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Philips 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 Philips to do better resource allocation and build a defensible value and supply chain.
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What is a Valuable Resource for Philips? Defining Valuable in VRIO
A resource or capability is considered valuable for Philips , if it allows the
Philips to exploit opportunities or negate threats
emerging out of both the micro business environment and the macro environment. If a resource does not allow Philips to minimize threats or exploit opportunities, than it doesn't contribute signficantly to building a sustainable competitive advantage for Philips.
What are Rare Resources for Philips? Defining Rare in VRIO
In an industry that Philips operates in, valuable resources are held by number of competitors. So valuable resources themselves don’t provide a sustainable competitive advantage. Philips require rare resources to compete in the industry. If Philips don’t have rare resources that are required to succeed in the industry then Philips won’t be able to compete successfully in the marketplace. Secondly holding rare resources can provide Philips competitive advantage against players that don’t have those rare resources. HBR Case Study Solution
What is a Inimitable (Difficult to Immitate) Resource for Philips? Defining Inimitable in VRIO
A valuable and rare resource can provide a competitive advantage to Philips 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. Philips 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 Philips
What is a Organization for Philips? Defining Organization in VRIO
Even if the Philips 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 Philips 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 |
---|---|---|---|---|---|
Financial Resources of Philips | Yes | No | Financial instruments and market liquidity are available to all the nearest competitors | Philips has reasonably sound financial position | Philips has relatively sustainable Competitive Advantage |
Supply Chain Network Flexibility of Philips | Yes | Yes | Near competitors also have flexible supply chain and share some of the suppliers | Fully utilized by Philips organizational structure and capabilities | Keeps the business running |
Global and Local Presence of Philips | Yes, as it diversify the revenue streams and isolate company's balance sheet from economic cycles | Yes | Can be imitated by competitors of Philips but at a relatively high cost | Yes, it is one of the most diversified companies in its industry | Providing Strong Competitive Advantage |
Vision of the Leadership for Next Set of Challenges | Yes | No | Can't be imitated by competitors of Philips | Not based on information provided in the case | Can Lead to Strong Competitive Advantage |
Pricing Strategies of Philips | Yes, Philips has sound pricing strategies | No | Pricing strategies are regularly imitated in the industry | Yes, firm has a pricing analytics engine | It can only provide Philips with a Temporary Competitive Advantage |
Track Record of Project Execution | Yes, especially in an industry where there are frequent cost overun | Yes, especially in the segment that Philips operates in | No, none of the competitors so far has able to imitate this expertise | Yes, Philips is successful at it | Providing Strong Competitive Advantage |
Position among Retailers and Wholesalers – Philips retail strategy | Yes, Philips has strong relationship with retailers and wholesalers | Yes, Philips has dedicated channel partners | Difficult to imitate though not impossible | Yes, over the years company has used it successfully | Sustainable Competitive Advantage |
Ability to Attract Talent in Various Local & Global Markets | Yes, Philips 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 Philips | To a large extent yes | Providing Strong Competitive Advantage |
Track Record of Leadership Team at Philips | Yes | Yes | Can't be imitated by competitors | Yes | Providing Strong Competitive Advantage |
Distribution and Logistics Costs Competitiveness | Yes, as it helps Philips in delivering lower costs | No | Can be imitated by competitors of Philips but it is difficult | Yes | Medium to Long Term Competitive Advantage |
Alignment of Activities with Philips 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 |
Brand awareness of Philips products and services | Yes, the brand awareness of Philips products are high | Yes, Philips has one of the leading brand in the industry | No | Philips has utilized its leading brand position in various segments | Sustainable Competitive Advantage |
Access to Cheap Capital for Philips | Yes, as a leading player in the industry and current macro economic conditions, Philips has access to cheap capital | No | Can be imitated by the competitors of Philips | Not been totally exploited | Not significant in creating competitive advantage |
Philips 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 Philips | Philips is leveraging the customer loyalty to good effect | Provide Philips medium term competitive advantage |
Philips 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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