Business Strategy vs. Business Tactics
A brief overview and examples of the differences between strategy and tactics.
Key Takeaways:
Both strategy and tactics involve management making decisions.
Strategy is essentially about the long-term plan of the business and usually involves the commitment of a significant amount of a business' resources.
Tactics are very closely influenced by and shaped by the functional objectives of the of the business.
There is a difference between strategy and tactics in relation to business theory and making decisions.
Business Strategy
Strategy is essentially about the long-term plan of the business. Strategic decisions are taken at the top level of a business. It is based on what the business wants to achieve and is set by the vision or the mission of the business. Strategic decisions and strategic actions are essentially based around trying to achieve the corporate objectives. Another key distinguishing feature of strategy usually involves the commitment of a significant amount of a business' resources.
Business Tactics
By contrast, tactics tend to be more short-term rather than long-term. Tactics often involve responding to opportunities that arise or threats that appear. Tactical actions are very closely influenced and shaped by the functional objectives of the business. In other words, business tactics are the operational and day-to-day decisions that management make. Usually when comparing to strategy, tactics involve less resources and less of a significant commitment of risk.
Here are a couple of examples of the differences between strategic decisions and tactical decisions and how each play out when it comes to different parts of business theory:
Strategy = mission statements, vision, core values, organizational culture, growth strategy, positioning, and targeting the markets it wants to compete with and win.
Tactical = functional areas like marketing mix, pricing (adjusting price to reflect changing market circumstances), recruitment of people, inventory, location, and customer service.
Here is a comparison between two businesses and distinguishing their strategic and tactical decisions:
Starbucks
One of the key strategic goals in Starbucks’ growth strategy has been to build market leadership in China, the fastest growing emerging market. So, the strategic decision was around committing significant business resources to open almost 2000 stores across many of China's largest cities. This included a corporate vision of “one cup, one person, one neighborhood at a time” as a very strategic decision. The decision to move into China and commit huge resources, the company must tactically do a bunch of detailed actions to support this strategy.
However, it was criticized in the official press for selling what appeared to be high-priced coffees in some of its stores in the major cities. The tactical response was based around a social media campaign that brought the people in China (customers) to support the brand.
Netflix
In 2016, Netflix launched its service overnight in 100 new countries. This was based around its vision of becoming the world's leading media streaming and entertainment service. Interestingly, one of the few countries they couldn't launch was in China.
Tactically, Netflix needed to make decisions on which territories around the world they could benefit from, or where they should and shouldn’t bother competing in. Different territories imposed they’re own requirements and regulations on Netflix for wanting to enter their marketplace. For example, the EU forced the likes of Netflix and Amazon Prime to increase the quota of programs that are made in Europe. The way Netflix responded to this was very much a tactical rather than a strategic decision.