Business Policy and Strategic Management

10/17/2013

SUN TZU: WAR AND MANAGEMENT Chapter 9

The Art of Strategic Management and Thinking Chapter 9

1

10/17/2013

Sun Tzu’s Art of War Model Situation Appraisal

Formulation Of Goals And Strategies

Evaluation Of Strategies

Implementation Of Strategies

Strategic Controls

S I T UA T I O N A P P R A I S A L SELF FACTOR

ENEMY FACTOR

ENVIRONMENT FACTOR

ANALYSIS OF STRENGTHS AND WEAKNESSES

ENVIRONMENT FACTOR

• Which general is ore able? • Which troops are stronger? • Which army has better trained officers and men? • Which army executes law and instructions more effectively? • Which army better administers rewards and punishments?

• Which ruler possesses more moral influence? • Which army is more able to obtain the advantages of climate? • Which army is more able to obtain the advantages of terrain?

2

10/17/2013

S I T UA T I O N A P P R A I S A L c o n t …

DESIRABILITY OF WAR? NO

• • • •

Definite Advantages Strong assurance of victory As a last resort Defense invincibility

SEEK NON-WAR ALTERNATIVES

PREPARATION FOR WAR

• Prepare and strengthen defense • Consolidate resources

• Formulation of • Goals • Strategies

FORMULATION OF STRATEGIES

F O R M UL A T I O N O F G O A L S AND STRATEGIES GOALS FORMULATION

• Prioritizing of Goals 1. Attack enemy’s strategies 2. Disrupt enemy’s alliances 3. Attack enemy’s army 4. Besiege walled cities • Achievability of Goals • Results in net positive gains

NO

CHOICE OF BATTLEGROUND

• Areas with distinctive advantages • Areas ignored by enemy • Characteristics of battleground CONCENTRATION OF FORCES

• Gain relative superiority • Secrecy of battle plan • Deception ATTACKING

• • • •

Need to attack Need to win profitably Relative advantages in numbers Possibility of niching CONTINGENCY PLANNING

•

Flexible interchange of direct and indirect forces

3

10/17/2013

STRATEGICE CONTROLS

PRINCIPLE OF INTELLIGENCE (Information Acquisition)

PRINCIPLE OF SECURITY (Information Proctection)

ESPIONAGE

SECRECY

• • • • •

Local Agents Inside Agents Double Agents Doomed Agents Living Agents

• • • • •

Withholding strategic plans Tight security measures Punitive deterrents Creation of unpredictability Use of deception

E V A L UA T I O N O F S T R A T E G I E S STRATEGY EFFECTIVENESS

• Strong chance of victory • Profitable gains

SUBJECTIVE EVALUATION • • • •

Strategic target Strategic fit Strategic advantage Strategic timing

NUMERICAL (OBJECTIVE) EVALUATION (Based on understanding of market and environment forces)

• • • • •

Definition of scope Estimation of experiments Calculation of resources Weighing chances for success Planning for victory

IS STRATEGY EFFECTIVE?

NO REFORMULATE

YES IMPLEMENTATION OF STRATEGIES

4

10/17/2013

I M P L E M E N TA T I O N O F S T R A T E G I E S HUMAN FACTOR The Sovereign • Non-interference in military affairs • Avoidance of political appointments

The Army • Army effectiveness depends on:

The Commanders Essential traits and qualities • Cautiousness Courage • Composition Pragmatism • Sincerity Ability to: • Strategies Execute • Manage


Quantity (strength)
Quality (training)
Control, which includes:
Doctrine (structure and organization)
Discipline • Communication

I M P L E M E N TA T I O N O F S T R A T E G I E S OPERATIONAL FACTOR Principle of Swiftness • Timing • Momentum • Avoidance of Protracted Campaigns

Principle of Swiftness • Shaping and Flexibility • Innovativeness • Use of Initiative

Anticipation of:

Principle of Adaptability • Baits • Illusions and Fakery • Use of Contingency • Zheng and Qi Forces • Direct and indirect approaches • Kidnapping and Pilferage

Capitalize on Available Means • Water • Fire

• Enemy and reactions • Environmental Changes

5

10/17/2013

Sun Tzu’s Art of War Model

These basic principles also form the basic thrust or central theme of Sun Tzu’s Art of War . They are important for the development of strategies in war as well as business. Together , they form what we call the Art of Strategic Management.

The Art of Strategic Management


7 Key Concepts:
detailed

planning


market

intelligence


choice

of battleground


swiftness

in execution of plans


adaptability
creation
attack,

in maneuvers

of strategic advantages through deception

if one has to fight in the open

6

10/17/2013

Detailed Planning


It has to be exhaustive in coverage and considerations.




