Sun Tzu Art of War
in Business : A Critical Analysis
Introduction
To Sun Tzu’s ‘Art of War’
Comparison
of Sun Tzu’s ‘Art of War’
with Western concept
Application
of Sun Tzu’s ‘Art of War’ in
business world
Conclusion
Executive
Summary
Bibliography
Introduction
To Sun Tzu’s ‘Art of War’ (top)
Sun Tzu was a military strategist who had gained
fame for winning much war victories in Chine dated around 400 B.C. Experience
from war battle had been written down by this great warlord and since then
became a classic strategy work in China. Its simple yet depth-meaning
philosophies in gaining competitive edge over one’s opponent had been much
studied and applied even in the Western world. Much of its original cop
had been translated to various type of language such as in Japanese, French,
Russian, Spanish and English. It consists of 13 short topics with number of
words less than 6000. Although it can be read within one day, it reflects a deep
insight and care of thought in battle. Its intrinsic value would take a person
many days to comprehend them. (Tse,2003)
The strategies employed in the warfare had been applied
not only in China itself but also to other parts of the world. It had been
stated that even the great French conqueror, Napoleon was influenced by the
masterpiece of The Art of War (Griffith, 1963). Great consideration on the use
of speed had been manipulated by the swift Genghis Khan in extending his
Mongolian empire. Deception in spy had been meticulously applied in World War II
battles. The concept of speed and deception are some major parts in SunTzu’s
military game plan. (McNeilly,1996:4)
Hence, The Art of War has basically changed the public
perception on competition. It is a much interesting process in the application
of its concept in the business world. Thus, this gives rise to the justification
of this research paper on Sun Tzu’s strategist mindset and its relevancy to
the emerging of business globalization.
Comparison
of Sun Tzu’s ‘Art of War’
with Western concept (top)
There are much similarities and differences between Sun
Tzu’s ‘Art of War’ and Western concept in terms of business.
Sun
Tzu stressed on ethical behavior in a competitive
situation. This differs greatly from Machiavellian which lack of sense of moral
judgment in achieving victories. In fact, ethical behaviour is the main pillar
of any successful competition in Art of War. (Gagliardi,2003). The fall of the
infamous Enron Company was the result of inadequate transparency and unethical
auditing.
Sun
Tzu discouraged direct conflict among competitors.
He justified it with the high cost of direct conflict. This differs from the
Western concept, which prefers to overcome competitors ‘head-on’. Reducing
prices to compete for market dominance could only bring lost to both parties.
Sun
Tzu encouraged unity
in any organization setting. There must be a shared philosophy and inspiration.
Thus dedication to company is much emphasized. In other words, Sun Tzu would
support the current concept of ‘collectivism’. In contrast, the Western
culture is much more geared towards individualism.
Art
of War is much an observational concept. There is
not much research done during the formulation of its concept. Sun Tzu devised
the system much on his sharp analytical skills. Western concept of strategic
management has much objectivity. Researches are done extensively to formulate
the updated trend of doing business. In short, Art of War relies much on wisdom
and intuition rather than scientific methods.
Leadership
is much emphasized in Art of War. This might justified the high power
distance in China. As it was written by a military general (high-ranked
officer), it is no doubt that most Chinese who studied it would submit greatly
to authority. This could explain the facts that most Chinese CEO would stay very
long in an organization. As compared to Western companies, the CEO turnover is
related to individual performance.
Despite
the differences, there are few similarities between both concepts. In
negotiation process, both advised on preparation process.
The negotiator must learn the needs and cultures of other prior to meeting.
Preparation is important to get a better deal out of the other party.
Creativity
is another similarity for both concepts. According to Art of War, one
must be differs from the others to achieve greatness. Edward de Bono has much
explored the theme behind creativity. Many new products and services had been
established due to Western creativity.
In
conclusion, differences of Art of War and Western concept can be evaluated from their
formulation, cultural disparity and objectivity. It is hope that their
distinction can be adopted and suited best according to different situations
Application
of Sun Tzu’s ‘Art of War’ in
business world (top)
Military strategies are comparable as in the business
realm. Both possess the same method to achieve different objectives that is to win
against competitors to achieve great battles
/ maximize profit. Sun Tzu concept emphasizes on effective competition with
greater utilization of limited resources in the ever-changing business world. (McNeilly,
1996:5).
