This is a book about corporate strategy written for industrial economists. It is intended for students who have already completed an introductory course in economics, and who, therefore, have some familiarity with the conventional theory of the firm. They may also be acquainted with some of the modern revisions to the conventional theory, although such knowledge can probably be treated as an optional extra.

Corporate strategy is concerned with long-term decision taking. It reflects the firm's need to prepare for an uncertain future in an uncertain environment, which may be subject to almost continual change. By contrast, formal economic analysis often concentrates on equilibrium conditions in a world with little or no uncertainty, and, although equilibrium analysis is a powerful tool, it sometimes seems to be far removed from the world of the corporate strategist. Indeed, in casual conversation I have often heard businessmen explaining why they had to reject an “economic” solution for “strategic” reasons. In reality this conflict is more apparent than real, but the appearance is both misleading and unfortunate: misleading, because it ignores the deep insights into strategic behavior which can be developed from the analytical and empirical work of many economists, and unfortunate, because it simultaneously denies the potential usefulness of those insights. I hope that this book may help to dispel some of this misunderstanding by synthesizing a fairly broad range of economic and management literature and relating the economic analysis directly to its strategic context.