Operationalization of Sun Tzu Art of War Strategies For Business

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2nd ANNUAL SUMMIT ON BUSINESS AND ENTREPRENEURIAL

STUDIES (2nd ASBES 2012) PROCEEDING
15th - 16th OCTOBER 2012. HILTON HOTEL, KUCHING, SARAWAK, MALAYSIA
ISBN: 978-967-5705-08-3. WEBSITE: www. internationalconference.com.my
OPERATIONALIZATION OF SUN TZU ART OF WAR STRATEGIES FOR BUSINESS

EXCELLENCE: A STUDY ON MALAYSIAN MANUFACTURING INDUSTRIES
Gowrie Vinayan & Hong Yong Hoe
Faculty of Management
Multimedia University, Cyberjaya, Malaysia
gowrie.vinayan@mmu.edu.my
yhhong@mmu.edu.my
ABSTRACT
In recent years there were many studies, both internationally and locally, suggesting that the adaptation
of Sun Tzu Art of War (STAW) is likely to improve an organizations competitive position. Hence, a
number of literatures available have attempted to outline the critical success factors or developing the
dimensions of STAW for business applications. However, most of the studies were based on theoretical
examinations and are not statistically substantiated. The objective of this study is therefore, to
operationalize Sun Tzu Art of War strategies, the ancient Chinese art of war which then, can be applied
to the modern business operations in Malaysian manufacturing organizations. The model was examined
using data collected from 300 manufacturing organizations comprising Multinational corporations and
Small Medium Enterprises in Malaysia. The proposed relationships were tested using the Statistical
Package for the Social Sciences (SPSS) and the Structural Equation Modelling technique. The statistical
results supported all the hypotheses. Four dimensions developed in this study, namely: Employee
Motivation, Market Knowledge, Strategic Planning and Effective Leadership are found to be adequately
representing Sun Tzu Art of War strategies in Malaysian Manufacturing Industries. For academicians,
this study contributes to the knowledge on Sun Tzu Art of War strategies by providing the empirical and
statistical evidence on the development of the dimensions that befits the manufacturing organisations in
Malaysia. This study will also be an impetus for industrial practitioners to understand the roles that Sun
Tzu Art of War strategies in organizations in order to attain business excellence. The operationalized
dimension of Sun Tzu Art of War strategies, which is not studied in many past researches will guide
Malaysian businesses as Malaysia works towards transcending the manufacturing era and move
towards the service era.
Field of Research:
Sun Tzu, business excellence, competitive advantage, manufacturing.
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1. INTRODUCTION
According to Sun Tzu, the main objective of a war is not to win a hundred victories in a hundred battles
but to subdue the enemy without fighting, and hence, the birth of war strategies. Strategy has received
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extensive attention from Sun Tzu Art of War (STAW) writers. While the acceptance of Sun Tzu Art of War
in China was well established as one of the oldest military strategy, their insights did not receive much
attention in terms of their relevance in modern business practice (Lo et al, 1998) Most of the written
literatures were covering the aspects marketing strategies, advertising strategies, take over and attack
strategies and product strategies. A substantial number of literature, researches and books have been
written and published concerning the Sun Tzu Art of War practices (Giles, 1910; Candela, 1998; Zhan,
2002; Somerville, 2003). Top on the list of literatures written on Sun Tzu Art of War are on marketing
strategies (Diener, 2003; Yuen, 2008; Ziegler, 2009), advertising strategies (Hawkins & Rajagopal, 2005),
take over and attack strategies (Griffith, 1963; MacDonald & Neupert, 2005) and product strategies
(Marber, Kooros, Wright & Wellen, 2002). Some literatures are concerned mainly with the use of
marketing effort in battling competitors (Kolar & Topirisic, 2007), planning and positioning (Lee, Robert,
Lau & Bhattacharyya., 1997; 1998), SWOT analysis and Balanced Score Card (Lee & Ko, 1998; Chih 2003),
and the promotion of a decision making environment (Ko & Lee, 2000).
Few literatures concern mainly with the use of marketing effort to battling competitors (Kolar &
Toporisic (2007), Planning and Positioning (Lee et al., 1997; 1998) SWOT analysis and balance score card
(Chih, 2003) promotion of decision making environment (Ko & Lee, 2000). Sun Tzu Art of War has also
been structured in various principles applicable to business people (McNeilly, 1996). This worlds oldest
military strategy, also helps in improving ones negotiating skills; develop self-discipline while identifying
obstacles that blocks opportunity (Wing, 1988). In Sun Tzus view, it is of great importance to be aware
of our internal belongings and the strength of the internal resources. An organizations resources
comprise both tangible and intangible assets, human and materials that are possessed or controlled by
the organization that allows it to devise and apply value-enhancing strategies (Barney, 1991; Wernerfelt,
1984). Prahalad and Hamel (1990) listed three tests to identify a core competence: (1) that it should
provide potential access to a wide variety of markets, (2) it should be relevant to the customers key
buying criteria; and (3) it should be difficult for competitors to imitate. It is this possession, and the
effective deployment of the keys resources that provides a unique collaboration of all the relevant
factors that enables the organization to excel. As such, in order to obtain the best performance of a war
mission, one ought to adhere to the principles of swiftness, adaptability and deceptiveness. In strategy
implementation, Sun Tzu said: War is such that the supreme consideration is speed. This is to take
advantage of what is beyond the reach of the enemy, to go by way of routes where he least expects you,
and to attack where he has made no preparations (Ames, 1993, p. 157).
Evidently, there is a visible limitation on literatures and a lack of empirical research addressing the
utilization of Sun Tzu Art of War management strategies in business perspectives. Prominent among the
few articles attempted to link between Sun Tzu Art of War and business strategies, is by Mc Neilly,
(1996) where he examines the original 13 chapters and condensed them into six concise principles
appropriate to modern business situations. Other writers includes: Wee et al (1991) on the process of
strategic management and (Ko & Lee, 2000) on the decision-making environment. These studies are
very much descriptive rather than empirical in nature, thereby leaving a gaping hole between simulating
a war strategy to business applications.
There is no widely accepted and empirically tested STAW model that can provide a common platform
for research studies and business applications. Most of the studies arbitrarily select few dimensions of
the Art of War and translate them to be used for business equations. Hence, the dimensions were not
operationalized with statistical substantiations. One of the contributions of this study is to develop the
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measurement dimension for Sun Tzu Art of War strategies that is applicable to manufacturing
organizations in Malaysia. Hence, there is need to have an adequate set of measurement dimensions for
Sun Tzu Art of War strategies that are applicable to the manufacturing organizations in Malaysia.
1.1 Objectives of the Study

