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McDonald's VRIO / VRIN Analysis | Assignment Help
What is VRIO / VRIN Analysis ?
VRIO stands for – Value of the resource, Rareness of the resource, Imitation Risk, and Organizational Competence.
VRIO is a resource focused strategic analysis tool.
To build a sustainable competitive advantage the resources that –casename— needs to be valuable, rare, and difficult to imitate. Secondly the –casename— needs to possess capabilities, organizational structure, and culture to optimize the available resources usage. VRIO analysis can help organizations such as McDonald's to do better resource allocation and build a defensible value and supply chain.
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What is a Valuable Resource for McDonald's? Defining Valuable in VRIO
A resource or capability is considered valuable for McDonald's , if it allows the
McDonald's to exploit opportunities or negate threats
emerging out of both the micro business environment and the macro environment. If a resource does not allow McDonald's to minimize threats or exploit opportunities, than it doesn't contribute signficantly to building a sustainable competitive advantage for McDonald's.
What are Rare Resources for McDonald's? Defining Rare in VRIO
In an industry that McDonald's operates in, valuable resources are held by number of competitors. So valuable resources themselves don’t provide a sustainable competitive advantage. McDonald's require rare resources to compete in the industry. If McDonald's don’t have rare resources that are required to succeed in the industry then McDonald's won’t be able to compete successfully in the marketplace. Secondly holding rare resources can provide McDonald's competitive advantage against players that don’t have those rare resources. HBR Case Study Solution
What is a Inimitable (Difficult to Immitate) Resource for McDonald's? Defining Inimitable in VRIO
A valuable and rare resource can provide a competitive advantage to McDonald's for certain period of time as all the competitors are going to try to imitate or replicate that resource. A sustained competitive advantage emerges, if the resource is difficult to imitate by the competitors. McDonald's can create inmitability by innovating on the product side, reducing pain points on service delivery, and having an effective post sales servicing strategy.
Check out the SWOT analysis of McDonald's
What is a Organization for McDonald's? Defining Organization in VRIO
Even if the McDonald's has all the valuable resources that are both rare and difficult to imitate, it won’t automatically result into a sustainable competitive advantage. The key to build the sustainable competitive advantage is to have organizational capabilities, expertise, and structure to exploit the resources. If McDonald's is not organized based on its strengths then it won’t able to exploit all the resources that it possesses.
Resources | Value | Rare | Imitation | Organization | Competitive Advantage |
---|---|---|---|---|---|
Global and Local Presence of McDonald's | Yes, as it diversify the revenue streams and isolate company's balance sheet from economic cycles | Yes | Can be imitated by competitors of McDonald's but at a relatively high cost | Yes, it is one of the most diversified companies in its industry | Providing Strong Competitive Advantage |
Access to Cheap Capital for McDonald's | Yes, as a leading player in the industry and current macro economic conditions, McDonald's has access to cheap capital | No | Can be imitated by the competitors of McDonald's | Not been totally exploited | Not significant in creating competitive advantage |
Successful Implementation of Digital Strategy at McDonald's | Yes, without a comprehensive digital strategy it is extremely difficult to compete | No, as most of the firms are investing into digitalizing operations | Can be imitated by competitors | One of the leading player in the industry | Digital strategy has become critical in the industry but it can't provide sustainable competitive advantage to |
Intellectual Property Rights, Copyrights, and Trademarks | Yes, they are extremely valuable for McDonald's to thwart competition | Yes, IPR and other rights are rare and competition of McDonald's will find it extremely difficult to copy | Risk of imitation is low but given the margins in the industry disruption chances are high | So far the firm has not utilized the full extent of its IPR & other properties | Providing Strong Competitive Advantage |
Track Record of Leadership Team at McDonald's | Yes | Yes | Can't be imitated by competitors | Yes | Providing Strong Competitive Advantage |
Alignment of Activities with McDonald's Corporate Strategy | Yes | No | Each of the firm has its own strategy | Yes, company has organizational skills to extract the maximum out of it. | Still lots of potential to build on it |
Opportunities for Brand Extensions for McDonald's products | Yes, new niches are emerging in the market | No, as most of the competitors are also targeting those niches | Yes can be imitated by the competitors | Brand extensions will require higher marketing budget | Temporary Competitive Advantage |
Pricing Strategies of McDonald's | Yes, McDonald's has sound pricing strategies | No | Pricing strategies are regularly imitated in the industry | Yes, firm has a pricing analytics engine | It can only provide McDonald's with a Temporary Competitive Advantage |
Talent to Manage Regulatory and Legal Obligations | Yes | No | Can be imitated by competitors | Yes | Not critical factor |
Brand Positioning of McDonald's in Comparison to the Competitors | Yes | No | Can be imitated by competitors but it will require big marketing budget | Yes, the firm has positioned its brands based on consumer behavior | Temporary Competitive Advantage |
Brand awareness of McDonald's products and services | Yes, the brand awareness of McDonald's products are high | Yes, McDonald's has one of the leading brand in the industry | No | McDonald's has utilized its leading brand position in various segments | Sustainable Competitive Advantage |
Opportunities in the E-Commerce Space for McDonald's - using Present IT Capabilities | Yes, the e-commerce space is rapidly growing and McDonald's can exploit the emerging opportunities | No, most of the competitors are investing in IT to enter the space | The AI and inhouse analytics can be difficult to imitate | It is just the start for the organization | In the long run it can provide sustainable competitive advantage |
Position among Retailers and Wholesalers – McDonald's retail strategy | Yes, McDonald's has strong relationship with retailers and wholesalers | Yes, McDonald's has dedicated channel partners | Difficult to imitate though not impossible | Yes, over the years company has used it successfully | Sustainable Competitive Advantage |
Access to Critical Raw Material for Successful Execution | Yes | Yes, as other competitors have to come to terms with McDonald's dominant market position | Can be imitated by competitors | Yes | Providing Sustainable Competitive Advantage |
McDonald's SWOT Analysis, SWOT Matrix, Weighted SWOT Case Study Solution & Analysis
Books and References
Ahir Gopaldas and Anton Siebert (2022 July August) "What You’re Getting Wrong About Customer Journeys",
Harvard Business Review , 92
Linda A. Hill, Emily Tedards, and Taran Swan (2021) "Drive Innovation with Better Decision-Making", Harvard Business Review 86
Dyer, J. H., & Hatch, N. (2004). Using Supplier Networks to Learn Faster. Sloan Management Review, 45(3), 57–63
Barney, J. B. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17, 99–120
Dyer, J. H., Kale, P., & Singh, H. (2004, July–August). When to ally and when to acquire. Harvard Business Review, 109–115
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