In order to understand what the manager of a firm does, it is first necessary to understand exactly what we mean by the term ‘firm’. We might as well start at the beginning and ask why firms exist in the first place. Once we have answered this question we will have a better idea where managers fit into the picture and, therefore, we will be able to come up with a clear definition of the role of the manager. Once the role of the manager is defined we can start analysing what it is that managers do, which, of course, is the purpose of the book.