Formulation of goals and choice of battlegrounds

Once the situation appraisal is completed and a decision is taken for war, the next step is getting for combat. Preparation for war involves formulation along two aspects.

Goals
Strategies ( including choice of battleground)

Formulation of goals
In war, the ultimate goal or objective must to be win. Nobody enters a war to lose territories! Similarly, nobody enters business to lose money. The final objective must be to make as much money as possible, with the ultimate goal of capturing the entire market! The paramount purpose in war, according to Sun Tzu, is victory. Thus, those who are skillful in the art of warfare:

subdue the enemys army without direct battle; capture the enemys cities without fierce assaults; and destroy the enemys nation without protracted operations. In other words:

your aim is to capture all states intact. Thus, your forces are not worn out and your victory can be complete. This is the crux of offensive strategy.

The aim in war is to win and to win profitably. The parallel in business is to achieve maximum gains with minimum effort. In order to win profitably, goals must:

Be prioritized. Be achievable. Represent some net positive gains.

Prioritizing goals
It is necessary to prioritize goals because the underlying principle of war is to win profitably. Hence, the general must decide what kind of war objectives are most desirable and beneficial to his state and his forces. The following goals for offensive strategy were stated by Sun Tzu in the following priorities: The highest form of generalship is to attack the enemys strategy. The next best policy is to disrupt his alliances. The next best is to attack his army. The worst policy of all is to besiege walled cities. Besiege cities only when there are no other alternatives.

Attacking the enemys strategy

Sun Tzu considered this as the highest form of generalship. Foremost in the mind of every general in war should be to attack the enemys strategy. This should be the main goal or objective of any military combat.

In business world, to attack the enemys strategy is like using preemptive measures to upset the competitors plan. For examples, preemptive strategies would include
1. Introducing a superior product into the market earlier than any other competitor.

2. Entering new segments of the market before any of the competitors

3. Choosing to enter foreign markets long before any other companies.

Disrupting the enemys alliances

The next best thing to do after attacking the enemys strategy is to disrupt his alliances. In business world, disrupting the alliances of the competitors may seem quite unthinkable, but alliances do exist. At the macro level, common markets, economic unions, and free trade areas are examples of alliances.

Attacking the army of the enemy

In war, going after the army of the enemy can take one of the following:

1. Capturing or assassinating key officers or personnel.

2. Upsetting the morale of the enemys troops.

3. Burning or cutting off supplies to the enemy. 4. Ambushing the enemy forces and/or conducting periodic raids.

In business world, it is a very common practice to attack the competitors directly by employing similar tactics as in war, such as the following:
1. Luring and attracting key personnel away from the competitors firm

2.

Spreading rumors about the poor performance of competitors firms so as to lower the morale of their employees.
Preventing the access of technology or technical knowledge to competitors. Attracting rank and file employees from competitors by using either higher salaries, fringe benefits, or both.

3. 4.

Besieging walled cities

According to Sun Tzu, this is the worst policy, and should be avoided unless there are no other alternatives. This is because in attacking walled cities, victory is likely to be long delayed and the ardor (passion/enthusiasm) and morale of the army will be depressed. The troops will be exhausted and the resource of the state may not be sufficient to support a protracted campaign.

In the same way, a company should avoid competing in the open for market share, especially if: 1. The product is no differentiated. 2. The market is not growing.

Achievable goals

Not only must war goals be prioritized, they must be also be achievable. Goals can only be achievable when the general has made a thorough and careful assessment of the battle situation and knows the chances of success and defeat.

Achievable goals in war also imply understanding the following

1. Who to engage (choosing the right enemy for attack) 2. How to accomplish them within a reasonable period of time.

Goals must result in net positive gains

In war, goals are set with the intention of gaining territories or some other tangible benefits. As war can have dire consequences, it must be assessed very carefully: War is a matter of vital importance to the state. It concerns the lives and deaths of the people, and affects the survival or demise of the state. It must be thoroughly studied.

Formulation of strategies: Choice of battleground

There are few principles governing the formulation of strategies. These include: The principle of choice of battleground The principle of concentration of forces The principle of attack The principles of Zheng (direct) and qi (indirect) forces

Choice of battleground
The choice of a battleground is a variable and controllable factor. While terrain is fixed and not alterable, a general can decide on the type of battleground on which to engage the enemy. However, once a certain type of battleground is decided upon, he will still have to contend with the characteristics conferred by the terrain. Similarly, in business, a company can choose the areas in which it would like to compete.

There are three factors that relate to the principle of choice of battleground.

Areas that have distinctive advantages.

