Wednesday, October 31, 2012

Applying War Strategies to Business Situations

In this week’s class, we talked about the history of strategy and its application in war by Sun Tzu, Vegetius, and other leaders. Today’s concept of the term “strategy” is derived from Sun Tzu’s thesis – “The Art of War” written in 500 BC. So can those strategies, made centuries ago, still be applicable in today’s world? Can war strategies be somehow translated into business situations?

As stated by Bogdan Cernat-Gruici, strategy is the combination of “planning the route” and “walking the path”. It is a link between an objective’s end and the exact means to achieve that goal. He also states that not only is making the right decision important, but it is also equally important to make those decisions in the correct logical order. Looking at the example of Napolean Bonaparte, he adopted four main strategies:
  1. Increased the speed with which the army traveled – this helped him deploy his troops faster than his enemies could, and so his enemies got overwhelmed as they could not get enough time to organize to mount a successful defense. Similarly, companies need to operate in a way that gives them a competitive advantage over other organizations. In order to be successful in a market, they need to launch products faster and at the appropriate time, penetrate international markets faster, and also react to environmental and regulatory factors quicker than the other contenders to gain a competitive edge.
  2. Organized his army into platoons that are self-sufficient – Napoleon’s platoons contained people that could see the bigger picture and perform multi-functional tasks. As globalization increases, the speed with which a company develops also increases. As more tasks and activities are performed outside the national borders, more multi-tasking, multi-functional units are required.
  3. Used supplies from conquered territories only instead of bringing them along. This aided to the fast movement of his army. The down side of this was soldiers stealing from the local people; however, this strategy was necessary in the short run. Organizations today, are leaning more towards the “Just in Time” method to reduce the costs of inventory instead of maintaining optimum supply quantities. The disadvantage here is that they are dependent on their suppliers.
  4. Attacked enemy supply lines – this eliminates the need for direct confrontation. In the business world, this is done by the use of exclusivity contracts. For example, if Pepsi has an exclusivity contract with Pizza Hut, Coca Cola is automatically eliminated as a contender for that segment. 

In conclusion, the opportunities for applying war strategies in business situations are limitless. A good war strategy begins with proper consideration of tactics whereas a good company’s strategy begins proper consideration of the market conditions.

Reference: “The Way to Victory-Using Military Strategies in Business Situations” - Bogdan Cernat-Gruici, The Romanian Economic Journal, Year XI, no. 29 (99-115)

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