Fundamentally the research questions identify and operationalize the constructs that represent Sun Tzu
Art of War strategies from the viewpoint of business applications and also to explore if Sun Tzu Art of
War strategies is linked to business strategies. Hence, this study is intended to fill the research gaps by
providing guidance on the application and selection of appropriate initiatives that can be developed and
used as the main business improvement initiatives for businesses.
1)
To empirically explore the various viewpoints on literatures on Sun Tzu Art of War; and
2)
To develop the appropriate measurable dimensions that represents Sun Tzu Art of War
strategies for business applications.
2. LITERATURE REVIEW
2.1 Sun Tzu Art of War - History
Sun Tzu Art of War consisting of about 6,200 words written in Chinese characters (Ames, 1993). The
strategies, principles and tactics are executed to wage a war, overcoming obstacles via carefully planned
strategies. Sun Tzus works were written originally in Chinese characters has created some problems in
capturing the full meanings and implications of his thoughts when translated into the English due to the
complexity of the Chinese language, writing and culture. (Low & Tan, 1995) As a result of which some of
the precise meanings may have been misinterpreted or unambiguously interpreted. Due to the scarcity
of the English version of the Art of War, this study has adopted the translated version from Ames (1993).
Sun Tzu, the most renowned and revered ancient general in the early Chinese history, is best
remembered for the worlds earliest military treatise, The Art of War. Sun Tzu Art of War was written by
him more than 2,500 years ago during the period of Chinese history known as the Age of the Warring
States (McNeilly, 1996). Sun Tzus Art of War is the oldest military book in Chinese history and the
principles of which has continue to valuable, in-fashion to many businesses in the world today. The
Chinese term for the Art of War is Bing Fa, which literally translates into Soldier doctrine. Much of
which was discussed all throughout this study, to a very large extent, concerns Sun Tzus key ideas and
philosophies. Sun Tzus work expounds details on the principles, strategies and the tactics that are
required to overcome psychological obstacles, environmental disharmony, personal disagreement and
organizational contention (Lo et al., 1998). Sun Tzu views the world as a complete holistic entity with
inter-linked interdependent systems within which, it must be contained. With this in mind, he
developed his doctrine by outlining the appropriate tactics and specific strategies that was used
successfully in the warring states in China.
Sun Tzus The Art of War consists of 13 chapters, ranging from Laying plans in first chapter to The use
of spies for the 13th chapter. Within chapters there is a series of numbered and almost independent
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statements. The 312 individual statements range in length from a short single sentence to several
sentences (Ames, 1993). Sun Tzu Art of War not only gives guidance on general strategies, but also
advices on the rightful behavior and conduct that a leader should demonstrate in their relations with
subordinates. (Lo et al., 1998). The principles and strategies of the Art of War by Sun Tzu were applied
in a management context by the authors, Lee et al, (1997); (1998); Lee and Ko, (2000). Lee and Ko,
(2000) modified the 13 chapters in Krause's Sun Tzu: The Art of War for Executives (Krause, 1996) to
become the Sun Tzu's Art of Business Management. Table 1 shows the major business management
strategies derived.
Table 1: Sun Tzus Art War for Business Management
Ch.
Business context
Explanation
Planning
planning of strategies, estimation and leadership
Competitive actions
resources and competitive actions
Competitive strategy
competitive strategy and wisdom
Positioning
positioning and targeting, strengths and weaknesses estimation
Opportunity and timing
opportunity, timing and management structure
Control
control of market situations and climate
Managing direct conflict
management of conflict and avoid confrontation
Flexibility
flexibility and adaptability
Maneuvering
observing
10
Types of competitive situations and

causes of failure
11
Competitive conditions and offensive

strategy
12
Destroying reputation
13
Gathering intelligence
alliance and vision
information.
Low & Yeo (1992), summarized the main precepts in the treatise (Table 2). According to them, a
combination of all the above precepts can be translated into one precept, which is the Maintenance of
a strategically advantageous position with innovation, will, speed, flexibility, accuracy and precision and
strong alliance against a competing force.
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Table 2 : Sun Tzus Art of Wars main precepts

Main Precepts
No
Chapter translation
Other translations
Calculations
Planning
Analyzing the conflict
Challenges
Waging war
Estimating the cost
Plan of attack
Strategy
Positioning
Depositions
Positioning yourself for triumph
Directing
Forces
Positioning your opponent for defeat
Illusion and reality
Opportunities
Using camouflage
Engaging the force
Maneuver
Maneuvering for advantage
The nine variations
Variations
Spontaneity in the field
Moving the force
Marshes
Confrontation in the field
10
Situational positioning
Terrain
Positioning during confrontation
11
The nine situations
Battleground
Mobilizing during confrontation
12
The fiery attack
Incendiarism
The decisive thrust
13
The use of intelligence
Espionage
The information advantage
Developing an error-free strategy
Source : Low and Yeo (1992)
2.2 Sun Tzu in business management application

