Now in warfare, evaluations must be made as follows: First, estimating the degree of difficulty; second, assessing the scope of operation; third, calculation of own forces; fourth, comparison of forces; and fifth, establishing the chances of victory. Based on the characteristics of the terrain, the degree of difficulty is estimated. Based on the degree of difficulty, the scope of operation is assessed. Based on the scope of operation, the calculation of own forces is made. Based on the calculation of own forces, comparisons are evaluated against those of the enemy. Based on the evaluations, the chances of victory can then be established. – Chapter Four, Sun Tzu Art of War
According to Sun Zi, there are five stages you need to look into to evaluate your chances of victory, and they are firstly estimating the degree of difficulty; secondly, assessing the scope of operation; thirdly, calculation of own forces; fourthly, comparison of forces; and fifth, establishing the chances of victory.
Let’s have a look at how to apply these five stages to business strategy evaluation.
Degree of Difficulty
The first stage is degree of difficulty, as elaborated by Sun Tzu, you have to look at the terrain to decide. Terrain in warfare would refer to the culture of targeted consumer market, political and economic forces, laws enacted for economy and industry. In summary, it means the characteristic of the targeted market. And from this you can move to the next stage of evaluation which is assessing the scope of operation.
Scope of Operation
Scope of operation in business would mean, if you are in retail, how many stores, which location, supply and transport network and so on. If you are into manufacturing it would be number of factories, where the factories should be, distribution network and so on. And from all these factors, you can then look at the third area and that is calculation of own forces.
Calculation of Own Forces
Calculation of own forces would be all about human resource. Do you have the right person for each job? Do you have suitable people to carry out your marketing campaign, establish your supply chain and logistic network? Do you have the ‘right’ frontline staff? It is an assessment of the number and quality of your human resource that determine if you are able to handle the scope of operation and in turn serving the targeted market.
Comparison of Forces
Next is the fourth area which is the comparison of one’s troops to the enemy’s. This fourth area would be assessed if you are entering into a market that has at least one established rival operating in it. Often, it is when you are going into an overseas market. This then you have to make a comparison of whose staff is competent, which are their areas of strength and weakness and what is yours as well. Does your strength allow you to capture a good portion of the overseas market to make your business viable?
After all this is done, only then can you determine and calculate your odds of victory. Once you have calculated your odds of victory, you can then decide whether to execute your strategy or not.