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Sam's Club 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 Sam's Club to do better resource allocation and build a defensible value and supply chain.
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What is a Valuable Resource for Sam's Club? Defining Valuable in VRIO
A resource or capability is considered valuable for Sam's Club , if it allows the
Sam's Club to exploit opportunities or negate threats
emerging out of both the micro business environment and the macro environment. If a resource does not allow Sam's Club to minimize threats or exploit opportunities, than it doesn't contribute signficantly to building a sustainable competitive advantage for Sam's Club.
What are Rare Resources for Sam's Club? Defining Rare in VRIO
In an industry that Sam's Club operates in, valuable resources are held by number of competitors. So valuable resources themselves don’t provide a sustainable competitive advantage. Sam's Club require rare resources to compete in the industry. If Sam's Club don’t have rare resources that are required to succeed in the industry then Sam's Club won’t be able to compete successfully in the marketplace. Secondly holding rare resources can provide Sam's Club competitive advantage against players that don’t have those rare resources. HBR Case Study Solution
What is a Inimitable (Difficult to Immitate) Resource for Sam's Club? Defining Inimitable in VRIO
A valuable and rare resource can provide a competitive advantage to Sam's Club 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. Sam's Club 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 Sam's Club
What is a Organization for Sam's Club? Defining Organization in VRIO
Even if the Sam's Club 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 Sam's Club 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 |
---|---|---|---|---|---|
Access to Cheap Capital for Sam's Club | Yes, as a leading player in the industry and current macro economic conditions, Sam's Club has access to cheap capital | No | Can be imitated by the competitors of Sam's Club | Not been totally exploited | Not significant in creating competitive advantage |
Opportunities in the Adjacent Industries that Sam's Club 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 |
Customer Community of Sam's Club | Yes, as customers are co-creating products | Yes, the Sam's Club has able to build a special relationship with its customers | It is very difficult for Sam's Club competitors to imitate the culture and community dedication | Going by the data, there is still a lot of upside in building on Sam's Club customers community ecosystem | Providing Strong Competitive Advantage |
Access to Critical Raw Material for Successful Execution | Yes | Yes, as other competitors have to come to terms with Sam's Club dominant market position | Can be imitated by competitors | Yes | Providing Sustainable Competitive Advantage |
Alignment of Activities with Sam's Club 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 |
Marketing Expertise within Sam's Club | 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 Sam's Club are often matched by competitors | Yes, Sam's Club is leveraging both its inhouse marketing department and external expertise | Temporary Competitive Advantage |
Pricing Strategies of Sam's Club | Yes, Sam's Club has sound pricing strategies | No | Pricing strategies are regularly imitated in the industry | Yes, firm has a pricing analytics engine | It can only provide Sam's Club with a Temporary Competitive Advantage |
Sam's Club 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 Sam's Club | Sam's Club is leveraging the customer loyalty to good effect | Provide Sam's Club medium term competitive advantage |
Financial Resources of Sam's Club | Yes | No | Financial instruments and market liquidity are available to all the nearest competitors | Sam's Club has reasonably sound financial position | Sam's Club has relatively sustainable Competitive Advantage |
Opportunities in the E-Commerce Space for Sam's Club - using Present IT Capabilities | Yes, the e-commerce space is rapidly growing and Sam's Club 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 |
Track Record of Leadership Team at Sam's Club | Yes | Yes | Can't be imitated by competitors | Yes | Providing Strong Competitive Advantage |
Opportunities for Brand Extensions for Sam's Club 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 |
Sales Force and Channel Management of Sam's Club | Yes | No | Can be imitated by competitors | Still there is lot of potential to utilize the excellent sales force | Can provide Sam's Club sustainable competitive advantage. Potential is certainly there. |
Talent to Manage Regulatory and Legal Obligations | Yes | No | Can be imitated by competitors | Yes | Not critical factor |
Sam's Club 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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