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Esso 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 Esso to do better resource allocation and build a defensible value and supply chain.
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What is a Valuable Resource for Esso? Defining Valuable in VRIO
A resource or capability is considered valuable for Esso , if it allows the
Esso to exploit opportunities or negate threats
emerging out of both the micro business environment and the macro environment. If a resource does not allow Esso to minimize threats or exploit opportunities, than it doesn't contribute signficantly to building a sustainable competitive advantage for Esso.
What are Rare Resources for Esso? Defining Rare in VRIO
In an industry that Esso operates in, valuable resources are held by number of competitors. So valuable resources themselves don’t provide a sustainable competitive advantage. Esso require rare resources to compete in the industry. If Esso don’t have rare resources that are required to succeed in the industry then Esso won’t be able to compete successfully in the marketplace. Secondly holding rare resources can provide Esso competitive advantage against players that don’t have those rare resources. HBR Case Study Solution
What is a Inimitable (Difficult to Immitate) Resource for Esso? Defining Inimitable in VRIO
A valuable and rare resource can provide a competitive advantage to Esso 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. Esso 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 Esso
What is a Organization for Esso? Defining Organization in VRIO
Even if the Esso 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 Esso 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 |
---|---|---|---|---|---|
Access to Critical Raw Material for Successful Execution | Yes | Yes, as other competitors have to come to terms with Esso dominant market position | Can be imitated by competitors | Yes | Providing Sustainable Competitive Advantage |
Financial Resources of Esso | Yes | No | Financial instruments and market liquidity are available to all the nearest competitors | Esso has reasonably sound financial position | Esso has relatively sustainable Competitive Advantage |
Opportunities in the Adjacent Industries that Esso 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 |
Customer Community of Esso | Yes, as customers are co-creating products | Yes, the Esso has able to build a special relationship with its customers | It is very difficult for Esso competitors to imitate the culture and community dedication | Going by the data, there is still a lot of upside in building on Esso customers community ecosystem | Providing Strong Competitive Advantage |
Esso 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 Esso | Esso is leveraging the customer loyalty to good effect | Provide Esso medium term competitive advantage |
Marketing Expertise within Esso | 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 Esso are often matched by competitors | Yes, Esso is leveraging both its inhouse marketing department and external expertise | Temporary Competitive Advantage |
Access to Cheap Capital for Esso | Yes, as a leading player in the industry and current macro economic conditions, Esso has access to cheap capital | No | Can be imitated by the competitors of Esso | Not been totally exploited | Not significant in creating competitive advantage |
Brand awareness of Esso products and services | Yes, the brand awareness of Esso products are high | Yes, Esso has one of the leading brand in the industry | No | Esso has utilized its leading brand position in various segments | Sustainable Competitive Advantage |
Pricing Strategies of Esso | Yes, Esso has sound pricing strategies | No | Pricing strategies are regularly imitated in the industry | Yes, firm has a pricing analytics engine | It can only provide Esso with a Temporary Competitive Advantage |
Global and Local Presence of Esso | Yes, as it diversify the revenue streams and isolate company's balance sheet from economic cycles | Yes | Can be imitated by competitors of Esso but at a relatively high cost | Yes, it is one of the most diversified companies in its industry | Providing Strong Competitive Advantage |
Supply Chain Network Flexibility of Esso | Yes | Yes | Near competitors also have flexible supply chain and share some of the suppliers | Fully utilized by Esso organizational structure and capabilities | Keeps the business running |
Ability to Attract Talent in Various Local & Global Markets | Yes, Esso 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 Esso | To a large extent yes | Providing Strong Competitive Advantage |
Position among Retailers and Wholesalers – Esso retail strategy | Yes, Esso has strong relationship with retailers and wholesalers | Yes, Esso has dedicated channel partners | Difficult to imitate though not impossible | Yes, over the years company has used it successfully | Sustainable Competitive Advantage |
Product Portfolio and Synergy among Various Product Lines of Esso | 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 |
Esso 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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