The graphs
shows here the production frontier in which the best practices has been used to
create a commodity or a service. The company uses its maximum input to deliver
“Standard” value at the given cost. Everything related to operational
effectiveness is on point. At this level operational effectiveness moves to the
frontier because of the high quality service deliverance that distinguishes you
from the pool. The frontier is constantly shifting outward as new
technologies and management approaches are developed and as new inputs become
available. Companies are improving their operational effectiveness day by day
because these operational effectiveness can be imitated easily. For example every
company can avail the best HR Team, Consultants, Marketing teams etc. but this
can be copied easily. Thus, competition based only on operational effectiveness
shifts the frontier outward and effectively raises the bar for everyone. Any
company can lower the price of their product, if their competitors have lowered
the price. In this graph cost has been incurred due to performing operational
effectiveness, because every activity company performs requires capital but
when the company performs its task effectively average cost will decline. However, now companies
(including the Japanese) competing solely on operational effectiveness are
facing diminishing returns, zero-sum competition, static or declining prices,
and put pressure on costs that affect companies’ capacity to re-invest or to
perform day to day operations in the business for the long term. Operational
effectiveness give companies sum edge over others but it does not guarantee you
long term sustainability and alone it’s insufficient. OE Improves Operational effectiveness but it provides benefit for
none. Whole industry will decline or become static or comes under the same


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effectiveness and Strategic positioning goes hand in hand .In order to sustain
longer in the market a company must be efficient in both of them. 


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