Sun Tzus ultimate goal is to win the victory in the battlefield. Sun-Tzu said: Warfare is a great matter
to a nation; it is the ground of death and of life; it is the way of survival and of destruction, and must be
examined. Therefore, go through it by means of five factors; compare them by means of calculation, and
determine their statuses. According Sun Tzu, in the process of preparing for a war, one must consider
many tools such as the weapons, the armies, the terrain, the logistic supports and the preparedness of
the army. Between the world of business and the military applications and thinking, there is an
intriguing analogy to be drawn. Similarly in business world, one need to watch out many factors in
competition, such as the culture, the stakeholders, the resources, policies, etc (Wu et al., 2004). It has
been a known fact that Sun Tzus Art of War can be feasibly applied to business and management (Ko &
Lee, 2000, Wee et al, 1991; and McNeilly, 1996) and decision-making environment (Ko & Lee, 2000).
The brutal competition in the business arena today is of no difference between that of the battlefield.
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According to Wee, in war poor planning will lead to the loss people, equipment and the battle itself. It is
the same with business environment, where history shows that many businesses have slipped into
decline stage or demise which has resulted in the loss of capital and resources due to poor planning.
Lo et al, (1998) interpreted the military terminology within the context of the business environment.
They are:
battlefield can be interpreted as the marketplace.
general/commander translates to the manager or management.
military warfare is interpreted as the competition.
army/troops becomes the employees of the business.
enemy becomes the competitors
Mc Neillys, (1996) six concise principles that are drawn from Sun Tzus 13 chapters that he finds
appropriate to modern business situations are:
(1)
Win all without fighting learn to capture the market without destroying it.
(2)
Avoid strength, attack weakness strike where the competition least expects it.
(3)
Deception and Foreknowledge maximize the power of market intelligence.
(4)
Speed and preparation when a battle is unavoidable, move swiftly to overcome competition
(5)
Shape your opponent employ strategies to understand fully the strengths and weaknesses of
the competition.
(6)
Character-based leadership emphasizes the important of effective leadership under turbulent

times. Lead via actions, understanding the needs of the employees and motivate them with
sincerity.
The above outline by McNeilly, prescribed from the Sun Tzus Art of War clearly depicts the strategy that
adopted and practices by business organizations today. Wee et al, (1991) proposed a model call Sun
Tzus Art of War model, resembling a strategic management model, systematically examining the
equivalent business practices that corresponds with the war strategies. According to him, some
principles of Sun Tzu are found to be more relevant to marketing and management than others (Wee et
al., 1991). After making a comprehensive evaluation on the consensus between the principles of war
and the principles of business operations, Wee et al. (1991) suggests that five categories can be formed
from Sun Tzus principles of war. They are (1) Situation appraisal; (2) Formulation of goals and
strategies; (3) Evaluation of strategies; (4) Implementation of strategies; and (5) Strategic controls.
Utilizing the above 5 strategic platforms, Wee et al, (1991) proposed a framework to ascertain how Sun
Tzus philosophies are indeed applicable to todays business operations. Wees work, however, is a
conceptualize framework with no empirical validation that states the success of operationalization of
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their framework. The model merely juxtaposed the principles of wars consistency with that of business
scenarios.
Chih (2003) via their conceptual work titled Recreating Sun Tzus Art of War as a Strategy-oriented
Balanced Scorecard for Business attempted to develop a framework that incorporates Sun Tzus
strategy formulation with the measurement of balanced scorecard into one model. They build a
scorecard summarizing Sun Tzus thirteen chapters:
Table 3 : Sun Tzus Art War as a strategy oriented Balanced Scorecard for Business
Characteristics
Chapter
Rules of War
Lee and Kos interpretation of Sun Tzu
Competitive
Calculations
Planning planning of strategies
Advantage
Doing Battle
Resources and competitive actions
Perspective
Planning Attacks
Competitive strategy and wisdom
Weakness & Strength
Control control of market situation

& climate
Market
Orientation
Perspective
Future
Readiness
Perspective
Management of conflict and avoidance of

confrontation
Army Struggle
Army Maneuvers
12
Fire Attacks
Nine Changes
Flexibility and adaptability
11
Nine Grounds
Competitive conditions and offensive

strategy, alliance and vision
13
Using Spies
Formation
Observing & maneuvering

Destroying and decision
Intelligence and information

Positioning strengths & weakness
estimation
Internal
Process
Force
10
Ground Formation
Perspective
Opportunity, timing and management

structure
Competitive situations and causes of
failure
Source : (Chih, 2003)
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The ultimate objective of a business operation will always be survivability and sustainability. To achieve
this, the top management will have to consider all the factors from all perspectives. This requires
careful examination of all existing conditions before attaining the success. From the overall above
viewpoints and studies on Sun Tzu Art of War as the sources of business excellence and prime movers of
business strategies, in particular, this study developed an initial conceptual model.
3. CONCEPTUAL FRAMEWORK
To illustrate how Sun Tzus philosophy has been employed in the realm of business and corporate
management, the proposed conceptual framework juxtaposed both the factors from the Wee et al.
(1991) which are : Situation Appraisal, Formulation of Goals and Strategies, Evaluation of Strategies,
Implementation of Strategies and Strategic Controls and Mark Mc Neillys six principles, namely (1) Win
All Without Fighting (2) Avoid Strength, Attack Weakness (3) Deception and Foreknowledge (4) Speed
and Preparation (5) Shaping the Enemy (6) Character-Based Leadership:
Figure 1 : Sun Tzus Art of Business Management
Mc Neillys six principles
Wee et als five Sun Tzu components

