As presented in the first two parts of the book, changes in ownership and changes in management can, and frequently do, imply changes in strategy. What about the other way around – do changes in strategy lead to changes in ownership and in management, and if so, by what mechanisms and under what circumstances? The field of strategy is traditionally divided into two questions: corporate strategy – what businesses and markets a firm chooses to be in; and business strategy – what position a firm occupies and what resources a firm utilizes to compete in a given industry or market. Whereas corporate strategy has been and continues to be a subject of debate among shareholders and finance specialists, with the attendant articulation of agency theoretical considerations about ownership and management, business strategy has been left to managers and economists, and its implications for ownership and corporate governance have remained largely unexplored. We will show that changes in business strategy, by affecting risk, also raise significant governance questions that both managers and shareholders need to be aware of.

The effects of changes in both corporate strategy and business strategy are covered in Chapter 5. Changes in strategy are usually associated with rises and falls in the fortunes of a firm; in fact, success in the marketplace is the ultimate measure of the suitability of a strategy. In the context of examining changes in strategy, it is therefore also of interest to examine when strategic change may be blocked: Chapter 6 looks at cases where no changes occur in ownership, management, and strategy – despite failure in the marketplace; Chapter 7 studies examples in which market success reinforces the existing constellation of ownership, management, and strategy.