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Philip Morris International 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 Philip Morris International to do better resource allocation and build a defensible value and supply chain.
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What is a Valuable Resource for Philip Morris International? Defining Valuable in VRIO
A resource or capability is considered valuable for Philip Morris International , if it allows the
Philip Morris International to exploit opportunities or negate threats
emerging out of both the micro business environment and the macro environment. If a resource does not allow Philip Morris International to minimize threats or exploit opportunities, than it doesn't contribute signficantly to building a sustainable competitive advantage for Philip Morris International.
What are Rare Resources for Philip Morris International? Defining Rare in VRIO
In an industry that Philip Morris International operates in, valuable resources are held by number of competitors. So valuable resources themselves don’t provide a sustainable competitive advantage. Philip Morris International require rare resources to compete in the industry. If Philip Morris International don’t have rare resources that are required to succeed in the industry then Philip Morris International won’t be able to compete successfully in the marketplace. Secondly holding rare resources can provide Philip Morris International competitive advantage against players that don’t have those rare resources. HBR Case Study Solution
What is a Inimitable (Difficult to Immitate) Resource for Philip Morris International? Defining Inimitable in VRIO
A valuable and rare resource can provide a competitive advantage to Philip Morris International 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. Philip Morris International 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 Philip Morris International
What is a Organization for Philip Morris International? Defining Organization in VRIO
Even if the Philip Morris International 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 Philip Morris International 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 |
---|---|---|---|---|---|
Pricing Strategies of Philip Morris International | Yes, Philip Morris International has sound pricing strategies | No | Pricing strategies are regularly imitated in the industry | Yes, firm has a pricing analytics engine | It can only provide Philip Morris International with a Temporary Competitive Advantage |
Ability to Attract Talent in Various Local & Global Markets | Yes, Philip Morris International 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 Philip Morris International | To a large extent yes | Providing Strong Competitive Advantage |
Sales Force and Channel Management of Philip Morris International | Yes | No | Can be imitated by competitors | Still there is lot of potential to utilize the excellent sales force | Can provide Philip Morris International sustainable competitive advantage. Potential is certainly there. |
Financial Resources of Philip Morris International | Yes | No | Financial instruments and market liquidity are available to all the nearest competitors | Philip Morris International has reasonably sound financial position | Philip Morris International has relatively sustainable Competitive Advantage |
Track Record of Project Execution | Yes, especially in an industry where there are frequent cost overun | Yes, especially in the segment that Philip Morris International operates in | No, none of the competitors so far has able to imitate this expertise | Yes, Philip Morris International is successful at it | Providing Strong Competitive Advantage |
Opportunities in the Adjacent Industries that Philip Morris International 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 |
Distribution and Logistics Costs Competitiveness | Yes, as it helps Philip Morris International in delivering lower costs | No | Can be imitated by competitors of Philip Morris International but it is difficult | Yes | Medium to Long Term Competitive Advantage |
Position among Retailers and Wholesalers – Philip Morris International retail strategy | Yes, Philip Morris International has strong relationship with retailers and wholesalers | Yes, Philip Morris International has dedicated channel partners | Difficult to imitate though not impossible | Yes, over the years company has used it successfully | Sustainable Competitive Advantage |
Brand Positioning of Philip Morris International 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 |
Marketing Expertise within Philip Morris International | 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 Philip Morris International are often matched by competitors | Yes, Philip Morris International is leveraging both its inhouse marketing department and external expertise | Temporary Competitive Advantage |
Brand awareness of Philip Morris International products and services | Yes, the brand awareness of Philip Morris International products are high | Yes, Philip Morris International has one of the leading brand in the industry | No | Philip Morris International has utilized its leading brand position in various segments | Sustainable Competitive Advantage |
Philip Morris International 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 Philip Morris International | Philip Morris International is leveraging the customer loyalty to good effect | Provide Philip Morris International medium term competitive advantage |
Product Portfolio and Synergy among Various Product Lines of Philip Morris International | 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 |
Opportunities in the E-Commerce Space for Philip Morris International - using Present IT Capabilities | Yes, the e-commerce space is rapidly growing and Philip Morris International 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 |
Philip Morris International 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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