Corporate success, of the kind achieved by BMW, Honda, and Glaxo, is
not the realization of visions, aspirations, and missions--the product of
wish-driven strategy. It is the result of a careful appreciation of the
strengths of the firm and the economic environment it faces. But nor is
success often the realization of a carefully orchestrated corporate plan. The
strategy of successful firms is adaptive and opportunistic. Yet in the hands
of a successful company an adaptive and opportunistic strategy is also
rational, analytic, and calculated. Adaptiveness does not mean waiting for
something to turn up. Opportunism is only productive for a firm which
knows which opportunities to seize and which to reject.

This chapter introduces the central themes of the book. Corporate success
derives from a competitive advantage which is based on distinctive capa-
bilities, which is most often derived from the unique character of a firm's
relationships with its suppliers, customers, or employees, and which is
precisely identified and applied to relevant markets. The remainder of the
book develops these arguments and explains the various types of distinctive
capability which successful firms hold and how they are effectively
identified, developed, and exploited.

Did it make sense for Benetton, an Italian knitwear manufacturer, to
move into retailing, and was it right to decide to franchise most of its
shops to individual entrepreneurs? Should Saatchi & Saatchi have attempted
to build a global advertising business? What segment of the car market was
most appropriate for BMW? These are typical issues of corporate strategy.
Corporate strategy is concerned with the firm's choice of business, markets,
and activities.

Should Eurotunnel offer a premium service or use its low operating costs to
cut prices? How should Honda have approached the US motor-cycle market?
Faced with three different standards for high definition television, and a mar-
ket potentially worth tens of billions of pounds, what stance should a tele-
vision manufacturer adopt? What will be the future of European airlines as
deregulation progresses? These are typical issues of business, or competitive,
strategy. Competitive strategy is concerned with the firm's position relative to
its competitors in the markets which it has chosen.

The strategy of the firm is the match between its internal capabilities and its
external relationships. It describes how it responds to its suppliers, its cus-
tomers, its competitors, and the social and economic environment within
which it operates. The analysis of strategy uses our experience of the past to
develop concepts, tools, data, and models which will illuminate these deci-
sions in future. Taking corporate and business strategy together, we learn why
some firms succeed and others fail. Why did EMI fail to profit from its body
scanner while Glaxo succeeded brilliantly in marketing its anti-ulcer drug,
Zantac? Why has Philips earned so little from its record of innovation? Why

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