Thursday, 04 December 2008

Business strategy versus tactics

Business strategy has its origins in military thinking. In his classic The Art of War written over 2000 years ago, Sun Tzu states that "Strategy is the great Work of the organisation. In situations of life or death, it is the Tao of survival or extinction. Its study cannot be neglected." Definitions of strategy abound, but as a general rule, business strategy can be seen as long term, based on an understanding of the environment and an understanding of the business organisation or self-knowledge. Tactics on the other hand relate to short term actions to gain an advantage.

Wordweb defines strategy as "An elaborate and systematic plan of action" or "The branch of military science dealing with military command and the planning and conduct of a war". Tactics is defined as "The branch of military science dealing with detailed manoeuvres to achieve objectives set by strategy" or "A plan for attaining a particular goal".

The first distinction is therefore one of duration. Strategy is long term. Tactics comprise the actions taken to achieve strategic objectives. A company may have a strategic objective to become the largest player in the market. A price war is a tactic that may be employed to help achieve this objective.

Strategy relates to an organisations direction. Tactics relate more to operational goals. A company's marketing strategy defines the way it wants to be seen in the market-place. The specific marketing campaigns are tactical in nature.

Every chess player understands the difference between strategy and tactics. Chess strategy governs the way the entire game is played. The player may want to dominate the centre of the board, dividing the opponents men, or may wish to surround the opposition. Tactical play involves the individual manoeuvres that help to achieve the strategy. Chess tactics are a series of 'tricks' that the chess master has stored to surprise the opponent, to gain a material advantage and to advance his strategic objectives.

A company's strategic objectives could focus on which market segment it wishes to serve. A designer clothing store could be aimed at the super rich, while a chain of burger bars attempts to maximise turnover by keeping costs down. In each of these cases the businesses may follow a series of actions or tactical manoeuvres to assist it to achieve these objectives. The clothing store may buy an established exclusive store to help provide the right status. The burger bar could embark on a simple but aggressive competitive strategy aimed at undercutting the rest of the market. Tactics may include a price war or buying out the competition.

Business strategy involves identifying what a company wants to achieve, how and when. The pursuit of these strategic objectives may involve a series of tactical manoeuvres, each of which is aimed to bring the business closer to achieving its goals.

No comments: