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Nestle 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 Nestle to do better resource allocation and build a defensible value and supply chain.
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What is a Valuable Resource for Nestle? Defining Valuable in VRIO
A resource or capability is considered valuable for Nestle , if it allows the
Nestle to exploit opportunities or negate threats
emerging out of both the micro business environment and the macro environment. If a resource does not allow Nestle to minimize threats or exploit opportunities, than it doesn't contribute signficantly to building a sustainable competitive advantage for Nestle.
What are Rare Resources for Nestle? Defining Rare in VRIO
In an industry that Nestle operates in, valuable resources are held by number of competitors. So valuable resources themselves don’t provide a sustainable competitive advantage. Nestle require rare resources to compete in the industry. If Nestle don’t have rare resources that are required to succeed in the industry then Nestle won’t be able to compete successfully in the marketplace. Secondly holding rare resources can provide Nestle competitive advantage against players that don’t have those rare resources. HBR Case Study Solution
What is a Inimitable (Difficult to Immitate) Resource for Nestle? Defining Inimitable in VRIO
A valuable and rare resource can provide a competitive advantage to Nestle 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. Nestle 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 Nestle
What is a Organization for Nestle? Defining Organization in VRIO
Even if the Nestle 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 Nestle 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 |
---|---|---|---|---|---|
Sales Force and Channel Management of Nestle | Yes | No | Can be imitated by competitors | Still there is lot of potential to utilize the excellent sales force | Can provide Nestle sustainable competitive advantage. Potential is certainly there. |
Ability to Attract Talent in Various Local & Global Markets | Yes, Nestle strategy is built on successful innovation and localization of products | Yes, as talent is critical to firm's growth | Difficult to imitate for the current competitors of Nestle | To a large extent yes | Providing Strong Competitive Advantage |
Track Record of Leadership Team at Nestle | Yes | Yes | Can't be imitated by competitors | Yes | Providing Strong Competitive Advantage |
Product Portfolio and Synergy among Various Product Lines of Nestle | 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 |
Access to Critical Raw Material for Successful Execution | Yes | Yes, as other competitors have to come to terms with Nestle dominant market position | Can be imitated by competitors | Yes | Providing Sustainable Competitive Advantage |
Opportunities in the Adjacent Industries that Nestle can exploit & New Resources Required to Enter those Industries | Can be valuable as they will create new revenue streams | No | Can be imitated by competitors | All the capabilities of the organization are not fully utilized yet | Has potential |
Access to Cheap Capital for Nestle | Yes, as a leading player in the industry and current macro economic conditions, Nestle has access to cheap capital | No | Can be imitated by the competitors of Nestle | Not been totally exploited | Not significant in creating competitive advantage |
Talent to Manage Regulatory and Legal Obligations | Yes | No | Can be imitated by competitors | Yes | Not critical factor |
Intellectual Property Rights, Copyrights, and Trademarks | Yes, they are extremely valuable for Nestle to thwart competition | Yes, IPR and other rights are rare and competition of Nestle 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 |
Customer Community of Nestle | Yes, as customers are co-creating products | Yes, the Nestle has able to build a special relationship with its customers | It is very difficult for Nestle competitors to imitate the culture and community dedication | Going by the data, there is still a lot of upside in building on Nestle customers community ecosystem | Providing Strong Competitive Advantage |
Vision of the Leadership for Next Set of Challenges | Yes | No | Can't be imitated by competitors of Nestle | Not based on information provided in the case | Can Lead to Strong Competitive Advantage |
Brand awareness of Nestle products and services | Yes, the brand awareness of Nestle products are high | Yes, Nestle has one of the leading brand in the industry | No | Nestle has utilized its leading brand position in various segments | Sustainable Competitive Advantage |
Supply Chain Network Flexibility of Nestle | Yes | Yes | Near competitors also have flexible supply chain and share some of the suppliers | Fully utilized by Nestle organizational structure and capabilities | Keeps the business running |
Opportunities in the E-Commerce Space for Nestle - using Present IT Capabilities | Yes, the e-commerce space is rapidly growing and Nestle 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 |
Nestle 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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