JOURNAL 2 GROUP

SOMB

Subject : Strategic Management

Course : MGT 3434
Code
Lecturer’s : Mr. Shuhaimi Haji Mohd Sauh
Name
Date of : 30th November 2018
Submission
Topic : Journal Summary 2, What is Strategy?

Name Student ID Programme

Daleesha A/P Visva Prakash 1202172004 Bachelor of Business
Administration
Adelene Shalini A/P Michael 1202172005 (International Business)
Bachelor of Business
Administration
(International Business)

Ros Shamila Binti Mohd Haris 1202172001 Bachelor of Business
Administration
(International Business)

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1.0 TABLE OF CONTENTS PAGE NUMBER

NO. CONTENTS 1

1.0 Table of Contents 2
2
2.0 Journal Summary 2
2.1 Introduction 2-3
2.2 Operational effectiveness is not strategy 3
2.3 Strategic positioning is essential to strategy 3
2.4 Trade-off are essential to strategy
2.5 Conclusion 4

3.0 References

1

2.0 Journal Summary

2.1 Introduction
Strategy is a set of action. Strategy is about creating uniqueness rather than focusing on
becoming the best. This strategy is different from vision, mission and goals because strategy
focuses on the action that is implemented to be outstanding one out of many. For example, “to
become the world’s best airline company” is not a strategy it is a vision but the methods and
actions taken to be the best airline company is called as a strategy. Strategic management is
where strategy is formulated, implemented and evaluated that leads to the achievement of a
company.

2.2 Operational effectiveness is not strategy
Too often in today’s companies, managers mistake operational effectiveness with strategy.
Both are important. Both help drive superior performance. Operational effectiveness means
performing similar activities better than rivals perform them. Operational effectiveness
includes but is not limited to efficiency. It refers to any number of practices that allow a
company to better utilize its inputs by, for example, reducing defects in products or developing
better products faster. In contrast, strategic positioning means performing different activities
from rivals’ or performing similar activities in different ways.” According to Porter, various
management tools like total quality management, benchmarking, time-based competition,
outsourcing, partnering, reengineering, that are used today, do enhance and dramatically
improve the operational effectiveness of a company but fail to provide the company with
sustainable profitability. Thus, the root cause of the problem seems to be failure
of management to distinguish between operational effectiveness and strategy: Management
tools have taken the place of strategy. Thus, it is justifying that operational effectiveness is not
strategy.

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2.3 Strategic positioning is essential to strategy
Three key principles in strategic management are creation of valuable position, trade-off’s in
competing and creating fit among activities. It is emerged from three sources variety based,
needs based and access based. Positioning develops and maintains a unique position and image
in market for product with a view that target market appreciates and gives extra value to
organization than competitors (Ries and Trout,1986). Customers perception is important
because they have to choose between organizations and rival and they prefer product with
superior performance which has that significant features which customers expects and is
satisfied. Thus, it is justified that strategy requires strategic positioning.

2.4 Trade-off are essential to strategy
Trade-off is where having two choose between two options and compromising the other to
prevent competitors from copying good ideas, product features or services. IKEA can be a
simple example of having a trade-off as their strategy, for instance, their product has no custom
options and are ready-to-assemble designs compared to traditional furniture retailer where
customers can customize their furniture based on color and fabrics which are fully assembled
Hence, tradeoff is essential to strategy to attain sustainable competitive advantage which
eliminates duplication by rivals. A strategic position is not sustainable unless there are trade-
offs with other positions. Trade-offs occur when activities are incompatible. Simply put, a
trade-off means that more of one thing necessitates less of another. An airline can choose to
serve meals, adding cost and slowing turnaround time at the gate, or it can choose not to, but it
cannot do both without bearing major inefficiencies.

2.5 Conclusion
As a conclusion, it is essential for companies to distinguish between strategy and operational
effectiveness in order for them to outperform their competitors and achieve full competitive
advantages. Whereas, strategic position is how a company position itself in a market to stand
out against rivals which is based on product or service variety, customer’s needs and so on.
Lastly, trade-off is creating choices for the company and secure against imitators.

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3.0 References

Edwards, J. Mastering strategic management. Retrieved from
https://opentextbc.ca/strategicmanagement/chapter/resource-based-theory/

Institute for strategy & competitiveness. Retrieved from

https://www.isc.hbs.edu/strategy/creating-a-successful-strategy/Pages/making-
strategic-trade-offs.aspx

M, P. E. (2017). What is strategy? Retrieved from
https://hbr.org/1996/11/what-is-strategy

Making Strategic Trade-offs. Retrieved from

https://www.isc.hbs.edu/strategy/creating-a-successful-strategy/Pages/making-
strategic-trade-offs.aspx

Operational effectiveness is not strategy. Retrieved from
https://www.scribd.com/document/235208221/Operational-Effectiveness-is-Not-
Strategy

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