Strategy Vs Tactical Decisions

Introduction

Porter’s Generic Strategy framework (Porter M. E., 1985) describes how organizations pursue competitive advantage across the market scope and Bowman & Faulkner (1997) suggests a Strategic Clock approach. Looking at the latest, there are extended strategic positions than Porter’s generic strategies of how companies compete in the marketplace (Thompson, et al., 2013). Other approaches can be Ansoff’s Matrix and Mintzberg’s generic strategies (Mintzberg, 1988; Kotha & Vadlamani, 1995).

Ansoff’s matrix suggests different strategies based on the existence or new of the products and markets (FME, 2013). This way, opportunities and levels of risks associated with each strategy are considered (Thompson, et al., 2013). The danger that lies with this choice of some medium risk strategies lies on focus of organizations on one type of customers, so it is necessary to scan the environment actively (through analysis such as SWOT, PEST, etc). Looking for potential problems and action to respond to them is crucial in order to maintain a growth strategy.

Strategy vs tactical decisions

As per Bradford (2016), the execution is the main base and should be prioritized since the strategy is adaptable to the changing environment, however when chosen a strategy for the company, if the business mind is set to do all it takes to reduce the odds of failure, then the organization is half-way there to turn it into a successful one. It is necessary, however, a clear distinction between a strategy as Michael Porter defines and tactical decisions, which as often confused. Strategy is the overall campaign plan, which may involve complex operational patterns, activities and decision making that govern tactical execution. Tactical decisions are the actual means to gain an objective.

Tactical decisions are characterized as:

1. Decisions that help reach long-term objectives;
2. In aid to achieve goals that are SMART and maximize profits (notion of competitive advantage based on the efficiency and effectiveness of the business compared to others);
3. Part of a plan, with vision and mission;
4. Strategy is then the plan and direction for a long-term sustainable competitive advantage;

Consider planning distinct as doing: formulating a long-term plan is different than solving day-to-day problems and issues that arise (Harrison & Hoek, 2008). The tactical decisions are likely to be complex in nature (Johnson, Scholes, & Whittington, 2008). Since these decisions require an integrated approach, and by this, it is meant that both, inside and outside of an organization, it can affect operational decisions, done at uncertain situations and involve some considerable changes (Johnson, Scholes, & Whittington, 2008).

It leads to tackling changes in the business environment, building capabilities such as resources and competences and meets value and expectations of stakeholders. But most importantly, it gives the organization the advantages over competitors (competitive advantage). Competitive Advantage refers to the favorable position that an organization possess over their competitors due to the implementing of the following strategy (Harrison & Hoek, 2008).

Tactical decisions are also concerned with the scope of the activities regarding the organization. It refers to the importance to be given to one area of activity over the other, or to a portfolio of areas and vital to keep organization’s boundaries, product and service range and geographical coverage (Johnson, Scholes, & Whittington, 2008).

There are two models to obtain competitive advantage and those are:

Model 1: Externally

• Common concepts and tools used are Resource-Based View Model and Porter’s Value Chain;
• The aim is to determine strengths and weaknesses and create Competitive advantage.

Model 2: Internally

• Concepts and tools used are Porter’s 5 forces and PEST analysis;
• Aim: determine opportunities and threats dynamics and draw plan over that.

A strategy is only as strong as their weakest link (Bradford, 2016), being that one the different levels, activities and processes and the difficulty to copy for competitors and flexibility to adapt to market changes. Operational efficiency is essential, but no the main point since it is not enough to be a strategy, or at least an effective and sustainable one (Bradford, 2016). Strategies should not be turned into an optimization problem and be open to possible scenarios, therefore the focus on the integration of activities.