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Air China 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 Air China to do better resource allocation and build a defensible value and supply chain.
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What is a Valuable Resource for Air China? Defining Valuable in VRIO
A resource or capability is considered valuable for Air China , if it allows the
Air China to exploit opportunities or negate threats
emerging out of both the micro business environment and the macro environment. If a resource does not allow Air China to minimize threats or exploit opportunities, than it doesn't contribute signficantly to building a sustainable competitive advantage for Air China.
What are Rare Resources for Air China? Defining Rare in VRIO
In an industry that Air China operates in, valuable resources are held by number of competitors. So valuable resources themselves don’t provide a sustainable competitive advantage. Air China require rare resources to compete in the industry. If Air China don’t have rare resources that are required to succeed in the industry then Air China won’t be able to compete successfully in the marketplace. Secondly holding rare resources can provide Air China competitive advantage against players that don’t have those rare resources. HBR Case Study Solution
What is a Inimitable (Difficult to Immitate) Resource for Air China? Defining Inimitable in VRIO
A valuable and rare resource can provide a competitive advantage to Air China 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. Air China 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 Air China
What is a Organization for Air China? Defining Organization in VRIO
Even if the Air China 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 Air China 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 |
---|---|---|---|---|---|
Customer Community of Air China | Yes, as customers are co-creating products | Yes, the Air China has able to build a special relationship with its customers | It is very difficult for Air China competitors to imitate the culture and community dedication | Going by the data, there is still a lot of upside in building on Air China customers community ecosystem | Providing Strong Competitive Advantage |
Position among Retailers and Wholesalers – Air China retail strategy | Yes, Air China has strong relationship with retailers and wholesalers | Yes, Air China has dedicated channel partners | Difficult to imitate though not impossible | Yes, over the years company has used it successfully | Sustainable Competitive Advantage |
Brand Positioning of Air China 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 |
Brand awareness of Air China products and services | Yes, the brand awareness of Air China products are high | Yes, Air China has one of the leading brand in the industry | No | Air China has utilized its leading brand position in various segments | Sustainable Competitive Advantage |
Track Record of Leadership Team at Air China | Yes | Yes | Can't be imitated by competitors | Yes | Providing Strong Competitive Advantage |
Ability to Attract Talent in Various Local & Global Markets | Yes, Air China 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 Air China | To a large extent yes | Providing Strong Competitive Advantage |
Access to Critical Raw Material for Successful Execution | Yes | Yes, as other competitors have to come to terms with Air China dominant market position | Can be imitated by competitors | Yes | Providing Sustainable Competitive Advantage |
Opportunities for Brand Extensions for Air China 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 |
Marketing Expertise within Air China | 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 Air China are often matched by competitors | Yes, Air China is leveraging both its inhouse marketing department and external expertise | Temporary Competitive Advantage |
Air China 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 Air China | Air China is leveraging the customer loyalty to good effect | Provide Air China medium term competitive advantage |
Opportunities in the E-Commerce Space for Air China - using Present IT Capabilities | Yes, the e-commerce space is rapidly growing and Air China 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 Air China | 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 |
Intellectual Property Rights, Copyrights, and Trademarks | Yes, they are extremely valuable for Air China to thwart competition | Yes, IPR and other rights are rare and competition of Air China 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 |
Financial Resources of Air China | Yes | No | Financial instruments and market liquidity are available to all the nearest competitors | Air China has reasonably sound financial position | Air China has relatively sustainable Competitive Advantage |
Air China 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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