Fatigue and a time-limit.
Fatigue isn't like Thracia fatigue or even SoV. It simply determines how many rounds of combat a unit can do. This can be increased and replenished, and being stationed at garrisons, forts and bridges allows you to fight without losing stamina.
Time-limit is self-explanatory.
Additionally, squad comp and tactics (if you're familiar with FF12 Gambits, it's that) matter way more than individual strength. The strongest individual unit is nothing without a good team setup.
On the hardest difficulty, items can be used a max of 10 times.
Since you don't always defeat a squad in one round, the winner is determined by which squad lost the least HP. The loser of the round is then unable to move for a few seconds.
Also, it's real time, so even if one squad can beat another, they can always be intercepted by one that has the advantage. When two squads meet, they must fight. If another ally is present, you can substitute for better results maybe but it's not like Fire Emblem where you don't have to commit.