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Lotte Confectionery 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 Lotte Confectionery to do better resource allocation and build a defensible value and supply chain.
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What is a Valuable Resource for Lotte Confectionery? Defining Valuable in VRIO
A resource or capability is considered valuable for Lotte Confectionery , if it allows the
Lotte Confectionery to exploit opportunities or negate threats
emerging out of both the micro business environment and the macro environment. If a resource does not allow Lotte Confectionery to minimize threats or exploit opportunities, than it doesn't contribute signficantly to building a sustainable competitive advantage for Lotte Confectionery.
What are Rare Resources for Lotte Confectionery? Defining Rare in VRIO
In an industry that Lotte Confectionery operates in, valuable resources are held by number of competitors. So valuable resources themselves don’t provide a sustainable competitive advantage. Lotte Confectionery require rare resources to compete in the industry. If Lotte Confectionery don’t have rare resources that are required to succeed in the industry then Lotte Confectionery won’t be able to compete successfully in the marketplace. Secondly holding rare resources can provide Lotte Confectionery competitive advantage against players that don’t have those rare resources. HBR Case Study Solution
What is a Inimitable (Difficult to Immitate) Resource for Lotte Confectionery? Defining Inimitable in VRIO
A valuable and rare resource can provide a competitive advantage to Lotte Confectionery 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. Lotte Confectionery 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 Lotte Confectionery
What is a Organization for Lotte Confectionery? Defining Organization in VRIO
Even if the Lotte Confectionery 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 Lotte Confectionery 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 Lotte Confectionery | Yes, as it diversify the revenue streams and isolate company's balance sheet from economic cycles | Yes | Can be imitated by competitors of Lotte Confectionery but at a relatively high cost | Yes, it is one of the most diversified companies in its industry | Providing Strong Competitive Advantage |
Opportunities in the E-Commerce Space for Lotte Confectionery - using Present IT Capabilities | Yes, the e-commerce space is rapidly growing and Lotte Confectionery 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 |
Pricing Strategies of Lotte Confectionery | Yes, Lotte Confectionery has sound pricing strategies | No | Pricing strategies are regularly imitated in the industry | Yes, firm has a pricing analytics engine | It can only provide Lotte Confectionery with a Temporary Competitive Advantage |
Alignment of Activities with Lotte Confectionery 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 |
Supply Chain Network Flexibility of Lotte Confectionery | Yes | Yes | Near competitors also have flexible supply chain and share some of the suppliers | Fully utilized by Lotte Confectionery organizational structure and capabilities | Keeps the business running |
Talent to Manage Regulatory and Legal Obligations | Yes | No | Can be imitated by competitors | Yes | Not critical factor |
Vision of the Leadership for Next Set of Challenges | Yes | No | Can't be imitated by competitors of Lotte Confectionery | Not based on information provided in the case | Can Lead to Strong Competitive Advantage |
Lotte Confectionery 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 Lotte Confectionery | Lotte Confectionery is leveraging the customer loyalty to good effect | Provide Lotte Confectionery medium term competitive advantage |
Intellectual Property Rights, Copyrights, and Trademarks | Yes, they are extremely valuable for Lotte Confectionery to thwart competition | Yes, IPR and other rights are rare and competition of Lotte Confectionery 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 |
Ability to Attract Talent in Various Local & Global Markets | Yes, Lotte Confectionery 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 Lotte Confectionery | To a large extent yes | Providing Strong Competitive Advantage |
Marketing Expertise within Lotte Confectionery | 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 Lotte Confectionery are often matched by competitors | Yes, Lotte Confectionery is leveraging both its inhouse marketing department and external expertise | Temporary Competitive Advantage |
Product Portfolio and Synergy among Various Product Lines of Lotte Confectionery | 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 |
Brand Positioning of Lotte Confectionery 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 |
Opportunities for Brand Extensions for Lotte Confectionery 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 |
Lotte Confectionery 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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