Four Business Aspects

Business is all about ideas, risk, competition, profits and finally success. To manage and achieve success you have to use appropriate strategy and right tactics; you need to have unique business concept and a workable business model. Just look at these four aspects in detail below:

Business Concept

Business concept encompasses every business activity undertaken by an enterprise in creating value for customers, suppliers and other stakeholders. Business concept drives every functional area in a business to co-ordinate activities so that goals and objectives are achieved in an optimal fashion. Creating your business concept is the primary task.

Business Strategy

Business strategy is defined as “a well thought out long term plan incorporating chosen methods, moves or a series of maneuverers chalked out by business to achieve goals and objectives”. Strategy is perceived long-term, multi-dimensional, complex, and high-flown and having huge impact on business performance. It is the thinking part of the business process driven by the vision and mission giving direction and sense of purpose towards achieving business goals and objectives.

Business Model

Business Model is primarily “a business concept that has been put into practice”. It translates strategy of a business into a framework for action. Logic of a business, choices a business takes in creating, delivering and realizing value are shown in clear and concise manner in a business model. It is a road map, a motivator cum evaluator of business performance and a communicating tool of business purpose. It broadcasts to the outside world the distinct and discerning value proposition the business offers. More than that, business model bridges strategy with tactics. It displays tactical steps that could be taken by a business at any time to implement the business strategy.

Business Tactics

Business tactics are defined as “specific moves, manoeuvres and actions taken in isolation or as in a series by a business in order to move from one milepost to another in the pursuit of business strategy”. Tactics are short-term, linear with localised focus and having fairly limited impact on business performance. It is the action part of the business process; and symbolise movement towards mileposts within business objectives.

Muthu Ashraff

Business Adviser

Mobile : +94 777 265677

E-mail : cosmicgems@gmail.com

Web : http://www.cosmicgemslanka.com

Blog : http://cosmicgemslanka.com/blog/

 

Business Model Connects Strategy with Tactics

The notion that business model is a stand alone concept was widely accepted in business for quite sometime. Originally founded by Peter F Drucker, business model gained currency with the dot com revolution. Like the dotcom it faded out of fashion soon. Changes that shook technology, economy, social mobility and the way business goes about in the last decade necessitated a second coming of business model. This time it was accompanied with quantum shift in analysis. Gone are the days when business model was treated in isolation. Researchers and practitioners have now begun to spot an integration between strategy and tactics.

What is Business Strategy?

Every business needs a unique proposition, be it a product or service to be offered to the market. Such a proposition must create and sustain value for the business and those elements connected with it. More than that, this proposition must give a distinct and discernible advantage for the business as against its competitors. Sustaining this advantage is a bounden duty of a business that should make every stratagem in order to keep it primary position in the pecking order. That involves two types of actions. One relates to defence and the other relates to attack. In commercial sense the former is developing ability to tide over any adverse eventuality. Attack on the other hand is framing a road map in translating business strategy into practical measures by way of designing a business model.

What a Business Model does?

To answer this question , let me cherry pick three definitions of business model found in academic writings. To begin with look at what Hamel ( 2000 ) sees a business model; it is “ a business concept that has been put into practice”. What is implied is that a strategy of a business is put into practical terms by way of a business model. Secondly, the form of business model and what it does is succinctly stated by Shafer et al (2005) when the authors pen “ We define a business model as representation of a firm’s underlying core logic and strategic choices for creating and capturing value within a value network”. We have got a working definition of the way business model looks like. But wait a minute: what about delivery of value? Osterwalder (2009) has the answer when he writes: “A business model describes the rationale of how an organization creates, delivers, and captures value”.

Now we have the full spectrum of what a business does. It is about time to find out how the model connects with strategy and tactics. In a pioneering research work titled “From Strategy to Business Models and to Tactics” authors Ramon Casadesus-Masanell and Joan Eric Ricart explain in detail about how business model is integrated with strategy and success. Additional reporting by them in recent article tiled “ How to Design a Winning Business Model” (Harvard Business Review Jan-Feb 2011) continues the trend of expositing fundamental theory of business model as the logic of the company and by implementing strategy a business makes choices and face the consequences arising therefrom. They mention choices on policy, asset and governance. They also forecast consequences that are classified as rigid or flexible. The authors turn to the auto industry for an analogy: Strategy is designing and building the car, the business model is the car, and tactics are how one drives the car. By this time we have catapulted into the area of tactics

Business Tactics fill the Rest

These are steps a business take in order to implement the business model. A pre-explanation of how the business will re-act in a given situation could be easily gained from a cursory glance on a business model. In addition to planned tactics a business model allows leeway for the line managers to adopt ad-hoc measures in keeping with over-all thrust of the strategy. These measures could range from non-repetitive tactics, quick-fixes or actions made out of the gut feeling.

