Concept of Trade off in Business Strategy

The trade-off concept was first introduced by Skinner (1969,1974) who carried out a large study of successful American manufacturing firms. His findings indicated that a common feature of successful firms was that their operations had limited sets of objectives, which were consistent with the business strategies, focusing on the selected order winners. Specifically, he found that successful operations had consistent market demands, consistent product volumes, consistent manufacturing tasks and consistent quality requirements. Further, such operations typically limited their span of process to only a small number of core operations.

He recommended that each factory should be arranged to focus on a range of products which have the same order winners. In larger factories, with wide product ranges, the operations should be physically and organisationally arranged into separate plants-within-plant, each being devoted to a subset of products with the same order winning criteria.