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Lidl 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 Lidl to do better resource allocation and build a defensible value and supply chain.
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What is a Valuable Resource for Lidl? Defining Valuable in VRIO
A resource or capability is considered valuable for Lidl , if it allows the
Lidl to exploit opportunities or negate threats
emerging out of both the micro business environment and the macro environment. If a resource does not allow Lidl to minimize threats or exploit opportunities, than it doesn't contribute signficantly to building a sustainable competitive advantage for Lidl.
What are Rare Resources for Lidl? Defining Rare in VRIO
In an industry that Lidl operates in, valuable resources are held by number of competitors. So valuable resources themselves don’t provide a sustainable competitive advantage. Lidl require rare resources to compete in the industry. If Lidl don’t have rare resources that are required to succeed in the industry then Lidl won’t be able to compete successfully in the marketplace. Secondly holding rare resources can provide Lidl competitive advantage against players that don’t have those rare resources. HBR Case Study Solution
What is a Inimitable (Difficult to Immitate) Resource for Lidl? Defining Inimitable in VRIO
A valuable and rare resource can provide a competitive advantage to Lidl 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. Lidl 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 Lidl
What is a Organization for Lidl? Defining Organization in VRIO
Even if the Lidl 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 Lidl 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 |
---|---|---|---|---|---|
Customer Community of Lidl | Yes, as customers are co-creating products | Yes, the Lidl has able to build a special relationship with its customers | It is very difficult for Lidl competitors to imitate the culture and community dedication | Going by the data, there is still a lot of upside in building on Lidl customers community ecosystem | Providing Strong Competitive Advantage |
Opportunities in the Adjacent Industries that Lidl 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 |
Successful Implementation of Digital Strategy at Lidl | Yes, without a comprehensive digital strategy it is extremely difficult to compete | No, as most of the firms are investing into digitalizing operations | Can be imitated by competitors | One of the leading player in the industry | Digital strategy has become critical in the industry but it can't provide sustainable competitive advantage to |
Alignment of Activities with Lidl 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 |
Opportunities for Brand Extensions for Lidl 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 |
Ability to Attract Talent in Various Local & Global Markets | Yes, Lidl 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 Lidl | To a large extent yes | Providing Strong Competitive Advantage |
Marketing Expertise within Lidl | 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 Lidl are often matched by competitors | Yes, Lidl is leveraging both its inhouse marketing department and external expertise | Temporary Competitive Advantage |
Pricing Strategies of Lidl | Yes, Lidl has sound pricing strategies | No | Pricing strategies are regularly imitated in the industry | Yes, firm has a pricing analytics engine | It can only provide Lidl with a Temporary Competitive Advantage |
Position among Retailers and Wholesalers – Lidl retail strategy | Yes, Lidl has strong relationship with retailers and wholesalers | Yes, Lidl has dedicated channel partners | Difficult to imitate though not impossible | Yes, over the years company has used it successfully | Sustainable Competitive Advantage |
Track Record of Leadership Team at Lidl | Yes | Yes | Can't be imitated by competitors | Yes | Providing Strong Competitive Advantage |
Lidl 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 Lidl | Lidl is leveraging the customer loyalty to good effect | Provide Lidl medium term competitive advantage |
Opportunities in the E-Commerce Space for Lidl - using Present IT Capabilities | Yes, the e-commerce space is rapidly growing and Lidl 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 |
Global and Local Presence of Lidl | Yes, as it diversify the revenue streams and isolate company's balance sheet from economic cycles | Yes | Can be imitated by competitors of Lidl but at a relatively high cost | Yes, it is one of the most diversified companies in its industry | Providing Strong Competitive Advantage |
Product Portfolio and Synergy among Various Product Lines of Lidl | 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 |
Lidl 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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