Muthu Ashraff

Business Adviser

Mobile : +94 777 265677

E-mail : cosmicgems@gmail.com

Web : http://www.cosmicgemslanka.com

Blog : http://cosmicgemslanka.com/blog/

 

Key Differences between Business Strategy and Tactics

Most of you know the differences between business strategy and business tactics. But when you are asked to state the differences you generally fumble for suitable words and phrases. Maybe phrases such as “long and short term” and “high and low stuff” are often muttered. But not much is followed thereafter. In this blog I elaborate key differences between business strategy and business tactics for your benefit.

Business Strategy

1. Business strategy is defined as “a well thought out long term plan incorporating chosen methods, moves or a series of maneuverers chalked out by senior managers for obtaining a set of specific objectives of a business”. This definition characterises strategy as long-term, multi-dimensional, complex, and high-flown and having huge impact on business performance

2. Analysts consider strategy as the thinking part of the business process driven by the vision of the stakeholders

3. Although static in nature, strategy gives direction and sense of purpose in movement towards achieving business objectives

4. Value optimization is the anchor on which strategy is fastened; by this, business seeks best possible benefits in a sustainable manner and over a long-term span

5. Integration is the means whereby strategy connects various competing and complementary elements within a business. Like an alchemist, corporate management tries to drive the best mix, blend or configuration of resources and capabilities of business. In sum, strategy fuses many parts together to form a meaningful whole with a view to achieve set goals. For example, a business that has trained human resource and has identified a niche market could use a perfect configuration to get optimum results from an opportunity

6. As I said earlier strategy is for long –term and by nature static. This theme can be further laboured to see a nuance in terms of how a business responds to changes. You cannot easily adjust strategy to changes that are taking place in the market on a day-to-day basis. Nether strategy allows you to re-act to each change in a short time. Factoring market movements, alteration in consumer preferences and shift of business cycle into strategy takes quite some time. This part is better left to be handled by tactics as explained below.

Business Tactics

1. Business tactics are defined as ”specific moves, manoeuvres and actions taken in isolation or as in a series by line managers in order to move from one milepost to another in the pursuit of operationalizing strategy”. By this definition it is clear that tactics are short-term, linear, and single, with localised focus and having fairly limited impact on business performance

2. It is the action part of the business plan process and driven by mission related to a particular set of circumstances

3. Tactics are in a state of constant of flux keeping in line with changes taking place in the environment; these symbolise movement towards goals and mileposts within business objectives

4. Value maximization is the anchor on which tactics are knotted, by this, business seeks best possible benefits in the short-term, and so that trend curve of business success never falters

5. Decomposition is the means whereby tactics dissect a single part from the whole strategy that needs correction or adjustment. In other words, tactics allow you to excise a part from the whole plan, work on it and re-fix without upsetting the overall gist of the strategy. An apt example is the pricing policy adopted in a business. When an existing old customer comes with a special order for a large quantity of a popular product tactics allow you to consider a special discount in addition to the usual ones.

6. Tactics are by nature short-term affairs that function in consonance with all-inclusive strategic policy, but tweak it each time a business faces an issue or snag. Nobody can keep a treasure trove of tactics that could be applied to, each time an unforeseen consequence slaps on the face of business. Each time you face a crisis situation you come out with a tactic that takes care of it adequately. Admittedly, tactics are developed on the spur of the moment. It does not mean planning tactics is not necessary in a business though. If you envisage how a situation could unfold, you can develop the wherewithal to meet it. What is in essence is that you have to quickly adjust to changing business environment and the consequences that arise in its wake? For this purpose a line manager who has an uncanny ability to use a blend of planned and ad-hoc measures with a view to tide over a difficult and perhaps desperate situation is an excellent tactician.

Muthu Ashraff

Business Adviser

Mobile : +94 777 265677

E-mail : cosmicgems@gmail.com

Web : http://www.cosmicgemslanka.com

Blog : http://cosmicgemslanka.com/blog/