Co-ordination
is another important factor that could bind the relevancy of military
strategy in business sectors. The
first Emperor of China and Napolean had been managing a hugh military forces in
securing land area for expansion purposes. All these process require good and
proper coordination system. Even without advancement in information technology
during those times, these great leaders had effectively managed their vast land
acquisition. Geographical distances posed no great issue in military management.
Such successful concept can be applied in today competitive world of
cross-cultural and borderless boundary. Hence, the study of Art of War is made
even more precious in present times. (McNeilly,1996:6)
With
the emerging economies of new mass market such as China and Korea, globalization
is inevitable. Competition is even fiercer and much
good strategy is needed. Demanding market forces would eventually leads to a
creative competition in which much innovative products being created. Thus, this
eventually brings to improved standard of living. (Porter in McNeilly,1996:6).
Translation of The Art of War to various languages has
leads to its useful application worldwide. Even research on its concept has been
done and explored. The argument given by famous marketing gurus bear the
testimony of the benefit of military strategy to business. (Kotler,1981:41)
To
paint a much vivid picture of its concept, movie was made out of it as well. The
popular director , Oliver Stone’s production of the ‘Wall
Street’ portrayed the corporate world of hostility merger and the
battle of intellect among investors. (Tse,2003). Obviously, the astute mind of
the young hero utilizing Sun Tzu’s wits finally emerged winners over his
villains in the movie.
For this research paper, the business strategies
adopted can be divided into 5 main categories namely negotiation, capturing
market dominance and gaining competitive advantages, manipulating market
information, improving sales by overcoming competitors and effective leadership.
Negotiation
(top)
According to Sun Tzu, to win
a battle without a fight is the most ideal state. Thus negotiation is essential
in order to avoid a ‘war’.
The conflicting parties would gain in both ways.
The merger of
Celcom and TM Touch occurred from successful negotiation. Both are main players
in telecommunications industry in Malaysia. By merging, they had now become the
leader dominating the local market share. They can please customers better as
there are more service counters available and provide more extensive network
coverage even into the remote area. With hugh market share in hand, they can
easily compete with Maxis and Digi in price competition.
"Therefore
I have heard of military operations that were clumsy but swift, but I have
never seen one that was skillful and lasted a long time. It is never
beneficial to a nation to have a military operation continue for a long time.
Hence what is essential in war is victory, not prolonged operations."
(R.D. Sawyer translation in Tse,1993)
The above is very accurate in the context of
negotiation. When one was engaging in a negotiation for too long, he/ she will
be getting too personally involved in the negotiation and making unwise
decision. Example is when a sales executive trying to promote a car to a
potential customer. It is better if the salesperson understanding the customer
needs such as cost, loan requirement and the purpose of getting a car rather
than explaining unnecessary details. This could save time
for both parties as well as make discussion in the correct frame of mind.
"When
the opponent attacked, withdraw before them, frustrating their desire to join
battle; when the opponent tried to withdraw, pressed them."
(R.D. Sawyer translation in Tse,1993)
The
Asians can easily manipulate the impatience
character of the Westerners. When they go into negotiation, the Asian irritates
them by keeping silent and make them wait. As a result, they become worn-out of
waiting (and even become impatient) Thus they would make a deal favorable to the
Asians as to end the negotiation process faster.
"Pretend
inferiority and encourage his arrogance." (R.D.
Sawyer translation in Tse,1993)
This is the preparation
technique commonly employed by Asians. Before a negotiation process take
place, the shrewd negotiator would speak highly on or entertain his/her
counterpart although it not related to the subject in hand. This is to create a
conducive negotiation environment to work with. Thus, this could foster a closer
relationship even before a negotiation took place. A local dealer would have
brought his main supplier from China to a spa for massage or pub for drinks just
to entertain him. Thus, the supplier would in return make a favorable deal to
the dealer. Here, the negotiation ends even without any proper formality.
Market
dominance and gaining advantages (top)
During
Sun Tzu era, war played an important part of his expansion plan. However, he
mentioned that to win a war without fighting would be better than ‘spending’
the lives of his armies. As the present business competition is getting fiercer,
a company should target a market segment in
details to avoid unnecessary expenses in
promoting the product. Defining specialized market segment would also help in
creating market dominance. One good example is Microsoft, which now enjoyed its
dominant share in the well-defined software market.
