TACTICS IN STATEGIC MANAGEMENT

STRATEGIC MANAGEMENT

Shubhajit Nandi
MBA -MARKETING
University of Kalyani.

SHUBHAJIT NANDI
UNIVERSITY OF KALYANI.
MBA DEPARTMENT
TACTICS IN STATEGIC MANAGEMENT

Mention in detail the tactics of business strategy indicating

its advantage and disadvantage.
A tactic is a sub strategy. It is “a specific operating plan detailing how a
strategy is to be implemented in terms of when and where it is to be put into
action. By their nature, tactics are narrower in their scope and shorter in their
time horizon than are strategies”.
We shall consider here the two tactics of timing (when) and market
location (where) used in formulating and implementing business strategies.

Timing Tactics

When to make a business strategy move is often as important as what to

make. It is here that the timing of the application of a business strategy
becomes important. A business strategy of low cost or differentiation may be
essentially a right move but only if it is made at a right time.

The first company to manufacture and sell a new product or service is called
the pioneer or the first mover firm. The firms which enter the industry
subsequently are late mover firms.
As for example Parle with its Bisleri brand was the first mover in mineral
water industry in India which has attracted companies such as, Coca Cola
with the Kinley brand and Pepsi with the Aquafina brand.
An example of late mover in this industry was Nestle which planned to
introduce its brand PureLife.
Life Insurance Corporation (LIC) of India was the first mover in insurance
sector while the late movers were ICICI-Prudential Life Insurance, HDFC
Standard Life Insurance and Max New York Life Insurance.

There are advantages and disadvantages associated with being the first
mover or the late mover. Often the advantages of one type are the
disadvantages for the other. So; the advantages enjoyed late movers can be
disadvantages for the first mover firms.

Advantages for the first mover firms are as given below:

 They can establish a position as the market leaders.

SHUBHAJIT NANDI
UNIVERSITY OF KALYANI.
MBA DEPARTMENT
TACTICS IN STATEGIC MANAGEMENT

 Moving first n the industry results in forming early commitments to

suppliers of raw materials, new technology and distribution channels
creating cost advantages over late movers.
 They develop an image of being pioneers which helps to build image
and reputation.
 First time customers are likely to remain loyal.
Disadvantages for the first mover firms are as given below:

 Being a pioneer is often costlier than being a follower. Pioneers firms

have to spend resources on creating customer awareness and
education regarding the products especially if the products are new.
 Late movers can imitate the technological advances, skills.
 Technological change is often rapid creating obsolescence for the first
movers. Late movers can jump the technological threshold and use
new technology available.
 Customer loyalty is not guaranteed and can often prove to be
ephemeral.

Market Location Tactics

The second important aspect of business tactics is market location. The

aspect deals with the issue of where to compete. By this is meant the
target market the firm aims at while applying its business strategies.
Every industry has a number of firms that offer the same or substitute
products or services. One firm has the largest market share, some other firms
have relatively larger market share, a few others have a small market share,
and there are firms that operate only on the fringes and not in the
mainstream markets.
On the basis of the role that firms plays in the target market, market location
could be of four types: leader, challenger, follower and nichers.

1. Market Leaders –
Market leaders are the firms that have largest market share in the relevant
product market and usually lead the market and usually lead the industry in
factors, such as technological development, product and service attribute,
price benchmark or distribution channel design. In order to retain the market
leader position they follow these three strategies:

SHUBHAJIT NANDI
UNIVERSITY OF KALYANI.
MBA DEPARTMENT
TACTICS IN STATEGIC MANAGEMENT

 Expanding the total market through new users, and more usage.
For example perfumes market was meant for women but HUL
expand its market by introducing perfumes for men also. For
example AXE.
Cereals were used for breakfast but now they are being promoted as
snacks to increase the frequency of usage.
 Defend Defense Strategy-A market leader should generally adopt
a defense strategy. Six commonly used defense strategies
1.) Position Defense - “A company attempting a fortress
defense will find itself retreating from line after line of
fortification into shrinking product markets.”
E.g. Mercedes was using a position defense strategy until Toyota
launched a frontal attack with its Lexus.

