Tripod strategy: a case analysis of developing economies

Author: Iloka Benneth Chiemelie

Published: 8/ 12/ 2013

Evaluate the case made in the article for ‘the third leg in the strategy “tripod”’, with particular reference to the effectiveness of the four cases offered in supporting the central argument of this article.

The authors noted that there is a move from the adoption of the traditionally industry based view in the development of business strategy to an institution based view in the same respect. The institution based view has been described as encompassing principles that govern the way businesses are undertaken in developing cultures. These principles are built by both formal and informal, in which the informal is moulded mainly by the culture that govern the way business are undertaken (corporate culture) or the way people live their lives in that particular region (national culture). Institutionalization of the business process was described by the authors as being very significant because it regulates the way businesses are undertaken in order to ensure that the right thing are always done at the right time. In order to prove the significance of institutionalization of the business process, the authors proceeded to provide examples in the form of:

Antidumping as an entry barrier – through institutionalization, foreign firms are forced to ensure that they maintain the same price in both their parent nation and their investing nation, as well as all the states in the same nation. For instance, a firm in the USA with branch in Texas, Ohio and China that offers lower prices in China and higher prices in the USA, or lower prices in some US states and higher prices in order states can be sued by the customers. As such, the pricing is very much institutionalized and it means that international businesses seeking to invest most ensure that they offer the same quality and price in all the markets.

Competing in and out of India – following the 1991 economic reform, the Indian government opened room for international firms to outsource their IT related business process as a result of the high IT capability in the country and reduced cost of operation. The government saw this opportunity and decided to invest in training more IT students. The end product is that international firms adopted such as a platform for competition by maintain quality and supply as demanded at a lower cost than is obtainable in their home countries. This meant that westernized nations had to attack the Indiana government on grounds of not establishing the right platform for fair competition.

Growing business in China – China proved the theories by researchers that it is impossible to maintain sustainable growth in developing economies by subsequently maintaining sustainable growth in the country for 3 decades. The formula for their success has been linked to the “QUANXI” approach which is used to define establishment of interpersonal relationship between sellers and buyers that allowed for credit sales of which the retailers can return their purchase cost after selling the goods to the final consumers. Such an institutionalization of interpersonal relationship paved the right way for sustainability in the Chinese economy.

Corporate governance in emerging economy – the case noted that there is always a conflicting situation between what the shareholders want and the business objectives, which means that corporate governance is not given the needed attention in developing economies. In any case, institutionalization of such will yield high benefits to both the business and shareholders as the business process will be undertaken in an ethical and profitable manner.

From the above four cases, it can be seen that the adoption of an institutionalized business process is very significant as it would ensure that the businesses are undertaken in the right manner and all negative influences in the business process are eliminated. As such, it can be concluded that an institution-based view is the right approach for business growth.