To
get a long-lasting market, Sun Tzu had this to offer,
‘Generally
in war the best policy is to take a state intact; to ruin it is inferior to
this’.(Griffith,1963).
An
event in 1993 involving Philip Morris Company could reveal the essence behind
this concept. Cutting prices to compete with other discount cigarette brands
brought nobody to gain any profit. This eventually lead to loses for everyone in
the tobacco industry resulted in the resignation of Philip Morris CEO. (Zinn in
McNeilly,1996:14 ).
To
battle for supremacy, Su Tzu had this to advise,
‘
Now an army may likened to water, for just as flowing water avoids the heights
and hastens to the lowlands, so an army avoids strength and strikes
weakness’. (Griffith,1963).
To
gain success, a company must utilize its strength
against rivalry weakness. The consequence of not following it could be traced to
the example of Kmart. In 1990s, Kmart tried to compete with price reduction with
its main rival, Wal-Mart that had better and efficient cost structure. Hence,
K-Mart share recorded a negative profit. (Duff in McNeilly,1996:25). K-Mart
‘stroke when the iron is hot’ but in this case, it hit the strongest point
(iron) of its competitors and failed. A blind, disastrous hit is worst than a
non-hit at all.
In
the media industry, television network such as CNN, MTV and ESPN do not compete
with each other. Each do not trespass their boundaries or ‘attacking’ each
other strength. CNN provides global news coverage, MTV captivates audiences with
music and ESPN offers latest reports to sport enthusiastic. Each concentrate on
own strengths and provide the best for their own-targeted segment.
Flexibility
is another way in gaining advantages in the market. This is what Sun Tu has shed
his insights,
‘As
water shapes its flow according to the ground, an army wins by relating to the
enemy it faces. And just a water retains no constants shape, in war there will
be no constant conditions. Thus, he who can modify his tactics according to
the enemy’s situation shall be victorious and may called the Divine
Commander’ (Khoo,
2000:40)
40
years ago, the Japanese industries had decided to pursue the production of cars
with both left and right hand drive. They were already ahead in planning for
overseas market in contrast to the American who are still indecisive to do so.
Thus, the Japanese had gained a competitive edge by accommodating production
changes to suit the Western market. (Khoo 2000:40)
Market
Information (top)
Market information here encompasses much knowledge about the business,
competitors, markets and the use of deception
to gain competitive edge. A database on the
strength and weakness of competitors is necessary in understanding their
strategic planning. The quote by Sun Tzu would paint a much vivid picture:
‘When
the trees are seen to move the enemy is advancing. Birds rising in flight is a
sign that enemy is lying in ambush, when wild animals are startled and flee he
is trying to take you unaware’(Griffith,1963).
September 1994 saw a miscalculated assault on IBM midrange
computer, AS / 400 by Hewlett-Packard. Underestimating IBM product advancement,
HP tried to replace IBM in the computer market. HP finally admitted failure of
their objective. (Kroon, L in McNeilly,1996:45).
Market information is an essential component in understanding
consumer behaviour. This is what Sun Tzu had to describe,
‘Knowing
the distances, one can make use of an indirect or a direct plan. If he knows
the degree of ease or difficulty of transversing the ground he can estimate
the advantages of using infantry or cavalry’. (Griffith,1963)
SKI Limited , a ski resort operators has been using market information
effectively. It can even formulate database based on the preference choices of slope and facilities among consumers. It
also uses technology to monitor the movement of customers. With 2.5 million
skiers in the database, direct mail can be sent to update on any recent upgraded
facilities to attract consumers. (Marcial in McNeilly,1996:49)
Deception had been many times
utilized in war times. Deception creates a false alarm, enticing the enemy to
focus wrongly. As Sun Tzu mentioned
'
For if he prepares to the front his rear will be weak and vice versa. If he
prepares to the left, his right will be vulnerable and vice versa. And when he
prepares everywhere he will be weak everywhere.’ (Griffith,1963)
The takeover of Smith-Corona
or SCM Corporation by Hanson PLC was a good example deception example.
