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Schlumberger 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 Schlumberger to do better resource allocation and build a defensible value and supply chain.
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What is a Valuable Resource for Schlumberger? Defining Valuable in VRIO
A resource or capability is considered valuable for Schlumberger , if it allows the
Schlumberger to exploit opportunities or negate threats
emerging out of both the micro business environment and the macro environment. If a resource does not allow Schlumberger to minimize threats or exploit opportunities, than it doesn't contribute signficantly to building a sustainable competitive advantage for Schlumberger.
What are Rare Resources for Schlumberger? Defining Rare in VRIO
In an industry that Schlumberger operates in, valuable resources are held by number of competitors. So valuable resources themselves don’t provide a sustainable competitive advantage. Schlumberger require rare resources to compete in the industry. If Schlumberger don’t have rare resources that are required to succeed in the industry then Schlumberger won’t be able to compete successfully in the marketplace. Secondly holding rare resources can provide Schlumberger competitive advantage against players that don’t have those rare resources. HBR Case Study Solution
What is a Inimitable (Difficult to Immitate) Resource for Schlumberger? Defining Inimitable in VRIO
A valuable and rare resource can provide a competitive advantage to Schlumberger 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. Schlumberger 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 Schlumberger
What is a Organization for Schlumberger? Defining Organization in VRIO
Even if the Schlumberger 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 Schlumberger 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 |
---|---|---|---|---|---|
Marketing Expertise within Schlumberger | 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 Schlumberger are often matched by competitors | Yes, Schlumberger is leveraging both its inhouse marketing department and external expertise | Temporary Competitive Advantage |
Access to Critical Raw Material for Successful Execution | Yes | Yes, as other competitors have to come to terms with Schlumberger dominant market position | Can be imitated by competitors | Yes | Providing Sustainable Competitive Advantage |
Customer Community of Schlumberger | Yes, as customers are co-creating products | Yes, the Schlumberger has able to build a special relationship with its customers | It is very difficult for Schlumberger competitors to imitate the culture and community dedication | Going by the data, there is still a lot of upside in building on Schlumberger customers community ecosystem | Providing Strong Competitive Advantage |
Track Record of Project Execution | Yes, especially in an industry where there are frequent cost overun | Yes, especially in the segment that Schlumberger operates in | No, none of the competitors so far has able to imitate this expertise | Yes, Schlumberger is successful at it | Providing Strong Competitive Advantage |
Brand awareness of Schlumberger products and services | Yes, the brand awareness of Schlumberger products are high | Yes, Schlumberger has one of the leading brand in the industry | No | Schlumberger has utilized its leading brand position in various segments | Sustainable Competitive Advantage |
Talent to Manage Regulatory and Legal Obligations | Yes | No | Can be imitated by competitors | Yes | Not critical factor |
Opportunities in the Adjacent Industries that Schlumberger 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 |
Product Portfolio and Synergy among Various Product Lines of Schlumberger | 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 |
Intellectual Property Rights, Copyrights, and Trademarks | Yes, they are extremely valuable for Schlumberger to thwart competition | Yes, IPR and other rights are rare and competition of Schlumberger 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 |
Schlumberger 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 Schlumberger | Schlumberger is leveraging the customer loyalty to good effect | Provide Schlumberger medium term competitive advantage |
Opportunities in the E-Commerce Space for Schlumberger - using Present IT Capabilities | Yes, the e-commerce space is rapidly growing and Schlumberger 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 |
Successful Implementation of Digital Strategy at Schlumberger | 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 |
Global and Local Presence of Schlumberger | Yes, as it diversify the revenue streams and isolate company's balance sheet from economic cycles | Yes | Can be imitated by competitors of Schlumberger 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 Schlumberger | Yes | Yes | Near competitors also have flexible supply chain and share some of the suppliers | Fully utilized by Schlumberger organizational structure and capabilities | Keeps the business running |
Schlumberger 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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