it is able to preserve the uniqueness of the company.


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