Initially, Hanson PLC tried to acquire SCM by a formal tender offer. However,
SCM declined by offering a higher bid to stockholders. Hanson PLC pretended not
to compete in the biding but secretly buying SCM shares in the open market.
Finally, Hanson PLC managed in its conquest. (Charles H in McNeilly,1996:54)
Improving
sales and overcoming competitors (top)
In business, amount of
sales will determine the profit of a company. Sun Tzu utilized the concept of speed
to overcome his enemy. Similarly, this could also been applied in the world of
business.
‘Speed
is the essence of war. Take advantage of the enemy’s lack of preparation;
move by using unexpected routes and attack where he has made no defence’ (Khoo,
2004:57)
Upon
learning that Yamaha having 37% market share against Hondas’ 38% in the
two-wheelers industry, CEO Honda, Kawashima quickly shift the attention on cars
to motorcycle production. Honda managed to produce 81 new models compared to
Yamahas’ 34 during the 18 months duration. Hondas’ highly flexible
production system, multi-tasked trained employees and swift action from its CEO
enable Honda again dominated the industry with much confidence. (Khoo, 2000:57)
Reducing
order processing and receiving time would generate more sales.
Customer convenience to access order easily would create much sales
opportunities. Baxter Health Care Corporation, which was related to health care
products, minimized their processing time by 78% thus contributing to its upward
trend of sales. (Davis in McNeilly,1996:61).
A word of caution from the
Sun Tzu was
'
When torrential water tosses boulders, it is because of its momentum’ (Griffith,1963).
A company should not blindly
improve sales of a product, which do not gain the right momentum. It should starve
failure and highlight success. A misjudged investment would have cost
a company greatly. Crystal Pepsi, which was relaunched after its first failure,
had costs Pepsi losing other brand sales as well such a Diet Pepsi. Distributors
of Pepsi Company substituted more Diet Pepsi with Crystal Pepsi displays but to
no avail. Not only customers hated the non-tonic drinks of Crystal, the famous
Diet Pepsi also lost its market share in 1993. (Zinn in McNeilly,1996:69)
Sun Tzu gave a sound
strategy on overcoming competitors
‘
Sometimes drive a wedge between a sovereign and his ministers; on other
occasions separate his allies from him’ (Griffith,1963).
Honda tried to penetrate the
European market by using British Rover Group as an ally or rather a
‘bridge’. Honda managed to get 20% of Rover share. However, merger between
BMW and Rover in 1994 jeopardized Honda plan to breakthrough the lucrative
market. Moreover, BMW increased its market share in the region (Light,L in
McNeilly, 1996:109). Thus ‘allies’ chain of
the competitor was broken.
Sun Tzu called upon flexibility
and innovation to avoid losing war or
‘market share’. He mentioned,
‘
Therefore, when I have won a victory I do not repeat my tactics but respond to
circumstances in an infinite variety of way’ (Griffith,1963).
The company, which did not heed
this advice, paid a heavy consequence. It is known fact that Henry Ford was the
first inventor of car. The founder of the famous Ford Motor Company also
introduced the concept of mass car production, which led to a low production
cost. However, his stubbornness of using black color (as black paint dried
faster) finally opened up an opportunity to General Motors to capture market
share. GM collaborated with DuPoint Company to produce quick-drying different
colour paint. Ford had produced the most cars in 1914, but GM managed to sell
the most number of it. (Hawthorne in McNeilly,1996:115)
Occasionally, the worst
competitor could be within the company itself. Oracle had succeeded Microsoft in
the Window NT Database market share for third consecutive years in
1988. This was due to the incapability of Microsoft to produce good database
software. The matter was further complicated with its rigid internal policy to
incorporate internal application that use Microsoft database only. Innovation
process was restricted because presence of such rigidity control. Thus, ‘
The victorious army (Oracle)
marches upon the already self-defeated army (Microsoft)’.
