The meaning of business strategy and tactics

A business strategy sets out a plan for the medium to long term to help meet the organisation's main goals. It is closely linked to the company's overall objectives and can only be developed once these goals have been clearly defined. Businesses must first establish what they aim to achieve before deciding on the methods to get there.

Strategy in small and large firms

• Small firms - Strategies might not be documented formally. Instead, they could involve a series of decisions over time aimed at specific targets, such as entering a new customer group.
• Large firms - Strategies are typically more structured and written down, as they guide the activities of different departments like human resources or sales.

Tactics for implementing strategy

Tactics involve the short-term actions and everyday operations that put the broader strategy into practice. They focus on immediate steps to support long-term plans.

Strategic and functional decisions

Businesses make different types of decisions depending on their scope and impact. These range from broad, high-level choices that shape the company's future to more routine ones within specific areas.

Strategic decisions

• Strategic decisions are made for the long term and carry high levels of risk.
• They set the overall path for the business, such as choosing to expand internationally or launch a major new product line.

Functional decisions

• Functional decisions occur within individual departments to support the main strategy.
• They are usually short-term and involve lower risk compared to strategic decisions.
• For example, a marketing department might decide on a promotional campaign to align with a strategy of increasing market share.

Conducting a SWOT analysis

A SWOT analysis is a tool that examines four key aspects: strengths, weaknesses, opportunities, and threats. It helps businesses assess their position and plan effectively. Strengths and weaknesses are internal elements that the company can control, while opportunities and threats come from outside and require careful monitoring.

Internal factors in SWOT

• Strengths - Positive internal features that give the business an edge. Examples: Strong brand reputation or skilled workforce.
• Weaknesses - Negative internal issues that need improvement. Examples: Shortage of production staff or outdated equipment.

External factors in SWOT

• Opportunities - External chances for growth that the business can pursue. Examples: Emerging markets or new technology trends.
• Threats - External risks that could harm the business. Examples: Actions by competitors or economic downturns.

External factors influencing opportunities and threats include political changes, legal requirements, economic conditions, social trends, technological developments, environmental concerns, and rival activities. For instance, competitors can pose a threat while also affecting marketing goals, and staff shortages might be a weakness impacting operations.

SWOT analysis should be carried out objectively, using facts tailored to the business's unique situation.

Using SWOT analysis in business planning

SWOT analysis supports strategic planning by highlighting areas for action. Managers use it to capitalise on opportunities that match the company's strengths, turn weaknesses into positives, and prepare for threats. It can reveal competitive advantages, such as unique resources that set the business apart from rivals, allowing strategies to emphasise these.

Adapting strategy with SWOT:

• Businesses can update their SWOT analysis as conditions change, ensuring strategies remain relevant.
• This flexible approach helps in responding to new external factors and refining plans over time.