Areas ignored by the enemy. Characteristics of the battleground.

Areas that have distinctive advantages

In war, it is very important to fight in areas where you enjoy a relative superiority over the enemy. There are two ways to explain this: By being the first to occupy key grounds. By choosing a battleground that is more advantageous to oneself than to the enemy.

There are few principles governing the formulation of strategies. These include:

The principle of choice of battle ground

The principle of concentration forces

The principle of attack The principle of zheng (direct) and qi (indirect) forces

CHOICE OF BATTLEGROUND
As mentioned in chapter2 in the discussion of terrain, the choice of a battle ground is a variable and controllable factor. While terrain is fixed and not alterable, a general can decide on the type of battleground on which to engage the enemy. However, once a certain type of battleground is decided upon, he will still have to contend with the characteristics conferred by the terrain.

In business, a company can choose areas in which it would like to compete.

Three factors that can relate to the principle of choice of battleground: Areas that have distinct advantages Areas ignored by the enemy Characteristics of the battleground

AREAS THAT HAVE DISTINCT ADVANTAGES

Areas that have distinct advantages:

By being the first to occupy key grounds

By choosing a battleground that is more advantageous to oneself than to the enemy

By being the first to occupy key grounds

Being the first to occupy the key ground allows one to obtain the advantages accorded by the terrain. It also permits one to consolidate ones resources before the arrival of the enemy, and hence be better prepared for battle than the enemy.

By being the first to occupy key grounds

There are distinct advantages to being an early entrant into market. Many Japanese successes in the various markets of the world, especially in Asia, can be attributed to their being early entrants in these markets.

A battleground more advantageous to oneself is one which the terrain fits the nature of ones resources more than those of the enemy. Such a ground amplifies ones strengths while it also shields ones weaknesses. Hence, by bringing the enemy to such ground for battle, one obtains a stronger assurance of victory.

By choosing a battleground that is more advantageous to oneself than to the enemy

By choosing a battleground that is more advantageous to oneself than to the enemy

In business, it is therefore very important to compete in area where one has distinct advantages.

Strategy for foreign market entry: Stage I Exporting Lowest

Stage II

Licensing
CONTROL Joint-ventures &

RISKS Stage III

Stage IV

Wholly-Owned
Subsidiaries

Highest

The use of baits to lure the enemy to where you want to fight is therefore a very important way to ensure that you contend in an area where you can have distinct advantages. At the same time, it is important to inflict damages on the enemy when necessary so as to prevent him from occupying places that are important to you.

AREAS IGNORED BY THE ENEMY

Choosing areas ignored by the enemy, does not necessarily mean that you have strengths in those areas that you have chosen to fight in. You may not have any strengths at all and may even have to build them up.

 to be certain to succeed in what you attack a place where the enemy does not defend or where its defence is weak. To be certain of holding what you defend is to defend a place the enemy does not attack or where the defence is invulnerable to attacks. the strength of an army does not depend on large forces.

In the business world, we can find many examples of avoidance strategy choosing areas ignored by the enemy as well as niching strategy not relying on large forces. The Japanese successes in the various products in the world markets today are perhaps the best manifestation of choosing areas ignored by the enemies.

The irony about the present state of the world economic balance power between the Japanese and the West is that when they chose the areas in which to compete, the Japanese had no strengths in any of those areas! Everything, including technology and materials had to be imported from the Western world. The Japanese had only one thing to their favor the areas they chose to concentrate on where areas ignored by their enemies, and for reasons best known to their competitors, were continuously ignored until it was too late.

OF BATTLEGROUND

CHARACTERISTICS

The third factor that relates to the principle of choice of battleground involves a clear understanding of the characteristics of the battleground itself. For example, the movement of troops and supplies, the types of weapons to be used and the nature of offensive and defensive strategies.

13 Battlegrounds:
I. Dispersive Ground VIII. Indifferent Ground II. Accessible Ground IX. Treacherous Ground III. Frontier Ground X. Desolate Ground IV. Entrapping Ground XI. Distant Ground V. Constricted Ground XII. Serious ground VI. Key Ground XIII. Death Ground VII. Focal Ground

DISPERSIVE GROUND
This is a battle situation in which the army is fighting in its own territory. As such, it is not only dispersive, but also divisive, disruptive and dissentious. According to Sun Tzu, In dispersive ground, do not fight.

In business, the lesson to be learned from Sun Tzus exposition the dispersive ground is that firm should not compete in the same market with too many of its own products and brands. Unfortunately, such a competitive situation is quite typical of many consumer products like detergents, soaps and soft drinks where there are many brands of the same product competing for the same market.

a firm should try to minimize the number of brands in each market segment in which it is competing. If a new brand is to be introduced, it should be carefully targeted and focused on a new and/or different segment so as to avoid cannibalization with the existing brand(s).

