The genesis of this book lies in my experience as a strategy professor. Over the past 27 years, I have taught the core strategic management course in some very good MBA programs. When I began as an assistant professor, Michael Porter's book, Competitive Strategy, had recently been published, and I adopted it. The book brought the concepts and observations of industrial economists into the realm of business policy in a way that students and practitioners could comprehend and appreciate. At the time Porter's book was introduced, there was little research in strategic management, and his book presented the most rigorously developed set of frameworks available to academics teaching and doing research in strategy.
Over the past two decades, however, the strategy field has developed into a robust discipline with its own interests and research topics. Many of these topics build on the original synthesis of industrial economics in early strategy texts. However, many current ideas, concepts, and theories are only loosely related to traditional industry analysis. Practitioners, moreover, have continuously innovated to solve strategic problems in ways that the frameworks of industry analysis do not address. Its major points remain essential, but these points do not cover as much of the territory of strategy as they once did.
As the field developed, I moved more to teaching with readings, a shift that I believe has been fairly common for strategy courses in many business schools. But because many effective readings were (and are) written in practitioner journals, they were often oriented primarily toward application. This emphasis was beneficial for some topics, but the course was often perceived as lacking sufficient theoretical content or coherence.
What was needed then was a book founded on disciplinary research which at the same time included the concepts and topics of strategy that have been developed over the past 20 years. Moreover, since I teach at all levels—undergraduate, MBA, and EMBA—the book had to be understandable to students who had never been in business and yet offer immediate practical benefits to line managers and executives. And it had to be readable and fit within the confines of a module or quarter (7 to 10 weeks) or a semester-long course. This is the book I have tried to write.
The organization of the book in this edition is unchanged from the first. The book has five parts:
- Strategy and Strategic Decision-Making
- Building Competitive Advantage
- Managing the Boundaries of the Firm
- Expanding the Scope of the Firm
- Governing the Firm
Each part deals with a separate set of strategic issues as the firm grows from one to multiple lines of business.
Part I lays out the concept of strategy and argues that strategy is about achieving superior performance over time. The superior firm produces more value for the customer at a lower cost than competitors and defends the sources of this advantage—the firm's resources and capabilities—from imitation. This traditional but robust approach to defining competitive advantage pervades the book. Also, this Part presents a straightforward model of strategic planning and decision making. The chapters in Part II describe how successful firms build competitive advantage within the constraints of industry forces as they evolve over time, with a separate discussion of strategy execution within the organization. Part III focuses on how the firm executes its strategy by managing its boundaries through vertical integration and outsourcing and takes a separate look at partnerships. Part IV expands the scope of the firm to global markets and multiple businesses. Last, Part V outlines in detail the major issues of corporate governance, including its legal and institutional frameworks.
I believe this approach has three main advantages:
- It provides a practical, discipline-based underpinning to the discussion of important strategy topics and allows the student to make connections among these topics as the course proceeds. By the end of the course, the student should see that many strategic problems can be understood as elaborations of a small number of theoretical frameworks. Thus, the course is an integrated experience.
- It provides a clear way to understand the similarities and differences between single and multibusiness strategic issues. Identifying how a business can be improved as part of a multibusiness enterprise is a central management task. However, this task cannot be accomplished if the business and its parent organization are not understood through common strategic frameworks. In other words, there can be no concept of corporate strategy without a clear and practical concept of business strategy.
- The text covers a wide range of current strategy topics and links current theory to management practice. My experience with the frameworks in the book is that they are especially well suited for teaching cases, from any era currently in the case archives—Head Ski to Blockbuster and Microsoft 2002, Crown Cork and Seal to Merck and Zara. Further, when students read the business press, they will be able to see the applicability of what they're being taught. Also, it has been my experience that senior executives resonate with the approach taken in the book and relate its frameworks in their own decision making.
These benefits can be realized at any level of instruction. It can be gratifying to see undergraduates respond appropriately and enthusiastically to almost the same material that executive MBAs appreciate for somewhat different reasons. The undergrads like the clarity, coherence, and consistency of the approach to strategy, while EMBAs can take much of the material and apply it directly to their work. Needless to say, regular MBAs can experience the material in both ways.
Several teaching supplements are available to adopters of this text: an instructor's manual, including lecture notes, multiple-choice questions, and suggested cases for each chapter; a computerized test bank; and PowerPoint slides with key figures from the book and other lecture materials. Select supplements and additional resources are available from the book website at www.mhhe.com/walker2e.