The issues with which the earlier parts of this book have been concerned are the traditional issues of corporate strategy. What is the core business? What markets should the firm be in? What are the objectives of the corporation? How should its success be measured and how is it reflected in financial performance?
This part considers issues of business, or competitive strategy. The answers to these earlier questions are taken as given. The firm finds itself in certain markets, facing certain competition, dealing with its distributors, suppliers, and customers. How should it manage these relationships?
Relationships with competitors focus particularly on pricing and market positioning. These are the subjects of Chapters 14 and 15. In some markets, competitors have reached a realistic modus vivendi, in which there are generally understood rules of the competitive game. I describe these as stable competitive environments. In others, there is no sense of a repeated game, and competition may be pursued to mutually destructive lengths. Sometimes technological change, or new entry, may shift an industry from stability to instability in its competitive process.
Positioning and pricing are relevant to relationships with customers as well as with competitors. Advertising and branding are mechanisms by which firms communicate with their customers, but are also strategic tools governed by competitive interactions. Chapter 17 is concerned with relationships along the value chain--backwards to suppliers and forwards to distributors.