Planning must be detailed and includes:
Political

leadership ( moral influence )


Corporate

leadership ( generalship )


External

factor ( climate )


Physical

or infrastructural factor ( terrain )


Corporate

structure and organization ( doctrine or law )


Competitive
Human

edges ( strengths )

resource development ( training )


Motivation

( discipline )

Market Intelligence
According to Sun Tzu ;

“ This intelligence cannot be obtained from spirits nor from the gods, nor by inductive thinking; nor by deductive calculations. It can be obtained by men who have knowledge of the enemy’s situation. Thus, there is a need to actively collect, store , analyze and utilize information for the development of more effective strategies. ”

7

10/17/2013

Market Intelligence


Detailed planning must be based on intelligence.




Cannot be carried out on the basis of intuition, gut feeling, calculated guesses or other subjective means.




The successful acquisition and utilization of information for strategic purposes will definitely be one of the factors that determines the competitiveness of organizations in the future.

Market Intelligence


Deals with :
Collection
Evaluation
Final




Collection
Info.




dissemination of intelligence Re: enemy’s location , strengths and plans,

Evaluation
These

collection will then serve as data about the weather, the terrain of the battleground, and the movement of troops and civilians

8

10/17/2013

Market Intelligence Final dissemination of intelligence
Means

the final execution of the information obtained or the so called “foreknowledge” by Sun Tzu to be used in the planning strategies.


According

to Sun Tzu:


“The

reason why the enlightened ruler and the wise general are able to conquer the enemy whenever they lead the army, and to achieve the victories that surpass those of others is because of foreknowledge”

Choice of battleground


In military combat, choosing battlegrounds carefully will ensure success.




In business, choosing the right battleground will enable the company to exhibit its strengths better and camouflage its weaknesses.




It will also enable the firm to exploit marketplace.

opportunities in the


Through

nicheing strategies and cushion the effects of threats and the environment.

9

10/17/2013

Choice of battleground


A company should opt for one in which it has distinct advantages over its competitors.




Look for areas ignored by competitors.




An understanding and appreciation of the characteristics of different battlegrounds will help decide what kind of strategies would be appropriate and effective.

Swiftness in execution of plans
Swiftness

includes :


Perfect

Timing
Maintenance of momentum
Avoidance of protracted campaigns
Coordination must be perfect

10

10/17/2013

Swiftness in execution of plans


Several Advantages:
Element
When
Plans

of surprise events move quickly it has a mesmerizing effect.

are executed quickly


Does

not allow the competitors much time to react and their defense strategies can be threatened.


It

also denies competitors time to read the various strategies and maneuvers in the plan makes it difficult for them to counter strategize.

Swiftness in execution of plans cont…


Counter-espionage

effect


Minimizes

the chance that the plan will be leaked or spied upon

11

10/17/2013

Adaptability in Maneuvers


Requires the practice of shaping and flexibility , as battle conditions in war are never static.




Various Factors that affects business situations:
Consumers
Competitors
Government
General

public


State

of technology


State

of economy

Adaptability in Maneuvers


Entails the provision for innovation and exercise of initiatives




Company must encourage the flow of innovative ideas on all fronts.




When opportunities arise, as a result of the changing environment or other factors, the company must be capable of capitalizing on them.




It may also entail changes to plans that are already made.

12

10/17/2013

Adaptability in Maneuvers




In short, when plans should be adhered to as much as possible, bearing in mind the principle of detailed planning and the principle of security, a company must still be BOLD and FLEXIBLE enough to DEVIATE when NECESSARY.

Creation of Strategic Advantages through Deception


The use of deception such as
Baits
Illusions
Fakery




And the use of contingent planning are all designed to gain strategic advantages




And morality of their use in war has seldom been questioned.

13

10/17/2013

Creation of Strategic Advantages through Deception


Concern for business ethics
Deceptive

strategies and fraudulent practices of a company can harm their reputations and market shares.


Unethical

practices can also hurt both honest and dishonest companies and could also threaten the economic stability of whole industries.


Depends

on moral standards of an individual and the company that he is operating in and the code of conduct of the competitors both domestic and international.

Attack when in combat




When in combat or faced in an open competition, the best way to win is to attack offensively.




Defense can only result in a non lose situation and cannot guarantee success.

14

10/17/2013

Attack when in combat PRIORITY 1. The highest form of generalship is to attack the enemy’s strategy. 2. The next best policy is to disrupt the alliance.