Situation Appraisal
Win all without fighting

Avoid Strength, Attack
Weakness
Employee Motivation
Situation Appraisal
Evaluation of
Strategies
Deception & Foreknowledge

Speed & Preparation
Shaping the enemy
Character based
Leadership
Formulation of Goals
and Strategies
Strategic Planning
Implementation of
Strategies
Leadership
Strategic Controls
The four critical success factors that arise as a result of the analysis of both Sun Tzus 13 chapters and
McNeillys six factors are (1) Employee motivation, (2) Situation Appraisal (3) Stratategic Planning, and
(4) Leadership.
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3.1 Employee Motivation

Corporate mission and strategies in business organisation must be designed to create a sense of pride,
belonging and a purpose in the personal mission of the employees in order for them to work towards
the shared goal. Inevitably, business organisations need to motivate their ranks, either by giving the
employees material rewards such as a raise and/or a yearly bonus or rewards of recognition such as
promotions and/or delegated responsibility, in order to have a cohesive group striving towards a
common goal of the organisation. Mc Neilly has quoted two different reasons for motivating the
corporate employees. The first is the teamwork, ie. to have them united and working as a whole (group)
to achieve a common objective. Secondly, by using personal rewards as a motivating factor. Both of
which, according to Mc Neilly are targeted to motivate the employees to work diligently and
energetically for the organisation. Sun Tzu, when defining moral influence, he was referring to incidents
that would promote unity amongst the individual in order to attain the shared goals. According to him :
By moral influence I mean that which causes the people to be in harmony with their leaders, so they
will accompany them in life and unto death without fear or mortal peril. When one treats people with
benevolence, justice and righteousness and reposes confidence in them, the army will be united in mind
and will be happy to serve.
Moral influence, in this context is referred to common values or shared beliefs. In all challenges, there
will a moral element that arises from the will and the aspirations of the group without which, group may
not know what their objectives are. Hence, group must possess a common goal that unifies them.
Groups with a common motivating factor will have a have a clearer focus understanding of the scenario
that they are in and what lies ahead of them. These single common shared goals will the pursued
together and this will create solidarity within the group.
3.2 Situation Appraisal

According to Sun Tzu, one should consider the internal and external environment factors before waging
in war. The 5 criteria that are used to appraise the current situation are: the way (tao), the second is
climate, the third is terrain, the fourth is command, and the fifth is regulation (Ames, 1993, p. 103). The
factor weather is described in Sun Tzu Art of War as the interaction of natural forces, the effects of
winters cold and summers heat and the conduct of military operations according to the seasons. and
the terrain, iss defined as the , distances in the warzone, whether it is vast and open or constricted. So,
for Sun Tzu, having a clearer understanding of ones surroundings circumstances is foremost before
even thinking of a strategy. In military war, these fore knowledge is very crucial. Terrain refers to the
topography of war zone. This includes factors such as hills or mountains, trees, valleys, waterways and
fjords. Weather, on the other hand, refers to the natural occurences as climate and winds. Knowledge
of these factors would allow a leader to plan and organize his army accordingly. The strengths and
weaknesses are firms resources, be it tangible or intangible not only enables a firm to produce
efficiently and effectively but and also builds a competitive advantage (Hunt & Morgan 1995; Barney
1991; Wernerfelt (1984).
According to Porter (1985) a competitive strategy is about taking either the offensive or defensive action
in order to create a defendable position in an industry. This will allow business organizations to
successfully compete with rivalries and to generate a superior return on investment. Hence, an
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organization must have a complete knowledge and understanding of the information on the current
scenario or situation and the circumstances therein. Knowing only the strength and weaknesses of
oneself is not sufficient for business to operate in the competitive environment but also to be aware of
the terrain where the competition proper takes place. Mc Neilly (1996) defines the weather and
terrain together as the target market or demographic, the business environment, marketing and sales
reports and data, trend analysis the size of the market and how swiftly it is expanding. As Sun Tzu
states, to defeat the competition and achieve your goals you must have
foreknowledge.Foreknowledge is not projecting the future based on the past, it is not simple trend
analysis. Foreknowledge is firsthand insight and a deep understanding of what your competitor is
about: its strengths, its weaknesses, its plan, its people. This reiterates Sun Tzus point of knowing the
enemy. When corporate managers and strategists take into consideration the terrain, weather and
capabilities of themselves and their opponents, they will have to complete understanding of the
environment in which they are competing.
3.3 Strategic Planning