2). Mobile Defense- By market broadening and diversification. For

marketing broadening, there is a need to redefine the business
(principle of objective), and focus efforts on the competition (the
principle of mass).
E.g. Legend Holdings, the top China PC maker Legend has
announced a joint venture with AOL to broaden its business to
provide Internet services in the mainland

3) Flanking Defense- Secondary markets (flanks) are the weaker

areas and prone to being attacked Pay attention to the flanks.
E.g. San Miguel introduced a flanking brand in the Philippines,
Gold Eagle, as a defense against APB’s Beerhausen

4) Contraction Defense- Withdraw from the most vulnerable

segments and redirect resources to those that are more defendable.
By planned contraction or strategic withdrawal
E.g. India’s TATA Group sold its soaps and detergents business
units to Unilever in 1993

5) Pre-emptive Defense- Detect potential attacks and attack the

enemies first let it be known how it will retaliate .Product or brand
proliferation is a form of pre-emptive defense e.g. Seiko has over
2,000 models

SHUBHAJIT NANDI
UNIVERSITY OF KALYANI.
MBA DEPARTMENT
TACTICS IN STATEGIC MANAGEMENT

6) Counter-Offensive Defense-Responding to competitors’ head-

on attack by identifying the attacker’s weakness and then launch a
counter attack
E.g. Toyota launched the Lexus to respond to Mercedes attack

 Expanding the market share through the enhancement of

operational effectiveness by means of new product development,
raising manufacturing efficiency, improving product quality,
proving after sales services or increasing market expenditure.
For example Chevrolet offered 3 years free after sales service.

2. Market Challengers –
Market leader are firms that have second, third or lower ranking in the
industry. These firms can either challenge the market leader or choose to
follow them. The most common objective of a challenger is to increase the
market share. It can also use a strategy to attack its opponent. A general
attack strategy could be of five types-

 Frontal Attack- It involves matching the opponent in terms of product,

price, promotion and distribution. e.g. Japanese and Korean firms
launched frontal attacks in various ASPAC countries through quality,
price and low cost

 Flank Attack- It involves challenging the opponent’s weak or

uncovered geographical or segmental areas. e.g. In the 1990s, Yaohan
attacked Mitsukoshi and Seibu’s flanks by opening numerous stores in
overseas markets

 Encirclement Attack- It involves a grand move to capture the

opponent’s market share through means, such as, launching and
advertising, making and unbeatable product-related offering or
providing service guarantee. e.g. Seiko attacked on fashion, features,
user preferences and anything that might interest the consumer

SHUBHAJIT NANDI
UNIVERSITY OF KALYANI.
MBA DEPARTMENT
TACTICS IN STATEGIC MANAGEMENT

and Samsung was offering a TV with fridge counter attack

SONY.

 Bypass Attack- It involves ignoring the opponent and attacking the

easier market by means of diversifying into unrelated products,
moving into new geographical areas. e.g. Pepsi use a bypass attack
strategy against Coke in China by locating its bottling plants in the
interior provinces

 Guerrilla Attack- It involves small, intermittent attack to harass and

demoralize the opponent firm, and eventually secure a firm foothold
in the industry .This can be done by or secured by means such as price
cut, Price discounts and meaningful advertising or initiating legal
action. e.g. airlines use short promotions to attack the national carriers
especially when passenger loads in certain routes are low

3. Market Followers –
Market followers are firms that imitate the market leaders but do not
upset the balance of competitive power in the industry. The market
follower may adopt four broad strategies as under-

 Counterfeiter Strategy- It involves duplicates the market leader’s

product and packaging and selling it into black market.

 Cloner Strategy – It involves emulating the market leader’s

products, name and packaging. e.g. the IBM PC clones

 Imitator Strategy- It involves copying some things from the market

leader while retaining some other features such as pricing,
packaging, or advertising. e.g. car manufacturers imitate the style
of one another

 Adapter Strategy-It involves adapting one’s own products to those

of the market leader and selling them in different markets. e.g.
many Japanese firms are excellent adapters initially before
developing into challengers and eventually leaders
SHUBHAJIT NANDI
UNIVERSITY OF KALYANI.
MBA DEPARTMENT
TACTICS IN STATEGIC MANAGEMENT

4. Market Nichers –
They are the firms that carve out a distinct niche fir themselves,
which have been left uncovered by the other firms in the industry, or a niche
that is of little or no interest to others. For examples Event management
groups have created a niche market. Market niches have to adopt three
strategies which are as under:

 Creating Niche- It involves looking for ways and means by which

niche can be identified or created in an industry. For example
Johnson & Johnson has created a niche market for itself.

 Expanding niches- It involves enhancing the coverage of the

present niche to include similar market niches or new niches.

 Protecting Niches- It involves shielding the niches served from

attacks by other firms in the industry.

SHUBHAJIT NANDI
UNIVERSITY OF KALYANI.
MBA DEPARTMENT