However, if a company had to compete in the same with several of its own brands, then there is a need to ensure that there is unity of purpose among the various personnel involved.

ACCESSIBLE GROUND
It is a ground that is open, highly communicative and equally accessible to the enemy and yourself. There is liberty of movement and the enemy can traverse the ground as your forces.

Sun Tzus Strategies: Do not allow your formations to become separated. Pay strict attention to the defence. Be the first to occupy the higher and sunny positions that are convenient to your supply routes so as to gain advantage in battle.

in the business world, there are also accessible grounds. In fact, this is typical situations where the market entry and exit easy. In many small businesses such as the retail food industry, t is very easy to get into the market as the barriers in terms of capital and technology are both low. At the same time, because of the highly competitive nature of the industry, market exit is also common.

for such an industry, there is a little product differentiation and consumers can easily substitute one supplier with another. Under such circumstances, it becomes very important to pay attention to good location and the distribution system (the need to occupy sunny positions to gain advantage in battles).

to survive in such a competitive environment, costs of production must be brought down as low as possible and this can only be achieved when all parties within the company work in unison. Thus, ones formations will not become separated.

FRONTIER GROUND
When the army has made only a very swallow penetration into the enemys territory, the ground is considered frontier ground. In war, this is similar to capturing a beach-head, which is an area in hostile territory that is occupied with the intention of securing further landings of troops and supplies. This initial gain of a foothold is crucial for any further penetration into enemy territory.

Sun Tzu recommended that :

do not stop in frontier ground. Keep the forces closely linked.

In business, one can also make shallow penetration into the enemys territory when: a. introducing a new product into an existing market; b. introducing an existing product into a new market segment of an existing market; c. introducing an existing product into a new market, like in the case of entering a foreign market through exports or d. introducing a new product into new market.

Application in Business the business must not be content with just gaining an initial foothold. In other words, it is important not to stop at a small market share after gaining access into a competitors market or a new market. At this stage of market penetration, it is also very important to keep your forces closely linked or in close contact with one another.

ENTRAPPING GROUND
Is a ground which it is easy to get in, but difficult to get out. it is a type of ground that resembles a quicksand situation or one which is filled with boobytraps. Therefore, it is both enticing and intricate in nature.

In business, there are many situations that can be entrapping in nature. Examples: Business with low technology but high capital investment, like exploration, mining and construction. Business with low capital but high operating costs. At a macro level, a certain government welfare-related projects.

Constricted Ground Is one in which the access route is narrow and the retreat route is tortuous. It is the type of ground that is difficult to get into and at the same time difficult to get out of. Its hemmed-in nature allows a smaller force to strike with ease at a much larger force through various ambushes.

The strategies to be used in such a ground include the following:

1st (Devise strategems.)

-Be the first force to occupy the strategic points and await the enemy. Do not attack if the constricted positions are occupied by the enemy. Attack only if the enemys defense at the occupied points are weak.
*Devise-to put together *Stratagem-plan

-Constricted grounds us of and 2nd (Block the points remind of entrance business situations where the exit) competitive advantage is very narrow. This can happen in the case of a product under an expiring patent or where the technological advantage over the competitors is not great.

e.g.
The pharmaceutical business, to some extent, is quite constricted in that it is very difficult to get in and do well in a big way unless one invests substantially in R&D(research and

Entry Exit

Easy

Difficult

Easy

ACCESSIBLE GROUND
ENTRAPPING GROUND

FRONTIER GROUND CONSTRICTED GROUND

Difficult

Key ground

Is one which is equally advantageous to the enemy and yourself It is also described by Sun Tzu as precipitous.
*Precipitous=to force (into hasty action)

Sun Tzu

In precipitous ground, I must be the first to occupy the sunny heights and wait for the arrival of the enemy. If the enemy is the first to occupy such ground, do not follow him, but retreat and try to entice him.
*Entice=to attract by offering some pleasure or reward

Focal ground

Focal ground is mentioned by Sun Tzu in chapters VIII and XI where the same Chinese characters are used. When a state is surrounded by tree other states, its ground is considered focal.

In focal ground, the enemy will hesitate to capture it without abundant rear support. Also, unlike a key ground(in which there are advantages to both the enemy and yourself), a focal grounds advantage for one party will become the disadvantage of the other party.