Strategy is a dynamic process that characterizes how the firm should act upon, implement, or adapts to
its environment. As a result, strategy can best be understood by tracking it over time; by looking at
behavior rather than condition (Miller & Friesen, 1982, p. 1020). Upon assessing the internal and
external factors, one would be able to determine whether to attack or defend. Should attack be made
the decision, a swift, flexible and a deceptive activities should be in carried out as said by Sun Tzu In
war prize the quick victory, not the protracted engagement(Ames, 1993, p. 109). From the viewpoint of
modern writers, Porter (1980) provides the strategy for firms to compete in the industry; via overall cost
leadership, differentiation and focus. One of the fundamental tenets of Sun Tzu's philosophy is to attack
the opponents weaknesses. Sun Tzu says An army may be likened to water, for just as flowing water
avoid the heights and hastens to the lowlands, so an army avoids strength and strikes weakness." To
strike their weakness, according to Mc Neilly (1996) one should do a very deep level of research and
analysis. He states that : If you hope to be successful, you must prepare. You must build a strategic
plan that looks at the streangths and weaknesses of your company and understands those of your
competitors, studies and trends in the marketplace, factors in new technologies and takes into account
what customers are looking forOnce you know these things, once you have the foreknowledge, you
can plan where to strike, decide how you will utilize deception and think through how you will deploy
your resources.
An indepth level of research and critical analysis leads to an effective plan of action without which,
organising and mobilizing the resources, can be an uphill task. The doctrine factor, articulated by Sun
Tzu refers to organization and control, assignment of the relevant ranks to officials, and the adequate
provisions of required items that are to be used by the army. Here, Sun Tzu is referring to the formation
and organization of a group. According to him, in order to have an effective utilization of their
resources, a group must ensure self-organization, according to their strengths and weaknesses whilst
observing and taking note of the current happenings in the given situation. The group will also have to
take into consideration the capabilities of their opponents as when organizing their ranks. The rank
organization, upon obtaining adequate information will result in a well thought of strategic plan and
action. If the weakness of the opponent is known, more troops can be employed to attack their
weakness. Sun Tzu states, With many calculations, one can win; with few one cannot.
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The process of attacking, according to Sun Tzu must be unseen and invisible to enemies. In business
environment, this is akin to keeping the organizations strategy confidential. By maintaining
confidentiality, the competing forces will be unprepared for all eventualities that may be waged against
them. It is highest guideline of market orientation perspective (Chih, 2003).
3.4 Leadership
According to Sun Tzu, The Tao is the way of humanity and justice, laws are regulations and institutions.
To excel in a war one ought to first cultivate their own humanity, principles, values and justice while
maintaining their laws and institutions all throughout the conflict. This will make their position and
faction much stronger because they are united and have a clear understanding and knowledge of
forthcoming situation and what are they challenging. The fifth factor in Chapter 1 that Sun Tzu refers to
is command. By Command, what Sun Tzu meant was the possession of qualities of a general, such as
wisdom, sincerity, humanity, courage and strictness. To have an effective result, it is imperative for a
general to acquire and possess these qualities in order to motivate his army and garner support from
them.
Mc Neilly (1996) states that the importance of the qualities that a leader must possess and why these
qualities are essential for a good leader. He states: In business there are many unknowns. Therefore,
wisdom is important, for it allows a leader to clearly divine the companys strength, weaknesses and
opportunities to building stragtegy. Courage is essential because, without it, a leader cannot take
advantage of wisdom with bold action when the time requires it. Sincerety and humanity are crucial
because, at the heart of it, leading a team, department, division or company means accomplishing
success through other human beings. Discipline is necessary for it is required to ensure that strategy is
executed successfully. All these traits are a manifestation of a strong, positive and well-developed
character. The absence of these characteristics, a leader will find it difficult to realize a strategy and
have the support of ones employees, all of whom are crucial to the succes of a plan of action.
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Figure 2 : Research Conceptual Model

Second Order Level
First Order Level
F1
F2
F3
F4
F5
E1
E2
E3
E4
E5
ST2
G1
G2
G3
G4
G5
E6
E
E7
E8
E9
E10
ST3
H1
H2
H3
H4
H5
E11
E12
E13
E14
E15
ST4
J1
J2
J3
J4
J5
E16
E17
E18
E19
E20
ST1
STAW
4. RESEARCH METHODOLOGY
A large sample cross-sectional email survey was carried out with manufacturing organizations. The
findings are based on the 300 completed email survey responses. A total of 960 survey questionnaires
were e-mailed to business organizations from the list published by FMM and SME Corp. The sampling
frame also included the MITI quality management award winners and finalists. The questionnaire emailing yielded 339 questionnaire returns, for an overall response rate of 35%. After removing the
outliers, 300 questionnaires were left, which represents a usable response rate of 31%.
4.1 Instrument Development

The main objective of this paper is to develop an instrument for measuring top managers perception
Sun Tzu Art of War management strategies in manufacturing organizations in Malaysia. For data
collection, this study uses Mono-method Quantitative, a choice which is increasingly advocated within
the business and management research (Curran and Blackburn, 2001). The measurements of the
construct STAW involve a total of twenty scaled question measuring five dimensions and were
measured with five-point interval scale questionnaire, in the study. Questionnaires works best with
standardized questions that will be interpreted the same way by all respondents (Robson, 2002). The
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measures uses Likert-Style Rating Scale with 1 = strongly disagree, 2 = disagree, 3 = neutral, 4 = agree
and 5 = strongly agree. The respondents were required to indicate their degree of agreement or
disagreement with the attitude statements developed for this study to measure the construct.
To ensure content validity, an adequate judgment can be made by a thorough review of literature; prior
discussion with others; or a panel assessment (Saunders et al., 2009). This research instrument was
further pretested with academic staff of Multimedia University and by practicing managers to get an
understandable and unambiguous language before the formal distribution of the survey instrument.
Pre-testing is done to ensure that the questions are indeed eliciting the required responses, while
uncovering ambiguous wordings or errors before the actual survey are carried out (Burns & Bush, 2002;
Zikmund et al., 2000). The preliminary twenty items survey questionnaire was presented to three
industry practitioners. All the respondents were requested to comment critically on the suitability, the
appropriateness and the ease of understanding of the each item. The respondents were requested to
identify any difficulties with wording, problems with double-barrelled questions, leading questions and
biasness (Zikmund et al., 2000). Subsequently, all the items for each research construct were pilot tested
before performing the final study.
4.2 Data Analysis and Assessment of Model

