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.
Showing posts with label Business strategy. Show all posts
Showing posts with label Business strategy. Show all posts
Thursday, 04 December 2008
Wednesday, 03 December 2008
Business strategy: planning and managing change
Business strategy represents a company's the long term objectives. Strategic planning is carried out to plan for the medium to long term after conducting an in depth analysis of the competitive environment, opportunities and threats and the competencies found within the organisation.
Strategic change may become necessary because of changing market conditions or changes to the competitive environment. Technological changes and the company's fortunes may also provide the reason for change. Sometimes dramatic change is indicated simply to stay in business.
The new business strategy may have far reaching results. A change in strategic direction can result in profound changes to the organisation.
The effects of these changes will vary depending on the process used to formulate strategy. These approaches include a top-down approach, a bottom-up approach or an inclusive process that involves stakeholders at all levels of the organisation. Some companies carry out major strategic planning sessions annually while others see strategy as part of an emergent process.
Change is often the most difficult task that an organisation has to experience. The new strategy defines a different focus for the business, and almost all aspects of the business have to change.
A food manufacturing company had always focused its business on milling and baking. A massive distribution network has developed to support this. Large vehicles laden with goods are dispatched to almost all of the countries food distributers at least once and in some cases twice or three times a day. Why not use the spare capacity to distribute other goods and services?
While retaining its manufacturing capability, the focus changed to exploiting the distribution capability and employing a range of innovative marketing techniques. The entire manufacturing process was transformed to produce what is required when it is required.
The change required throughout the organisation was huge. Almost everyone, from drivers to warehousemen, financial and accounting staff, the sales team and management were faced with the prospect of doing their jobs very differently. How was this managed?
Management chose an inclusive model adopted by the organisation was of an inclusive management style. Everyone in the company became involved in redesigning how the tasks required would be accomplished. The business had been losing money and the entire staff knew that change was desperately needed for the company to stay afloat. Managing change became everyone's responsibility. Each staff member was empowered to take the initiative to find new and innovative ways to achieve his or her objectives.
A prominent oil company managed to open the lines of communication from the workers on the ground through to senior management. Many innovative ideas originated at ground level to increase profits, reduce cost and improve quality. When using bottom-up strategy formulation, change management becomes simpler. Most employees want the change. They initiated the change themselves and are aware of the benefits for themselves and for the organisation.
A top-down model of implementing strategy required a much greater degree of effort to manage the change itself. Employees are often worried about losing their jobs and even of being moved outside of their comfort zone. Change has to be planned. Change consultants may be needed to help the employees manage the transition. Implementation may initially cause a loss of morale and a temporary drop in production. This is to be expected. Strategic management require an awareness of the issues involved and must plan to manage the transitional period effectively to ensure the long term success of the new strategy.
Strategic change may become necessary because of changing market conditions or changes to the competitive environment. Technological changes and the company's fortunes may also provide the reason for change. Sometimes dramatic change is indicated simply to stay in business.
The new business strategy may have far reaching results. A change in strategic direction can result in profound changes to the organisation.
The effects of these changes will vary depending on the process used to formulate strategy. These approaches include a top-down approach, a bottom-up approach or an inclusive process that involves stakeholders at all levels of the organisation. Some companies carry out major strategic planning sessions annually while others see strategy as part of an emergent process.
Change is often the most difficult task that an organisation has to experience. The new strategy defines a different focus for the business, and almost all aspects of the business have to change.
A food manufacturing company had always focused its business on milling and baking. A massive distribution network has developed to support this. Large vehicles laden with goods are dispatched to almost all of the countries food distributers at least once and in some cases twice or three times a day. Why not use the spare capacity to distribute other goods and services?
While retaining its manufacturing capability, the focus changed to exploiting the distribution capability and employing a range of innovative marketing techniques. The entire manufacturing process was transformed to produce what is required when it is required.
The change required throughout the organisation was huge. Almost everyone, from drivers to warehousemen, financial and accounting staff, the sales team and management were faced with the prospect of doing their jobs very differently. How was this managed?
Management chose an inclusive model adopted by the organisation was of an inclusive management style. Everyone in the company became involved in redesigning how the tasks required would be accomplished. The business had been losing money and the entire staff knew that change was desperately needed for the company to stay afloat. Managing change became everyone's responsibility. Each staff member was empowered to take the initiative to find new and innovative ways to achieve his or her objectives.
A prominent oil company managed to open the lines of communication from the workers on the ground through to senior management. Many innovative ideas originated at ground level to increase profits, reduce cost and improve quality. When using bottom-up strategy formulation, change management becomes simpler. Most employees want the change. They initiated the change themselves and are aware of the benefits for themselves and for the organisation.
A top-down model of implementing strategy required a much greater degree of effort to manage the change itself. Employees are often worried about losing their jobs and even of being moved outside of their comfort zone. Change has to be planned. Change consultants may be needed to help the employees manage the transition. Implementation may initially cause a loss of morale and a temporary drop in production. This is to be expected. Strategic management require an awareness of the issues involved and must plan to manage the transitional period effectively to ensure the long term success of the new strategy.
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