Monday, May 23, 2011

Strategy - 5

One specific confusion that most first timers to strategy have is that of operational efficiency or, even excellence and strategy of the organization. A simple clarification that comes handy here is to ask yourself if this the end or a means to the end- the goal you have set out to achieve.

Companies do indulge in operational excellence to create internal efficiencies, this definitely affects the price of your product; but to say that this efficiency is itself strategy would be an understatement of the scope of strategy. Strategy is about the pursuit of the long term goal that the organization sets out for itself.

Operation efficiency need not even be an essential component of the strategy the company pursues. Some times the optimal level in operations is foregone to probably ward of the competition or to threaten the competition of a price war.

We will look to get a clear understanding of operational efficiency and the concepts present there in when we begin our discussion on operations management. We would in the next blog get to understand the difference between operational efficiency and strategy with the help of a small caselet.

No comments:

Post a Comment