For this research, the inferential statistics used are correlations and structural equation modeling (SEM).
Correlation analysis was used to examine the existence of relationships between variables that are being
studied. The details are discussed below. Structural Equation Modeling (SEM) was considered to be the
most suitable statistical methods for this study compared to other multiple method such as regression
analysis or multivariate analysis of variance (MANOVA) (Ramanathan 1989), because SEM combines
aspects of multiple regressions (examining causal relationship) and factor analysis (representing the
unmeasured factors with multiple variables) to estimates a series of interrelated dependence
relationship simultaneously (Hair et al, 2006). The model estimation was performed using AMOS 18.0, a
software package that is user-friendly software which provides a graphical user interface that is easy to
understand. AMOS also allows data to be imported directly from SPSS.
Firstly, an Exploratory Factor Analysis (EFA) and Reliability test was carried out. The correlation matrix of
the variables was exercised via SPSS correlation property to test for multicolinearity. For this study,
Principle Component Analysis was selected because the main objective of conducting the factor analysis
is to determine how and to which extent the items are linked to their underlying factors (Zhang et al.,
2000; Byrne, 2010). Principle Component Analysis method will be able to help in identifying if the
selected items cluster on one or more than one factor According to Zhang et. al. (2000), this is
particularly important when there are more items selected to measure a construct.
The Principal Component Extraction method with Promax Oblique Rotation was employed. Oblique
rotation should be used when factors in the population are likely to be strongly correlated (Malhotra,
1996) and is suitable method when some correlations were expected among variables (Hair et al., 2010).
The factor loading of 0.5 was used as a lower cut-off value as per recommendation by Pallant, (2001);
Hair et al, (2006). The Kaiser-Meyer-Olkin (KMO) measure of sampling adequacy which features an index
between 0 and 1 of the proportion of variance among the variables that might be common variance (ie.,
that might be indicative of underlying or latent common factors) was employed. The appropriateness
359

of factor analysis, is determined by examining the the Kaiser-Meyer-Olkin (KMO) measure of sampling
adequacy The value of 0.60 or above is required for KMO to be considered as a good factor analysis
(Tabachnick & Fidell, 2001. The reliability was measured by Cronbach Alpha which should exceed a
threshold of 0.70, although a 0.60 level can be used in exploratory study (Hair et al, (2010)
Secondly the adequacy of factor models was tested using the Confirmatory Factor Analysis procedure.
AMOS provides are many fit indices to test for model fit. The most commonly used fit indices are, Chisquare/df ratio, goodness of fit index (GFI), adjusted goodness of fit index (AGFI), Tuker-Lewis Index
(TLI), comparative fit index (CFI) and root mean square error approximation (RMSEA) (Hair et al., 2010).
For chi-square/df ratio, a value less than 3 is preferred, for GFI, AGFI, TLI and CFI, the value must be at
least 0.9 and the RMSEA value must be less than 0.08 (Byrne, 2010).
Thirdly, the multi-factor measurement model adequacy was tested. Cross loadings and correlation
between the subscales were inspected. According to Hair et al. (2010), a correlation value of more than
0.85, indicates the presence multicollinearity between the two constructs. In such situation, one of the
two constructs must be dropped from the model.
5. RESULTS
5.1 Exploratory Factor Analysis
The measurement model, Sun Tzu Art of War strategies includes 20 observed variables that measures
four latent variables. They are (1) Employee Motivation, (2) Situation Appraisal, (3) Strategic Planning,
and (4) Leadership. Each item was measured on a Likert scale of 1 to 5, where 1 indicated strong
disagreement, while 5 indicated strong agreement to the statement. Table 4 provides the summary for
construct, Sun Tzu Art of War strategies. At this stage, three observed variables, F5, H3, and J4 were
deleted from analysis because of their poor loading on respective constructs.
Table 4 : Components of Sun Tzu Art of War Strategies
Observed Variables
F1 to F5
G1 to G5
H1 to H5
J1 to J5
Total
Exogenous Latent Variables

Employee Motivation
Situation Appraisal
Strategic Planning
Leadership
Original Observed
Variables
Removed
Variables
5
5
5
5
F5
Nil
H3
J4
Remaining
Observed
Variables
4
5
4
4
20
17
The remaining 17 items in Sun Tzu Art of War strategies were factor analyzed. The principal component
method was used in extraction and the factors were rotated using promax oblique method. The
extracted results showed that all items loaded on their hypothesized factor. As recommended by
Pallant (2001), factor loading of 0.5 was used as a lower cut-off value. In the factor analysis, four factors

360

with eigenvalues greater than 1.0, were extracted and the total variance explained was 61 percent in the
17 items.
Table 5 : KMO and Bartletts Test for STAW
KMO and Bartlett's Test
Kaiser-Meyer-Olkin Measure of Sampling Adequacy.
Bartlett's Test of Sphericity
.863
Approx. Chi-Square
2548.730
Df
136
Sig.
.000
The Kaiser-Meyer-Olkin (KMO) value was 0.863, indicating sufficient inter-correlations (Table 5). The
Bartletts Test of Sphericity was significant [2 (136)=2548.73, p<0.001]. The diagonals of the anti-image
correlation matrix were all over 0.6, supporting the inclusion of each item in the factor analysis and
therefore it is clear that factor analysis is suitable for this data set. In reliability analyses, the Cronbachs
alpha values are provided in the last column of Table 6. All the values are more than 0.7 indicating that
the measure was reliable.
Table 6: Results from Factor Analysis for Sun Tzu Art of War Strategies
Items
F3
F2
F1
F4
G4
G2
G3
G5
G1
H2
H1
H4
H5
J1
J2
J3
J5
Employee
Motivation
.846
.832
.710
.627
Situational
Appraisal
Strategic Planning
Leadership
Cronbachs
alpha
0.796
.824
.804
.781
.755
.690
0.829
.846
.795
.777
.770
0.841
.817
.751
.746
.713
0.830
361