(CMP Media,2004)
Leadership
(top)
Lead by example
is the way encouraged by Sun Tzu
' When one
treats people with benevolence, justice and righteousness, and reposes
confidence in them, the army will be united in mind and all will be happy to
serve their leaders’
(Griffith,1963)
The key words here are
‘united in mind’. The ways a leader did his/her work would be captivated
more in the minds of his/her subordinates as compared to speech alone. A truly
leader in his own industry would be Mr Tony Fernandez, the CEO of Air Asia in
Malaysia. The company provided low cost air travel in the South East Asia
region. He was so much determined to promote Air Asia that he appeared in local
music award presentation, gave media conference and secured airport-landing
rights. As a result, sales had increased and he became one of the top CEO in
Asia.
‘Now
when troops gain a favorable situation the coward is brave; if it be lost, the
brave become cowards’ (Griffith,1963)
The next key words are
‘favorable situation’. Leader must able to motivate
employees to work efficiently. Over criticizing would create an unpleasant
working condition. Controlling too much work environment would hinder the
process of creativity and innovation. Keeping tight close door and non-glass
wall within manager office surely lessen any communication among colleague. A
mundane workplace would surely hamper initiative to excel for the company.
Instead, an unhealthy ‘you-you me-me’ situation would be cultivated.
A leader must be good in choosing
the correct person to do a certain job (delegation). It is useless in
a company with inefficient workers although having an excellent leader.
‘A
skilled commander selects his men according to their talents and uses them to
exploit the situation’ (Khoo, 2000:60)
Jimmy Lai who founded the Chinese-language newspaper, Apple Daily in Hong
Kong recruited 10 pizza delivery boys as reporters. He believed that they could
arrive at the spot or source of interesting news earlier then others because
their previous work experience could be used to beat the heavy traffic jam. His
sharp minds enabled Apple Daily to become one of the popular reading papers in
HK. (Khoo, 2000:60)
Creativity
is another quality to be considered. Creativity would spark off new
product/service which craft a new market. Sun Tzu mentioned,
‘
To foresee a victory that others can also foresee is not great feat. There is
no greatness in winning battles and being proclaimed universally as an expert,
for to lift a rabbit’s hair required no great strength; to see the sun and
the moon is not sign of sharp sight; to hear the thunderclap is not sign of
sharp hearing’ (Khoo,2000:100)
FedEx, which handles freight
services, was born out of creativity process. (Khoo ,2000:100) E-Bay and
Amazon.com were created as a new online services. The photocopy machine was also
the end result of a creative mind. Even the colorful small sticker of 3M company
was a product of creativity. All these had generated new business and profits to
the companies involved.
A leader must be well
equipped with knowledge and stand firm with his correct judgment. He must
be initiative in solving problems. Sun Tzu
advised,
‘The
skillful commander imposes his will on the enemy by making the enemy come to
him instead of being brought to enemy’ (Khoo, 2000:102)
The former Prime Minister of
Malaysia Datuk Seri Dr Mahathir Mohamed had brought forward the idea of Vision
2020 to the society. He had successfully brought Malaysia into a well modern
developing nation. He stood firm in not borrowing money from the International
Monetary Fund during the 1997 economy crisis. Proper monetary policies were
implemented. His sound financial knowledge (although he was medically trained)
finally helped Malaysia to regain back its healthy economic development (Khoo,
2000:102)
Conclusion
(top)
Sun Tzu’s Art of War
has been much studied and written by Western authors. Its ancient wisdom has
been applied into today’s modern business world. This paper has been divided
into few segments for easier comprehension and application.
Comparison of Art of War and
Western concept revealed that there is many differences exist between both. Art
of War and Western concept can be evaluated from their
formulation, cultural disparity and objectivity.
Negotiating, capturing
market dominance and gaining competitive advantages, manipulating market
information, improving sales by overcoming competitors and effective leadership
are the 5 main strategy analyzed within the frame of Art of War.
In negotiation, Sun Tzu
would avoid war to have a win-win situation, manipulate
time and prepare extensively to get a
favorable deal. In capturing market dominance and gaining competitive
advantages, targeting market segment is important
to avoid competition. Thus, less expense is needed to overcome a competitor. Competitive
edge (strength) and flexibility are another
two aspects to be considered to improve market share. Regarding market
information, a company should efficiently utilize customer
database as well as manipulate ‘action’ or use deceptive
methods to confuse competitors. To overcome competitors, a company must be quick to accommodate
change (proactive), flexible and innovative. Breaking
‘allies’ chain of competitors is another valuable strategy. Effective
leadership involves leading by example, ability to
motivate workers, proper delegating, creativity, knowledgeable and adopt a
reactive approach (initiative) in solving problems.
