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McDonalds 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 McDonalds to do better resource allocation and build a defensible value and supply chain.
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What is a Valuable Resource for McDonalds? Defining Valuable in VRIO
A resource or capability is considered valuable for McDonalds , if it allows the
McDonalds to exploit opportunities or negate threats
emerging out of both the micro business environment and the macro environment. If a resource does not allow McDonalds to minimize threats or exploit opportunities, than it doesn't contribute signficantly to building a sustainable competitive advantage for McDonalds.
What are Rare Resources for McDonalds? Defining Rare in VRIO
In an industry that McDonalds operates in, valuable resources are held by number of competitors. So valuable resources themselves don’t provide a sustainable competitive advantage. McDonalds require rare resources to compete in the industry. If McDonalds don’t have rare resources that are required to succeed in the industry then McDonalds won’t be able to compete successfully in the marketplace. Secondly holding rare resources can provide McDonalds competitive advantage against players that don’t have those rare resources. HBR Case Study Solution
What is a Inimitable (Difficult to Immitate) Resource for McDonalds? Defining Inimitable in VRIO
A valuable and rare resource can provide a competitive advantage to McDonalds 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. McDonalds 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 McDonalds
What is a Organization for McDonalds? Defining Organization in VRIO
Even if the McDonalds 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 McDonalds 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 |
---|---|---|---|---|---|
Brand Positioning of McDonalds 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 |
Alignment of Activities with McDonalds 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 |
Customer Community of McDonalds | Yes, as customers are co-creating products | Yes, the McDonalds has able to build a special relationship with its customers | It is very difficult for McDonalds competitors to imitate the culture and community dedication | Going by the data, there is still a lot of upside in building on McDonalds customers community ecosystem | Providing Strong Competitive Advantage |
Intellectual Property Rights, Copyrights, and Trademarks | Yes, they are extremely valuable for McDonalds to thwart competition | Yes, IPR and other rights are rare and competition of McDonalds 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 |
Pricing Strategies of McDonalds | Yes, McDonalds has sound pricing strategies | No | Pricing strategies are regularly imitated in the industry | Yes, firm has a pricing analytics engine | It can only provide McDonalds with a Temporary Competitive Advantage |
Opportunities for Brand Extensions for McDonalds 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 |
Access to Critical Raw Material for Successful Execution | Yes | Yes, as other competitors have to come to terms with McDonalds dominant market position | Can be imitated by competitors | Yes | Providing Sustainable Competitive Advantage |
Financial Resources of McDonalds | Yes | No | Financial instruments and market liquidity are available to all the nearest competitors | McDonalds has reasonably sound financial position | McDonalds has relatively sustainable Competitive Advantage |
Marketing Expertise within McDonalds | 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 McDonalds are often matched by competitors | Yes, McDonalds is leveraging both its inhouse marketing department and external expertise | Temporary Competitive Advantage |
Track Record of Leadership Team at McDonalds | Yes | Yes | Can't be imitated by competitors | Yes | Providing Strong Competitive Advantage |
Opportunities in the E-Commerce Space for McDonalds - using Present IT Capabilities | Yes, the e-commerce space is rapidly growing and McDonalds 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 |
Distribution and Logistics Costs Competitiveness | Yes, as it helps McDonalds in delivering lower costs | No | Can be imitated by competitors of McDonalds but it is difficult | Yes | Medium to Long Term Competitive Advantage |
Brand awareness of McDonalds products and services | Yes, the brand awareness of McDonalds products are high | Yes, McDonalds has one of the leading brand in the industry | No | McDonalds has utilized its leading brand position in various segments | 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 McDonalds operates in | No, none of the competitors so far has able to imitate this expertise | Yes, McDonalds is successful at it | Providing Strong Competitive Advantage |
McDonalds 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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