5.2 Confirmatory Factor Analysis (Single Factor Model)

Upon completion of the EFA, Confirmatory Factor Analysis was administered. Confirmatory Factor
Analysis (CFA) CFA is particularly useful in the scales validation to measure specific construct as well as
establishing the validity of a single factor model with the closest fit to the data (DeCoster, 1998).
The adequacy of the model was evaluated based on its fulfilling the criteria of reliability, convergent
validity, and discriminant validity via the following:-
The factor loadings or path significance, is indicated by the standardized regression estimate
assesses the effect of one variable on another variable. The factor loadings of latent to
observed variables should be above 0.50 (Hair et al., 2006, Bryne (2010). This is also measure of
construct validity.
The AVE or average variance extracted" measures the amount of variance that is captured by
the construct in relation to the amount of variance due to measurement error. Fornell & Larcker
(1981) Hair et al. (2010) recommended the threshold value of R= 0.50 Should the average
variance extracted is less than 0.50, then the variance due to measurement error is higher than
the variance due to the construct itself. In this case, the convergent validity of the construct is
violated.
Composite Reliability. The commonly used threshold value for CR (Composite Reliability) is 0.70
(Hair et al., 2010) which means that all items consistently represent the same latent construct,
thus establishing construct reliability. The individual item reliability of the subscales is "squared
standardized factor loading.", The overall reliability of the whole scale is the "composite
reliability"
The Goodness of Fit

The chi-square statistic/degree of freedom as well as model fit indices such as comparative fit
index CFI, GFI, AGFI, TLI, CFI, RMSEA and were examined to evaluate the adequate fit of models.
5.2.1 ST1 - Employee Motivation

The initial model consisted of five observed variables (F1 F5). In EFA, one indicator variable, In CFA, the
single factor model was found to be acceptable. The minimum factor loading is 0.75, indicating
convergent validity. The chi-square/df is less than 3, all other fit indices are more than 0.90, the RMSEA
is less than 0.08, indicating data fit. The regression weights for the five items are presented in Table 7.
The extracted value from square multiple correlation and standardized regression estimates revealed
that all indicators of the construct Employee Motivation were reliable and valid and remained for
further analysis. The AVE is 0.63, which is more than the cut-off 0.50 and the Composite Reliability value
is 0.87, which is more than 0.70, indicating that the model was fit.

362

Table 7: Regression Weights for the Items in Employee Motivation Concept

Path
5.2.2
Estimate
S.E.
C.R.
Std. Estimate
F4
<---
ST1
1.096
.080
13.701
***
.827
F3
<---
ST1
.998
.078
12.857
***
.773
F2
<---
ST1
1.130
.082
13.738
***
.830
F1
<---
ST1
1.000
.745
ST2 - Situation appraisal
The initial model, before EFA consisted of five observed variables (G1 to G5). All the five variables were
retained as all of them met the acceptance value of 0.3 and above. In CFA, the single factor model was
found to be acceptable. The minimum factor loading is 0.743, providing convergent validity. The chisquare/df is less than 3, all other fit indices are more than 0.90 and the RMSEA is less than 0.08,
indicating data fit. The regression weights for the five items are presented in Table 8. All of the items
loaded well on the hypothesized factor, indicating a support for the convergent validity. The AVE is 0.67
which is more than 0.50 and the Composite Reliability value is 0.91, which is more than 0.70, indicating
that the model was fit.
Table 8: Regression Weights for the Items in Situation Appraisal Concept
Path
Estimate
S.E.
C.R.
Std. Estimate
G5
<---
ST2
1.102
.056
19.736
***
.901
G4
<---
ST2
.992
.060
16.582
***
.803
G3
<---
ST2
.937
.063
14.795
***
.743
G2
<---
ST2
1.000
.060
16.612
***
.804
G1
<---
ST2
1.000
.843

363

5.2.3
ST 3 Strategic Planning
For Strategic Planning construct, five indicators were utilized to measure the construct (H1 H5).
Indicator H3 was omitted from EFA due to not meeting the acceptance value of 0.3 and above. In CFA,
the single factor model was found to be acceptable. The minimum factor loading is 0.67, indicating the
presence of convergent validity. The chi-square/df is less than 3, all other fit indices are more than 0.90,
and the RMSEA is less than 0.08, indicating data fit. The regression weights for the five items are
presented in Table 9. The AVE and Composite Reliability values are 0.55 and 0.82, respectively, meeting
the desired level, lending support for convergent validity of the measure.
Table 9: Regression Weights for the Items in Strategic Planning Concept
Path
5.2.4
Estimate
S.E.
C.R.
Estimate
H5
<---
ST3
1.110
.105
10.615
***
.783
H4
<---
ST3
1.131
.108
10.442
***
.759
H2
<---
ST3
1.058
.106
10.009
***
.712
H1
<---
ST3
1.000
.665
ST4 Leadership
In CFA, after dropping item J4, the single factor model was found to be acceptable. The minimum factor
loading is 0.76, indicating the presence of convergent validity. The chi-square/df is less than 3, all other
fit indices are more than 0.90 and the RMSEA is less than 0.08, indicating model fit. All indicator
variables were statistically valid. The regression weights for the five items are presented in Table 10.
The AVE value is 0.72, which is more than the cut-off point of 0.50. The Composite Reliability value is
0.78, which is more than 0.70, lending support for convergent validity.
Table 10: Regression Weights for the Items in Leadership Concept
Path
Estimate
S.E.
C.R.
Estimate
J5
<---
ST4
1.093
.066
16.620
***
.900
J3
<---
ST4
1.177
.070
16.709
***
.905
J2
<---
ST4
1.010
.068
14.769
***
.811
J1
<---
ST4
1.000
.764
364

