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Rolex 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 Rolex to do better resource allocation and build a defensible value and supply chain.
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What is a Valuable Resource for Rolex? Defining Valuable in VRIO
A resource or capability is considered valuable for Rolex , if it allows the
Rolex to exploit opportunities or negate threats
emerging out of both the micro business environment and the macro environment. If a resource does not allow Rolex to minimize threats or exploit opportunities, than it doesn't contribute signficantly to building a sustainable competitive advantage for Rolex.
What are Rare Resources for Rolex? Defining Rare in VRIO
In an industry that Rolex operates in, valuable resources are held by number of competitors. So valuable resources themselves don’t provide a sustainable competitive advantage. Rolex require rare resources to compete in the industry. If Rolex don’t have rare resources that are required to succeed in the industry then Rolex won’t be able to compete successfully in the marketplace. Secondly holding rare resources can provide Rolex competitive advantage against players that don’t have those rare resources. HBR Case Study Solution
What is a Inimitable (Difficult to Immitate) Resource for Rolex? Defining Inimitable in VRIO
A valuable and rare resource can provide a competitive advantage to Rolex 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. Rolex 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 Rolex
What is a Organization for Rolex? Defining Organization in VRIO
Even if the Rolex 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 Rolex 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 |
---|---|---|---|---|---|
Global and Local Presence of Rolex | Yes, as it diversify the revenue streams and isolate company's balance sheet from economic cycles | Yes | Can be imitated by competitors of Rolex but at a relatively high cost | Yes, it is one of the most diversified companies in its industry | Providing Strong Competitive Advantage |
Alignment of Activities with Rolex 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 |
Rolex 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 Rolex | Rolex is leveraging the customer loyalty to good effect | Provide Rolex medium term competitive advantage |
Vision of the Leadership for Next Set of Challenges | Yes | No | Can't be imitated by competitors of Rolex | Not based on information provided in the case | Can Lead to Strong Competitive Advantage |
Pricing Strategies of Rolex | Yes, Rolex has sound pricing strategies | No | Pricing strategies are regularly imitated in the industry | Yes, firm has a pricing analytics engine | It can only provide Rolex with a Temporary Competitive Advantage |
Sales Force and Channel Management of Rolex | Yes | No | Can be imitated by competitors | Still there is lot of potential to utilize the excellent sales force | Can provide Rolex sustainable competitive advantage. Potential is certainly there. |
Ability to Attract Talent in Various Local & Global Markets | Yes, Rolex 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 Rolex | To a large extent yes | Providing Strong Competitive Advantage |
Talent to Manage Regulatory and Legal Obligations | Yes | No | Can be imitated by competitors | Yes | Not critical factor |
Intellectual Property Rights, Copyrights, and Trademarks | Yes, they are extremely valuable for Rolex to thwart competition | Yes, IPR and other rights are rare and competition of Rolex 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 |
Opportunities for Brand Extensions for Rolex 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 |
Opportunities in the Adjacent Industries that Rolex 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 |
Access to Cheap Capital for Rolex | Yes, as a leading player in the industry and current macro economic conditions, Rolex has access to cheap capital | No | Can be imitated by the competitors of Rolex | Not been totally exploited | Not significant in creating competitive advantage |
Product Portfolio and Synergy among Various Product Lines of Rolex | 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 |
Financial Resources of Rolex | Yes | No | Financial instruments and market liquidity are available to all the nearest competitors | Rolex has reasonably sound financial position | Rolex has relatively sustainable Competitive Advantage |
Rolex 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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