Why Do Firms Differ? What Determines The International Success Or Failure Of Firms?

1123 WordsMay 13, 20165 Pages
For a business to enter a foreign market, it must research carefully what will be the determinant factors for its success. The ‘strategy tripod’ framework is a tool used in business strategy that can help managers make better, more informed decisions. The strategy tripod consists of three different philosophies that provides us with the answers to the 3 questions a firm must take into account for optimal performance, ‘industry-based view’, ‘resource-based view’ and ‘institution-based view’, and they aim to provide their own distinctive answer to the four fundamental questions in international business, which are: Why do firms differ? How do firms behave? What determines the scope of the firm? What determines the international success or failure of firms? In this essay we will first explain what the strategy tripod is, how it is useful for firms to take into account the different perspectives each leg of the tripod focuses on and what are the implications of adopting this tool in the firm’s strategy to gain competitive advantage. The conclusion will summarize the findings made and the considerations any firm wishing to expand should make. A firm’s strategy is defined as its theory of how to compete successfully. A ‘good’ theory is one that corresponds to ‘external’ and’ internal’ realities affecting a particular firm. External realities refer to the industry context and the institutional setting within which firms compete. The internal reality refers to the resources and

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