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H&M 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 H&M to do better resource allocation and build a defensible value and supply chain.
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What is a Valuable Resource for H&M? Defining Valuable in VRIO
A resource or capability is considered valuable for H&M , if it allows the
H&M to exploit opportunities or negate threats
emerging out of both the micro business environment and the macro environment. If a resource does not allow H&M to minimize threats or exploit opportunities, than it doesn't contribute signficantly to building a sustainable competitive advantage for H&M.
What are Rare Resources for H&M? Defining Rare in VRIO
In an industry that H&M operates in, valuable resources are held by number of competitors. So valuable resources themselves don’t provide a sustainable competitive advantage. H&M require rare resources to compete in the industry. If H&M don’t have rare resources that are required to succeed in the industry then H&M won’t be able to compete successfully in the marketplace. Secondly holding rare resources can provide H&M competitive advantage against players that don’t have those rare resources. HBR Case Study Solution
What is a Inimitable (Difficult to Immitate) Resource for H&M? Defining Inimitable in VRIO
A valuable and rare resource can provide a competitive advantage to H&M 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. H&M 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 H&M
What is a Organization for H&M? Defining Organization in VRIO
Even if the H&M 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 H&M 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 |
---|---|---|---|---|---|
Supply Chain Network Flexibility of H&M | Yes | Yes | Near competitors also have flexible supply chain and share some of the suppliers | Fully utilized by H&M organizational structure and capabilities | Keeps the business running |
Pricing Strategies of H&M | Yes, H&M has sound pricing strategies | No | Pricing strategies are regularly imitated in the industry | Yes, firm has a pricing analytics engine | It can only provide H&M with a Temporary Competitive Advantage |
Opportunities for Brand Extensions for H&M 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 |
Position among Retailers and Wholesalers – H&M retail strategy | Yes, H&M has strong relationship with retailers and wholesalers | Yes, H&M has dedicated channel partners | Difficult to imitate though not impossible | Yes, over the years company has used it successfully | Sustainable Competitive Advantage |
Customer Community of H&M | Yes, as customers are co-creating products | Yes, the H&M has able to build a special relationship with its customers | It is very difficult for H&M competitors to imitate the culture and community dedication | Going by the data, there is still a lot of upside in building on H&M customers community ecosystem | Providing Strong Competitive Advantage |
H&M 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 H&M | H&M is leveraging the customer loyalty to good effect | Provide H&M medium term competitive advantage |
Opportunities in the Adjacent Industries that H&M 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 |
Sales Force and Channel Management of H&M | Yes | No | Can be imitated by competitors | Still there is lot of potential to utilize the excellent sales force | Can provide H&M sustainable competitive advantage. Potential is certainly there. |
Product Portfolio and Synergy among Various Product Lines of H&M | 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 |
Global and Local Presence of H&M | Yes, as it diversify the revenue streams and isolate company's balance sheet from economic cycles | Yes | Can be imitated by competitors of H&M but at a relatively high cost | Yes, it is one of the most diversified companies in its industry | Providing Strong Competitive Advantage |
Access to Critical Raw Material for Successful Execution | Yes | Yes, as other competitors have to come to terms with H&M dominant market position | Can be imitated by competitors | Yes | Providing Sustainable Competitive Advantage |
Talent to Manage Regulatory and Legal Obligations | Yes | No | Can be imitated by competitors | Yes | Not critical factor |
Distribution and Logistics Costs Competitiveness | Yes, as it helps H&M in delivering lower costs | No | Can be imitated by competitors of H&M but it is difficult | Yes | Medium to Long Term Competitive Advantage |
Vision of the Leadership for Next Set of Challenges | Yes | No | Can't be imitated by competitors of H&M | Not based on information provided in the case | Can Lead to Strong Competitive Advantage |
H&M 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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