Interesting discussion as this scenario has evolved into a 'no solution' under today's model. There have been bullies since the beginning of time, but only in the last 20 years or so that we've begun to view our ways in dealing with them differently. A bully is usually (99.9% of the time) someone who's never had an aqq beating.
I dealt with multiple bullies growing up in a neighborhood with 15 boys, most at least 4 years older than me. Plus, I grew late and several of them, my brother included, were full grown in 8th grade. I remember one incident where my brother's best friend had been badgering me for weeks, and I'm talking bad - locking me in our storage building, constantly knocking me down and berating me. One day I had enough and as he was walking away I picked up a hammer my Dad had left laying in the garage and I threw it like a high-fastball right at the back of his head. I missed and it caught him right between the shoulder blades, knocking him to the ground with no air. He never bothered me again.
My Dad taught me when I was six years old that you never start a fight, but at the same time you will allow NO ONE to pick on you. I still live by that today. I agree with
@crossfire74 that your first option, especially in a work environment, has to be the low-road, political approach. But, in case that doesn't work, you must be willing and able to take it to the next level. In using this mentality and methodology, I've learned that bullies are usually big babies using their brashness as a shield to hide their weaknesses and shame, and at the end of the day they're not all that tough.