What is the difference between business Tactics & strategies?
Strategies and tactics are two different things. When you formulate business strategy you choose tactics that will help to achieve your strategic goals. Strategy refers to a direction toward a goal. Tactics are the actions taken to support that strategy. Most businesses deal with five types of strategy and the tactics used to achieve strategic goals: product, pricing, marketing, operational and financial strategies.
Industry competition requires your company to constantly present new and better products and services to keep up with changes in consumer demand. Microsoft and Apple, both creators of computer operating systems, have been waging a tactical battle for consumer preferences ever since both companies came into existence. Microsoft’s tactic was to be a software manufacturer and make its operating system available to computer manufacturers for use in their personal computer products, then sell the owners of PCs software to run on that operating system. Apple’s tactic was to keep its operating system proprietary and manufacture its own brand of computers. Both companies have achieved their strategic goals of growing to become leaders in the Internet and computing industry but there are significant differences in their product strategies and tactics.
Pricing strategy does not always mean employing low price tactics to gain industry dominance, but that is the obvious route. Some companies maintain high prices as a tactic, playing on our psychological tendencies to equate high quality with high prices. Other companies use low-price tactics presenting rebates, special sales and deep discounting. Other tactics that lower the price of purchase include inexpensive financing and delayed payment due dates from 30 days to as long as one year.
Marketing strategy seeks to target specific consumers with messages that are most likely to draw their attention. It involves seasonal advertising and special promotions as tactics to achieve market dominance. Other tactics that affect market position for a company are acquiring competing companies, becoming the exclusive distributor for popular brands and using pricing tactics to attract customers. Microsoft and Apple are, again, examples of marketing strategy and tactics. Microsoft dominated the market for word processing, spreadsheet, database and email software, making it the most useful to business needs. Apple dominated the graphic design market, which also gave Apple products an excellent reputation among the people who designed and produced graphic media, providing Apple products with an excellent word-of-mouth reputation. They also donated Apple computers and software to schools so children learned on Apple products and hopefully would buy them as adults.
The operational strategy of lowering costs to produce greater profit includes lowering your operational costs by installing the latest computer equipment and enterprise resource planning software, hiring contract employees to avoid paying benefits, establishing several facilities close to your target customers, investing in improved plant and equipment, moving to less expensive quarters and altering the hours of operation to manufacture more or lower the costs of keeping the company open.
In running your business you may develop a strategy that requires investment of money you don’t have. This is when financial strategy comes into play. Tactics to achieve the strategy of enough money to finance growth may involve factoring or borrowing against your accounts receivable, obtaining payroll financing to be able to pay your employees during times when you have large outflows of money, finding investors or taking your company public.