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Larsen & Toubro 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 Larsen & Toubro to do better resource allocation and build a defensible value and supply chain.
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What is a Valuable Resource for Larsen & Toubro? Defining Valuable in VRIO
A resource or capability is considered valuable for Larsen & Toubro , if it allows the
Larsen & Toubro to exploit opportunities or negate threats
emerging out of both the micro business environment and the macro environment. If a resource does not allow Larsen & Toubro to minimize threats or exploit opportunities, than it doesn't contribute signficantly to building a sustainable competitive advantage for Larsen & Toubro.
What are Rare Resources for Larsen & Toubro? Defining Rare in VRIO
In an industry that Larsen & Toubro operates in, valuable resources are held by number of competitors. So valuable resources themselves don’t provide a sustainable competitive advantage. Larsen & Toubro require rare resources to compete in the industry. If Larsen & Toubro don’t have rare resources that are required to succeed in the industry then Larsen & Toubro won’t be able to compete successfully in the marketplace. Secondly holding rare resources can provide Larsen & Toubro competitive advantage against players that don’t have those rare resources. HBR Case Study Solution
What is a Inimitable (Difficult to Immitate) Resource for Larsen & Toubro? Defining Inimitable in VRIO
A valuable and rare resource can provide a competitive advantage to Larsen & Toubro 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. Larsen & Toubro 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 Larsen & Toubro
What is a Organization for Larsen & Toubro? Defining Organization in VRIO
Even if the Larsen & Toubro 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 Larsen & Toubro 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 Larsen & Toubro | 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 Larsen & Toubro are often matched by competitors | Yes, Larsen & Toubro is leveraging both its inhouse marketing department and external expertise | Temporary Competitive Advantage |
Brand awareness of Larsen & Toubro products and services | Yes, the brand awareness of Larsen & Toubro products are high | Yes, Larsen & Toubro has one of the leading brand in the industry | No | Larsen & Toubro has utilized its leading brand position in various segments | Sustainable Competitive Advantage |
Sales Force and Channel Management of Larsen & Toubro | Yes | No | Can be imitated by competitors | Still there is lot of potential to utilize the excellent sales force | Can provide Larsen & Toubro sustainable competitive advantage. Potential is certainly there. |
Financial Resources of Larsen & Toubro | Yes | No | Financial instruments and market liquidity are available to all the nearest competitors | Larsen & Toubro has reasonably sound financial position | Larsen & Toubro has relatively sustainable Competitive Advantage |
Position among Retailers and Wholesalers – Larsen & Toubro retail strategy | Yes, Larsen & Toubro has strong relationship with retailers and wholesalers | Yes, Larsen & Toubro has dedicated channel partners | Difficult to imitate though not impossible | Yes, over the years company has used it successfully | Sustainable Competitive Advantage |
Global and Local Presence of Larsen & Toubro | Yes, as it diversify the revenue streams and isolate company's balance sheet from economic cycles | Yes | Can be imitated by competitors of Larsen & Toubro but at a relatively high cost | Yes, it is one of the most diversified companies in its industry | Providing Strong Competitive Advantage |
Product Portfolio and Synergy among Various Product Lines of Larsen & Toubro | 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 Larsen & Toubro to thwart competition | Yes, IPR and other rights are rare and competition of Larsen & Toubro 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 |
Distribution and Logistics Costs Competitiveness | Yes, as it helps Larsen & Toubro in delivering lower costs | No | Can be imitated by competitors of Larsen & Toubro but it is difficult | Yes | Medium to Long Term Competitive Advantage |
Opportunities in the E-Commerce Space for Larsen & Toubro - using Present IT Capabilities | Yes, the e-commerce space is rapidly growing and Larsen & Toubro 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 |
Supply Chain Network Flexibility of Larsen & Toubro | Yes | Yes | Near competitors also have flexible supply chain and share some of the suppliers | Fully utilized by Larsen & Toubro organizational structure and capabilities | Keeps the business running |
Ability to Attract Talent in Various Local & Global Markets | Yes, Larsen & Toubro 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 Larsen & Toubro | To a large extent yes | Providing Strong Competitive Advantage |
Talent to Manage Regulatory and Legal Obligations | Yes | No | Can be imitated by competitors | Yes | Not critical factor |
Access to Cheap Capital for Larsen & Toubro | Yes, as a leading player in the industry and current macro economic conditions, Larsen & Toubro has access to cheap capital | No | Can be imitated by the competitors of Larsen & Toubro | Not been totally exploited | Not significant in creating competitive advantage |
Larsen & Toubro 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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