It depends on how my son is being bullied. If he is being hit or bitten or the other party is raelly rough, I will do step 3.
If it's just the snatching of toys or just some pushing, I will do step 1 and if they can't handle it after a while, I will do step 2.
I believe the children have to learn how to stand up for themselves and also learn to process what is right and wrong behaviour and then decide what they should be doing or not doing.
Some things, if it's not life threatening or dangerous, I will let my son explore it on his own.