Strategy Tripod Assignment Example | Topics and Well Written Essays - 1750 words

Strategy Tripod - concession Example72). When it comes to global business, system is perceived in two dynamics, 1- strategy as action, and 2) strategy tripod. The strategy as action perspective suggests that the essence of strategy is interaction because actions and reactions such as competing aggressively, value war, attack, counterattacks etc lead to matched advantage (Peng and Gokalp, 2011, p. 250). The strategy tripod model sheds light on global competitive dynamic based on the major three perspectives, namely manufacturing-based, resource-based and institution-based fits. The Strategy Tripod The fundamental impersonal of the competitive strategy of a company is to gain sustainable competitive advantage in the industry. in that location has been a great amount of academic debates during recent historic period concerning competitive strategies to explain why do firms succeed and often fail. There are different approaches concerning competitive strategy such as SWOT, Po rters fin force etc. The strategy tripod is another approach to explain competitive strategy that states that a companys competitive strategy derives from three main sources the pressure of the industry the company operates in, the impact of the institutions that a company is surrounded by and the resources that a company possesses (Wallner, 2012, p. 12- 13). Peng (2008, p.14) identified the precise fundamental four questions in strategy. They are 1) why do firms differ? 2) How do firms behave? 3) What are the main determinants of the scope of a firms? 4) What are the main determinants of a firms success or failure? He elucidated the concept of strategy tripod to answer how do firms behave. According to him, strategy tripod is a framework that states that a competitive strategy as a discipline has three legs, that are the introductory three perspectives industry-based, resource-based and institution-based great deals of a firm. Three leading strategy perspectives, namely industr y-based view, institution-based view and resource-based view of the firm together with lead to a strategy tripod. The industry-based view highlights the five-forces propeling an industry and explains that the strategic effort is meant to examine the five competitive forces namely competitive rivalry, threat of entry, threat of substitutes, bargaining power of suppliers and bargaining power of customers. The resource-based view concentrates on strengths and weaknesses internal to a firm, whereas the industry-based view focuses on the opportunities and threats that are external to a firm. Industry-based view thusly concentrates on the O and T whereas the resource-based view concentrates on the S and W in the SWOT (Peng, 2008, p. 14). The institution-based view suggests that a firm and its competitive strategy conditions are influenced by the institutions that the firm is surrounded by. The three legs of strategy tripod are explained in detail below Industry-based view The industry- based view, which is pioneered by Michel Porter in early years of 1980s, emphasized that the primary principle of competitive strategy formulation is the relationship that a firm builds with its environment. outer factors are the major determinants of a firms competitive strategy because these factors not only affect firms performance but also its way to achieving competitive advantage (Gao, Murray and Kotabe, 2010). Firms are mostly depending on various external industry forces such as threats of substitutes and new entrants, bargaining power of buyers and suppliers and competitor rivalry among the major counterparts.