Overall, Art of War covered
a very much scope of business strategy. In short, wisdom learned in ancient
battle can be of assistance to the modern market ‘war’.
Executive
Summary (top)
I have leant much from
this research paper on Art of War. As a Chinese, I was not exposed to it as I
had my English education background. This research had uncovered the sharpness
mind and ancient wisdom developed 2500 years ago. Its simplicity understanding
and extensive use of metaphor enable me to grasp much of its underlying
knowledge.
There are certain Art of War concepts, which could be applied into the
current Asia communities. Example is the use of ‘flow of water which is
shapeless’ as an analogy to change according to certain scenarios. China
adopts the ‘fatalistic submission’, which believes that lives had been
pre-destined similarly to their business performance. (Scarborough, J 1998).
Thus, China must be more proactive if it wants to compete against US companies
Creativity could be useful
in the Asia communities as well especially in China. The act of unethical
copying patented products is not a fair competition. This is very much against
the underlying wisdom of Art of War. China should come up with its own fresh
ideas and product, which would make the nation proud.
The research also unearthed
business opportunities that could arise from studying Art of War. Much books,
movie and websites are created just to promote the Art of War to the public. Any
good motivational speaker could get much money in conducting courses related to
it. Not only Art of War, the Japanese version also caught much attention. A
‘twisted’ version of military wisdom with effective examples to suit the
business environment really crafted a new niche of market. It is much a creative
process indeed!!
I also learn the differences
between Art of War and Western concept in business. Art of War is more
subjective and less scientific compared to Western concept. However, there is
similarity such as emphasis on making preparation prior to a negotiation
process.
However, there is weakness
in interpreting Art of War into strategic management. Generally, Art of War is a
concept of military wisdom and not especially devoted to business. Thus, the
so-called ‘wisdom’ cannot be applied directly into the business world.
Example, Sun Tzu stressed on the importance of speed in war. Here, Art of War do
not explain how to increased ‘speed’ in business. ‘ Speed’ in modern
business can refer to shortened production time, rapid organization
transformation, fast adaptation to new environment or swift delivery and
packaging process. So, the wits of Art of War must be interpreted according to
appropriate context in today’s competitive age.
In conclusion, researching
into Art of War has been a satisfying moment personally for myself. No only did
I learnt the hidden wisdom; I am also captivated by the beautiful expression of
metaphor crafted by the master of ancient military warfare. Reading books
written on it provide me much real-life business examples especially in terms of
strategic management. This would serve useful for me to quote the useful
examples in my future business-related assignments. In short, Art of War should
be embraced by anyone who wants to dwell into the mind of strategists from a
different perspective that is from the military context point of view.
(4470 words)
Bibliography
(top)
-
CMP
Media (2004) Why is Microsoft losing NT market share to Oracle?
(updated 2004) http://www.intelligententerprise.com/db_area/archives/1999/992206/celko.jhtml
(accessed 1 October 2004)
-
Gagliardi,
G (2003) The Competitive Ethics of Sun Tzu’s The Art of War
(updated 2003) http://www.frugalmarketing.com/dtb/competitive-ethics.shtml
(accessed 28 September 2004)
-
Griffith,
S. (1963) Sun Tzu: The Art of War. New York and Oxford : Oxford
University Press.
-
Khoo,
KH (2000) Sun Tu The Keeper of CEOs’ Conscience. Selangor :
Pelanduk Publication (M) Sdn Bhd.
-
Kotler,
P (1981) ‘Marketing Warfare In The 1980s’ Journal of Business
Strategy, Vol I (3), 30-41
-
McNeilly,
M. (1996) Sun Tzu And The Art of Business. New York : Oxford
University Press Inc.
-
Scarborough,J
(1998) ‘Comparing Chinese and Western Cultural Roots: Why East is East
and……,’ Business Horizons (Nov-Dec 1998): 15-24
-
Tse,
A. (2003) The Art of War and the Art of Negotiation as taught by Sun Tzu
(updated 2003) http://www.suntzu.interneg-org/interneg/training/materials/sun_tzu.html
(accessed 23 September 2004)