5.3
Testing of multi-factor model for SCA
In this section, the multi-factor model of STAW, comprising of Employee Motivation, Situational
Appraisal, Strategic Planning and Leadership, was tested. The purpose is to weed out the lack of
discriminant validity. The path diagram is shown in Figure 3 and the correlation values for the subscales
are presented in Table 11.
Figure 3 : Multi-Factor Model for Sun Tzu Art of War Strategies
.55
e19
F1
.74
.68
e18
.82
.61
e17
ST1
F2
.78
.83
F3
.69
e16
F4
.45
.71
e24
G1
.65
e23
.85
G2
.81
.56
ST2
.75
e22
.65
e21
.51
G3
.80
.90
G4
.80
e34
G5
.56
.35
.44
e28
H1
.66
.52
e27
.72
H2
.59
e26
H4
ST3
.77
.33
.76
.58
e25
H5
.28
.58
e33
J1
e32
J2
.66
.76
.81
.82
.90
e31
J3
.81
e30
J5
.90
ST4
Chi-square = 150.542
df=113 p-value=.011
Chi-square/df =1.332
GFI = .947 AGFI =.928
TLI=.985 CFI=.987
RMSEA=.033
AIC=230.542
365

Table 11: Fit Measure for Multi- Factor STAW Model

Fit measures
Recommended value
Results
Chi-square 2, P-value =0.00
150.542 P = 0.11
Degree of freedom (df)

CMIN/DF
113
Less than 3.0
1.332
GFI
>0.9
0.947
AGFI
>0.9
0.928
TLI
>0.9
0.985
CFI
>0.9
0.987
RMSEA
<0.08
0.033
AIC
230.542
The multi-factor model for STAW shown in Figure 4 is acceptable. The chi-square/df is less than 3, all
other fit indices are more than 0.90, the RMSEA is less than 0.08, indicating model fit. (Table 11).
Table 12 : Covariance and Correlation between Subscales of SCA

Covariance
S.E.
C.R.
Correlation
ST1
<-->
ST2
.750
.126
5.971
***
.447
ST1
<-->
ST3
.671
.114
5.908
***
.507
ST2
<-->
ST3
.813
.123
6.593
***
.562
ST3
<-->
ST4
.388
.101
3.851
***
.277
ST1
<-->
ST4
.574
.117
4.907
***
.353
ST2
<-->
ST4
.580
.121
4.777
***
.326
Based on the correlation coefficients between the subscales, presented in Table 12, the highest value is
0.56 which is less than 0.85. Thus, there is no serious problem of multicollinearity between the
subscales. The lowest correlation value is between ST3 and ST4 (r =0.28). This value is slightly lower than
the usually acceptable value of 0.3. However, ST3 and ST4 do correlate adequately with other subscales
in the model thus both the observed variables were not omitted. Based on the analyses, there is
sufficient convergent validity of the items in the subscales and there is sufficient discriminant validity
between the subscales. The overall model fit indices indicate a reasonable level of multi-factor model fit.
Thus, it reasonable to believe that a second order factor model exist for the subscales of STAW.
366

6. CONCLUSION
In summary, the objective of this research paper is to develop a set of measurable variables that will
represent Sun Tzu Art of War strategies for Malaysian manufacturing industries. The findings obtained
indicate that the theoretically formulated measurement criteria or dimension of STAW are significantly
and positively linked with the construct Sun Tzu Art of War strategies. It is also noteworthy that this
study is perhaps the first of its kind in Malaysia for the identification of dimensions of STAW in
manufacturing business organizations in Malaysia.
From the theoretical standpoint, this study offers a quantitative measurement scale that was developed
to measure Sun Tzu Art of War strategies. The proposed theoretical model provided in this study
presents a detail examination towards the multidimensionality of STAW, which is used as a measure the
bottom-line in manufacturing sector in Malaysia. As such, with this new concept, this research hopes to
attract the attention of other researchers in this area as it attempts to unearth the circumstances that
can contribute to the establishment of the measurement scale for sustainable competitive advantage in
Malaysian manufacturing companies. The result from this research offers an imperative procedures and
guidelines for the management practitioners to devise a measurement criterion for their organization.
For business managers, this framework suggests that an effective strategy that was formulated based on
equal weighing of all relevant factors should be lifeblood of a competitive strategy. Future research may
also be directed to understanding the more dynamic approach of examining the impact of competition
on Sun Tzu Art of management strategies. It is interesting to understanding how the competitive
environment, the scarce resources and the flexible strategies impact and influence each other over time.
In summary, the objective of this research paper which is to provide a measurement criterion for Sun
Tzu Art of War strategies for Malaysian manufacturing organization has been achieved.
7. RESEARCH LIMITATIONS AND FUTURE RESEARCH

This study used cross-sectional design which captured the perceptions of managers at a point in time.
Although a survey research is helpful in predicting relationships among variables, proving causal
relationships among the constructs, is an uphill task. The cross-sectional design does not permit
inferences about the true nature of the causal relationships among the dimensions of STAW. The crosssectional data also does not capture these evolutionary transformations that may influence the
hypothesized relationships. Hence, the dynamism of dimension would be best captured by a
longitudinal study. The higher cost and longer period of time of a longitudinal study were the reasons
why this study was done cross-sectionally. However, since the study provides a strong groundwork for
future research, it may be modified to be a longitudinal study.
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2nd ANNUAL SUMMIT ON BUSINESS AND ENTREPRENEURIAL