Professor of Strategic Management
Schulich School of Business
Strategic management emerged as a field more than fifty years ago. Since then, the body of knowledge on the strategic direction and management of the enterprise -the primary domain of the field- has continued to grow.
Broadly, one can think of strategic management as comprised of three aspects: which industries to compete in, on which basis to compete in an industry, and the actual execution of the strategy. The first is what is known as corporate strategy, which shapes the general direction of the enterprise and determines the scope of the firm and the product-markets in which it competes. Mergers and acquisitions, diversification, strategic alliances and the like are among the key corporate strategy topics.
The second is competitive strategy, which focuses on how firms position themselves in an industry and establish the basis for their competitiveness, e.g. cost, differentiation, innovativeness, etc. For effective competitive positioning, both an external and internal focus is important. The former focuses on the environmental and industry conditions as well as competitive rivalry among firms, whereas the latter focuses on the firm’s own resources and capabilities and how these inform its strengths and weaknesses. Managers of firms need to analyze how external and internal considerations, together, underpin the firm’s competitive strategy and competitive advantage.
The third is what is known as strategy execution or implementation. Even if firms have chosen in which product-markets to compete and the basis upon which to compete in these markets, this remains largely a theoretical exercise unless they can effectively carry it out. This involves issues like firm structure, control systems, governance, etc. In fact one can argue that competitive advantage arises not just from having an effective competitive strategy but also the ability to implement it.
Whereas the above three aspects are what one would consider its core, yet the field of strategic management is a living entity that continues to evolve. In recent years, there have been two significant developments. First, with increasing globalization and lowering of barriers in commerce among nations, the international aspects of strategy have become part and parcel of strategic management. Topics here range from managing the global enterprise to location strategy to modes of entry. Second, as a result of the recent economic crisis and financial scandals, there has been a noticeable shift away from the erstwhile dominant shareholder model to a more comprehensive stakeholder model which recognizes the importance of the impact of a broader range of stakeholders on firm strategy and competitive advantage. These include customers, suppliers, employees, governments and other institutions.
In light of the above, the book Fundamentals of Strategic Management by professors Navas and Guerras is one that deserves to be commended. For one, it is comprehensive in its reach and covers all the topics outlined above. Second and importantly, the professors are highly experienced in their field and, besides their theoretical knowledge, have informed their approach and treatment of the subject with knowledge directly gleaned from years of teaching university students and managers at various levels over the years. In addition to a coherent conceptual framework, they use numerous examples to illustrate key ideas and link it back to the theory. As a result, the book has an applied focus which makes it appealingly accessible to students and practitioners of strategic management. With many of the examples and illustrations discussing Spanish firms, the appeal of this book should be even more attractive for readers and practitioners from Spain and, more broadly, Latin America.
Strategic management is a complex subject since it incorporates such a wide range of issues at so many levels. Moreover, in the current environment characterized by rapid rates of technological change, globalization and the emergence of competitors from emerging economies, the strategic challenges faced by firms and key decision makers are increasingly complex and urgent. A good book on the topic -comprehensive, systematic, informative and easy to read- would perform a useful role in aiding senior managers in their decision-making and should be an essential part of their tool-kit. In this regard, Professors Navas and Guerras make an excellent contribution.