Management tools and techniques consist of a variety of "best-practices" that managers use to drive cost reduction and improve operational effectiveness in their company. These tools run the gauntlet from outsourcing and automating, to implementing quality management techniques such as TQM. Management tools and techniques allow a company to compete onspeed, cost and quality. That is, businesses that focus their strategy on employing these best practices tend to be focused on delivering their products faster, cheaper and with less defects than their rivals.
Management tools and techniques are important for a business to understand and implement. That is, speed, cost and quality are important for a company's profit margin.However, companies that compete on speed, cost and quality alone often fall into this trap: management tools and techniques are easily copied, and the more benchmarking companies do, the more they begin to look alike. Companies that compete on operational effectiveness, but do not differentiate, end up racing to the bottom with diminishing profits - their gains in productivity are captured by consumers or elsewhere on the value chain. Companies that differentiate their products or services, but do not differentiate their processes, are also easily copied.
Sustainable competitive advantage must come from strategic positioning (finding some way to differentiate your product or service),fitbetween this position and the organization's operations (the organization's operations must be bothdifferentthan what other companies are doing, andbetterat supporting your unique strategic position), and operational effectiveness (being efficient will help ensure you stay better at supporting your strategic position, and efficiency is important for sustaining profitability).