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BMW 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 BMW to do better resource allocation and build a defensible value and supply chain.
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What is a Valuable Resource for BMW? Defining Valuable in VRIO
A resource or capability is considered valuable for BMW , if it allows the
BMW to exploit opportunities or negate threats
emerging out of both the micro business environment and the macro environment. If a resource does not allow BMW to minimize threats or exploit opportunities, than it doesn't contribute signficantly to building a sustainable competitive advantage for BMW.
What are Rare Resources for BMW? Defining Rare in VRIO
In an industry that BMW operates in, valuable resources are held by number of competitors. So valuable resources themselves don’t provide a sustainable competitive advantage. BMW require rare resources to compete in the industry. If BMW don’t have rare resources that are required to succeed in the industry then BMW won’t be able to compete successfully in the marketplace. Secondly holding rare resources can provide BMW competitive advantage against players that don’t have those rare resources. HBR Case Study Solution
What is a Inimitable (Difficult to Immitate) Resource for BMW? Defining Inimitable in VRIO
A valuable and rare resource can provide a competitive advantage to BMW 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. BMW 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 BMW
What is a Organization for BMW? Defining Organization in VRIO
Even if the BMW 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 BMW 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 |
---|---|---|---|---|---|
Marketing Expertise within BMW | Yes, firms are competing based on differentiation in the industry | No, as most of the competitors also have good marketing departments and expertise | Pricing strategies of BMW are often matched by competitors | Yes, BMW is leveraging both its inhouse marketing department and external expertise | Temporary Competitive Advantage |
Global and Local Presence of BMW | Yes, as it diversify the revenue streams and isolate company's balance sheet from economic cycles | Yes | Can be imitated by competitors of BMW but at a relatively high cost | Yes, it is one of the most diversified companies in its industry | Providing Strong Competitive Advantage |
Opportunities for Brand Extensions for BMW 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 |
Brand Positioning of BMW 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 |
Intellectual Property Rights, Copyrights, and Trademarks | Yes, they are extremely valuable for BMW to thwart competition | Yes, IPR and other rights are rare and competition of BMW 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 |
Vision of the Leadership for Next Set of Challenges | Yes | No | Can't be imitated by competitors of BMW | Not based on information provided in the case | Can Lead to Strong Competitive Advantage |
Track Record of Leadership Team at BMW | Yes | Yes | Can't be imitated by competitors | Yes | Providing Strong Competitive Advantage |
Brand awareness of BMW products and services | Yes, the brand awareness of BMW products are high | Yes, BMW has one of the leading brand in the industry | No | BMW has utilized its leading brand position in various segments | Sustainable Competitive Advantage |
Product Portfolio and Synergy among Various Product Lines of BMW | Yes, it is valuable in the industry given the various segmentations & consumer preferences. | Most of the competitors are trying to enter the lucrative segments | Can be imitated by the competitors | The firm has used it to good effect, details can be found in case exhibit | Provide short term competitive advantage but requires constant innovation to sustain |
Distribution and Logistics Costs Competitiveness | Yes, as it helps BMW in delivering lower costs | No | Can be imitated by competitors of BMW but it is difficult | Yes | Medium to Long Term Competitive Advantage |
BMW Customer Network and Loyalty | Yes, 23% of the customers contribute to more than 84% of the sales revenue | Yes, firm has invested to build a strong customer loyalty | Has been tried by competitors but none of them are as successful as BMW | BMW is leveraging the customer loyalty to good effect | Provide BMW medium term competitive advantage |
Successful Implementation of Digital Strategy at BMW | 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 |
Pricing Strategies of BMW | Yes, BMW has sound pricing strategies | No | Pricing strategies are regularly imitated in the industry | Yes, firm has a pricing analytics engine | It can only provide BMW with a Temporary Competitive Advantage |
Talent to Manage Regulatory and Legal Obligations | Yes | No | Can be imitated by competitors | Yes | Not critical factor |
BMW 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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