Sun tzus strategies for the enclosed state center on the use of diplomacy by befriending neighboring state And Strengthening ties with he allies

A good example of how such good relationships were manifested in the case of a business situation was turn-around story of Chrysler. Among other reasons, Lee Iaccoca manages to turn the company around because of his ability to build strong allies with the government, the financial community, the labor union, the suppliers and other parties. The strong support received from Chryslers allies prevented it from going bankrupt or being squeezed out by the much larger General motors and Ford.

Indifferent ground
Is a situation that is disadvantageous to both the enemy and yourself. In such a battle situation, Sun Tzus advice was that one should resist being drawn out by any bait. Instead, it is important to feign a retreat, and when the enemys defense is down, it becomes advantageous to strike.

1) When China first opened up, many companies were hesitant to go in as they were very uncertain about the Chinese policy. There appeared no tremendous advantages to be the first. Instead, many companies sidelined themselves and preferred to gain from the experience of the early entrants.

2) In the areas of R&D some companies prefer to let others take the lead and create the learning experience for them. In fact, in the early stages of Japans industrial development, they allowed American and European firms to take the lead in basic R&D while they concentrated on applied R&D and production technology. The Japanese at that time did not have the necessary skills to do the basic R&D, and there were no advantages to being the . Rather a more viabke strategy was to ride on the inventions of the pioneers.

Treacherous ground

According to Sun Tzu, when the army is traveling in mountain forests, dangerous passes, marshy swamps, or other difficult terrain, it is in treacherous ground.

Move swiftly
Do not encamp

Press on over the roads

It is important not to stay long in matured markets(do not encamp). Rather the marketer should actively look for new and better opportunities so as not to fall into a decaying maturing stage( move swiftly and press on over the road). This can be accomplished by market modification and/ or product modification.

Desolate ground
In business as in war can find desolate ground. These are declining markets, where sales declining due to technological advantages that bring about new and better products, consumer shifts in tastes, increased domestic and foreign competition.

Do not stay on desolate ground.

Distant ground
In distant ground, both sides are away from home base and are equally matched in forces. In such a situation, Sun Tzu advocates that it is to the best interest of both sides to avoid direct battles which would confer little advantage to either side.

e.g. In automobiles Japan used Datsun(now known as Nissan) to enter the ASEAN market. In the United states, Toyota was the first entrant. In motorcycle, it was Yamaha that penetrated the ASEAN market. After the successful launching and penetration of Honda into the American market, Yamaha and other Japanese brands like Kawasaki followed suit. Similar patterns were observed in the ASEAN market. Indeed, the Japanese foreign market entry strategy of non-direct confrontation was observed in many product categories.

Serious ground

Is one in which the army has penetrated deep into enemy territory and has left behind them many of the enemys fortified cities and towns.
In the case of serious ground, the army is now deep into enemy territory

The Japanese companies, for example, have for many years resisted moving their production plants overseas. It was only when their local costs of production and the Japanese yen went up substantially that they took such a step. Even so, one often finds reports of friction between the Japanese owners and their local counterparts.

Death ground

This is the situation in which the army can only survive if it fights with the courage of desperation, where the only way to suvive is to fight

In business, a company can also face death ground. Perhaps 2 internationally well known examples would illustrate this point.

Chrysler corporation of the United States was at the verge of bunkruptcy between 1978 and 1982. The company lost more the US$3.5 billion which was the biggest financial loss of any company in the history of the United States at the time. Despite the bailout by congress in December 1979 under the Chrysler Corporation Loan Guarantee Act, the company almost collapsed, it was literally in death ground

The turnaround came when Lee Iacocca took over the company. Among many other measures, he made it abundantly clear to his employees that the only way to survive was to fight. He was able to convince the otherwise militant United Auto Workers Union to take a pay cut that left the members earning about US$2 less per hour than their counterparts at General Motors and Ford. The total of their relinquished amounted to US$1 billion. His efforts resulted in a drastic change in the behavior and loyalty of the workers towards management, an occurrence that is very unusual in Americas heavily unionized industries.

At Chrysler we have one and only one ambition. To be the best. What else is there?

Another spectacular turnaround event in the automobile industry is that the Jaguar cars from Britain. Again, it was a company at the brink of collapse that was turned into a multi-million dollar success story. How did Jaguar cars Ltd. Do it? In essence, the ultimatumto the workers was short, clear and blunt: break-even in 6 months or fold up. The no-holds-barred message was passed down to every worker. And the bitter prescription worked. In 6years, the dying British car manufacturers did a complete turnaround from losses of US$62 million a year, the company began to make profits of US$207 million.

At stage two, the company focused on heart and minds campaigns. To survive in adversity, there had to e comradeship in spirit and purpose