Now, in war, evaluations must be carried out in the following way: first, estimate the degree of difficulty; second, evaluate the scope of the operation; third, calculation of own forces; fourth, comparison of forces; and fifth, establish the chances of victory. Depending on the characteristics of the terrain, the degree of difficulty is estimated. Depending on the degree of difficulty, the scope of the operation is evaluated. Depending on the scope of the operation, the own forces are calculated. Based on the calculation of one’s own forces, comparisons with those of the enemy are evaluated. Based on the evaluations, the chances of victory can be established. – Chapter Four, Sun Tzu The Art of War
According to Sun Zi, there are five stages that you should consider to assess your chances of victory and, first, to estimate the degree of difficulty; second, evaluate the scope of the operation; third, calculation of own forces; fourth, comparison of forces; and fifth, establish the chances of victory.
Let’s take a look at how to apply these five stages to evaluating business strategy.
Degree of difficulty
The first stage is of degree of difficulty, as elaborated by Sun Tzu, you have to look at the terrain to decide. The terrain in the war would refer to the target consumer market culture, political and economic forces, laws enacted for the economy and industry. In short, it means the characteristic of the target market. And from this, you can proceed to the next stage of evaluation, which is to evaluate the scope of the operation.
Scope of operation
The scope of operation in the business would mean, if it is in retail, how many stores, what location, supply and transport network, etc. If you like manufacturing, it would be the number of factories, where the factories should be, the distribution network, etc. And from all these factors, you can look at the third area and it is the calculation of the forces themselves.
Calculation of own forces
The calculation of own forces would have to do with human resources. Do you have the right person for every job? Do you have the right people to run your marketing campaign, establish your supply chain and logistics network? Do you have the “right” front-line staff? It is an assessment of the number and quality of your human resource that determines whether you can handle the scope of the operation and, in turn, serve the target market.
Comparison of forces
Next is the fourth area, which is the comparison of one’s troops with those of the enemy. This fourth area would be evaluated if you are entering a market that has at least one established rival operating in it. This is often when you enter a foreign market. This then has to make a comparison of who are the competent staff, what are their areas of strength and weakness, and what is yours as well. Does your strength allow you to capture a good part of the foreign market to make your business viable?
With all this done, only then will you be able to determine and calculate your chances of victory. Once you have calculated your chances of winning, you can decide whether to execute your strategy or not.