RATIONALE When victory is long delayed, the ardor and morale of the army will be depressed. When the siege of a city is prolonged, the army will be exhausted. When the army engages in protracted campaigns, the resources of the state will be impoverished.

3. The next best is to attack his army.

4. The worst policy of all is to besiege walled cities.

The Gurus of the Art of War


The Japanese companies have been practicing many of the military-like strategies of Sun Tzu in business.




Scholars who described the Japanese economic conquest of the world as a militaristic campaign:
PHILIP

KOTLER


KENICHI

OHMAE

15

10/17/2013

The Gurus of the Art of War


A BOOK OF FIVE RINGS
By
A

Musashi Miyamoto

military text that is reputedly read by most Japanese CEO’s


Became
Was

a best seller in the US

written around 1645 A.D.


Contained

many thoughts parallel to Sun Tzu’s Art of War


Musashi

must have obtained much of his inspiration from Sun Tzu, who’s works had been translated into Japanese as early as 716 A.D.

The Gurus of the Art of War


The Japanese could have perfected Sun Tzu’s strategies because it was known to the top military and political echelons of Japan for more than a thousand years.




And institutionalized the thinking's of Sun Tzu into their military, then to their corporate strategies and practices.




These influences have become intrinsic to Japanese corporate values and behavior.

16

10/17/2013

Rethinking of Japan


REVISIONISM
A

new school of thought


Begun


to emerge in the US since mid-1980’s

REVISIONIST
Clyde

V. Prestowitz – US trade official, author of Trading Places (

1988 )
Karel

van Wolferen – Dutch journalist, author of The Enigma of Japanese Power (1989)


James

Fallows – Journalist, political scientist


Chalmers

Johnson – published MITI and the Japanese Miracle

Rethinking of Japan


REVISIONIST
Reject

the Western Tenet that capitalism and democracy are fundamentally similar everywhere.


They

argue that Japan operates on a different set of economic and political imperatives.


They

thought that Japanese are only interested on making Japan become a dominant economic power in the world and less concerned with following market rules

17

10/17/2013

Rethinking of Japan


REVISIONIST
Advocate

various measures to break the economic stronghold of Japan


Advocating


economic war against the Japanese

REVISIONIST’S DEMANDS
Seeking

guaranteed market shares or measurable results for American products
Supercomputers
Semiconductors
plywood

Rethinking of Japan Reciprocity in highly protected sectors should be demanded such as:
Banking, construction and insurance
Japanese companies should exercise voluntary export restraints in areas that are currently hurting US industries.
Japan must undertake various measures to untangle their various invisible trade obstacles so that American firms can compete effectively in Japan


18

10/17/2013

Rethinking of Japan 2 Approaches of the Japanese


HARD Approach
They

stood up against the American pride


Mr.

Shintaro Ishihara – advocated strongly in his book “ The Japan that can say no.”
Argued

that American’s pride are too strong, arrogant and they ignore the high culture of Japan.

Rethinking of Japan




Kazuhisa Ogawa – another Japanese publication entitled “ Japan as the Enemy, A New Scenario for US Strategy”




The general theme of Ogawa’s book is that American anger at Japan has been increasing on a subliminal level and that Japan is now ranked as the US’s third enemy after the Soviet Union and China.

19

10/17/2013

Rethinking of Japan




Morita
Author

of well known book, which has been translated in English called, “Made in Japan”


Japan

is being blame for an America that has been fat and complacent.


They

tend to appeal on an increasing number of Japanese who are getting tired and impatient with complaints by Americans.

Rethinking of Japan


SOFT Approach
Japanese

companies are today spending heavily to shape the way Americans view them.




They are donating millions of dollars to US Education.
From

colleges to universities


Various


philanthropic activities

They donated over US$310 million to various organizations in America.

20

10/17/2013

Rethinking of Japan


They attempted to shape decision making in Washington through influence peddling. Example:
Japan’s

new clout in Washington (1989), when Toshiba Corp succeeded in defeating efforts to impose harsh sanctions on it because of it’s involvement in selling restricted technology to Soviet Union.

Rethinking of Japan


They want to reinforce notions that American problems are not caused by Japanese.




Japanese have demonstrated that their economic prowess does not exist in a vacuum.




Japanese made inroads in waging a new war to shape the minds and thinking of the average Americans, their policy makers and their institutions!

21

10/17/2013

Conclusion




Sun Tzu’s reflections on the Art of winning military conflict with the enemy, have been seen to shed light not only on the nature of the US-Japan Trade conflict but also the different ways in which business life is understood and conducted around the world.

22