Business Policy and Strategic Management
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Business Policy and Strategic Management...
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10/17/2013
SUN TZU: WAR AND MANAGEMENT Chapter 9
The Art of Strategic Management and Thinking Chapter 9
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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?
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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
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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
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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
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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
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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. ”
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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
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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.
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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
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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
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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.
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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.
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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.
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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
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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.
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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
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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
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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.
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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.
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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!
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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.
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