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BHP Billiton 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 BHP Billiton to do better resource allocation and build a defensible value and supply chain.
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What is a Valuable Resource for BHP Billiton? Defining Valuable in VRIO
A resource or capability is considered valuable for BHP Billiton , if it allows the
BHP Billiton to exploit opportunities or negate threats
emerging out of both the micro business environment and the macro environment. If a resource does not allow BHP Billiton to minimize threats or exploit opportunities, than it doesn't contribute signficantly to building a sustainable competitive advantage for BHP Billiton.
What are Rare Resources for BHP Billiton? Defining Rare in VRIO
In an industry that BHP Billiton operates in, valuable resources are held by number of competitors. So valuable resources themselves don’t provide a sustainable competitive advantage. BHP Billiton require rare resources to compete in the industry. If BHP Billiton don’t have rare resources that are required to succeed in the industry then BHP Billiton won’t be able to compete successfully in the marketplace. Secondly holding rare resources can provide BHP Billiton competitive advantage against players that don’t have those rare resources. HBR Case Study Solution
What is a Inimitable (Difficult to Immitate) Resource for BHP Billiton? Defining Inimitable in VRIO
A valuable and rare resource can provide a competitive advantage to BHP Billiton 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. BHP Billiton 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 BHP Billiton
What is a Organization for BHP Billiton? Defining Organization in VRIO
Even if the BHP Billiton 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 BHP Billiton 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 |
---|---|---|---|---|---|
Pricing Strategies of BHP Billiton | Yes, BHP Billiton has sound pricing strategies | No | Pricing strategies are regularly imitated in the industry | Yes, firm has a pricing analytics engine | It can only provide BHP Billiton with a Temporary Competitive Advantage |
Opportunities for Brand Extensions for BHP Billiton 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 |
Alignment of Activities with BHP Billiton 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 BHP Billiton | Yes | Yes | Near competitors also have flexible supply chain and share some of the suppliers | Fully utilized by BHP Billiton organizational structure and capabilities | Keeps the business running |
Position among Retailers and Wholesalers – BHP Billiton retail strategy | Yes, BHP Billiton has strong relationship with retailers and wholesalers | Yes, BHP Billiton has dedicated channel partners | Difficult to imitate though not impossible | Yes, over the years company has used it successfully | Sustainable Competitive Advantage |
Customer Community of BHP Billiton | Yes, as customers are co-creating products | Yes, the BHP Billiton has able to build a special relationship with its customers | It is very difficult for BHP Billiton competitors to imitate the culture and community dedication | Going by the data, there is still a lot of upside in building on BHP Billiton customers community ecosystem | Providing Strong Competitive Advantage |
Distribution and Logistics Costs Competitiveness | Yes, as it helps BHP Billiton in delivering lower costs | No | Can be imitated by competitors of BHP Billiton but it is difficult | Yes | Medium to Long Term Competitive Advantage |
Financial Resources of BHP Billiton | Yes | No | Financial instruments and market liquidity are available to all the nearest competitors | BHP Billiton has reasonably sound financial position | BHP Billiton has relatively sustainable Competitive Advantage |
BHP Billiton 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 BHP Billiton | BHP Billiton is leveraging the customer loyalty to good effect | Provide BHP Billiton medium term competitive advantage |
Brand awareness of BHP Billiton products and services | Yes, the brand awareness of BHP Billiton products are high | Yes, BHP Billiton has one of the leading brand in the industry | No | BHP Billiton has utilized its leading brand position in various segments | Sustainable Competitive Advantage |
Marketing Expertise within BHP Billiton | 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 BHP Billiton are often matched by competitors | Yes, BHP Billiton is leveraging both its inhouse marketing department and external expertise | Temporary Competitive Advantage |
Access to Cheap Capital for BHP Billiton | Yes, as a leading player in the industry and current macro economic conditions, BHP Billiton has access to cheap capital | No | Can be imitated by the competitors of BHP Billiton | Not been totally exploited | Not significant in creating competitive advantage |
Sales Force and Channel Management of BHP Billiton | Yes | No | Can be imitated by competitors | Still there is lot of potential to utilize the excellent sales force | Can provide BHP Billiton sustainable competitive advantage. Potential is certainly there. |
Successful Implementation of Digital Strategy at BHP Billiton | 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 |
BHP Billiton 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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