Cummins 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 Cummins to do better resource allocation and build a defensible value and supply chain.

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What is a Valuable Resource for Cummins? Defining Valuable in VRIO

A resource or capability is considered valuable for Cummins , if it allows the Cummins to exploit opportunities or negate threats emerging out of both the micro business environment and the macro environment. If a resource does not allow Cummins to minimize threats or exploit opportunities, than it doesn't contribute signficantly to building a sustainable competitive advantage for Cummins.

What are Rare Resources for Cummins? Defining Rare in VRIO

In an industry that Cummins operates in, valuable resources are held by number of competitors. So valuable resources themselves don’t provide a sustainable competitive advantage. Cummins require rare resources to compete in the industry. If Cummins don’t have rare resources that are required to succeed in the industry then Cummins won’t be able to compete successfully in the marketplace. Secondly holding rare resources can provide Cummins competitive advantage against players that don’t have those rare resources. HBR Case Study Solution

What is a Inimitable (Difficult to Immitate) Resource for Cummins? Defining Inimitable in VRIO

A valuable and rare resource can provide a competitive advantage to Cummins 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. Cummins 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 Cummins

What is a Organization for Cummins? Defining Organization in VRIO

Even if the Cummins 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 Cummins 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
Position among Retailers and Wholesalers – Cummins retail strategy	Yes, Cummins has strong relationship with retailers and wholesalers	Yes, Cummins has dedicated channel partners	Difficult to imitate though not impossible	Yes, over the years company has used it successfully	Sustainable Competitive Advantage
Opportunities for Brand Extensions for Cummins 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
Intellectual Property Rights, Copyrights, and Trademarks	Yes, they are extremely valuable for Cummins to thwart competition	Yes, IPR and other rights are rare and competition of Cummins 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
Sales Force and Channel Management of Cummins	Yes	No	Can be imitated by competitors	Still there is lot of potential to utilize the excellent sales force	Can provide Cummins sustainable competitive advantage. Potential is certainly there.
Opportunities in the Adjacent Industries that Cummins 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
Marketing Expertise within Cummins	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 Cummins are often matched by competitors	Yes, Cummins is leveraging both its inhouse marketing department and external expertise	Temporary Competitive Advantage
Brand Positioning of Cummins 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
Pricing Strategies of Cummins	Yes, Cummins has sound pricing strategies	No	Pricing strategies are regularly imitated in the industry	Yes, firm has a pricing analytics engine	It can only provide Cummins with a Temporary Competitive Advantage
Track Record of Project Execution	Yes, especially in an industry where there are frequent cost overun	Yes, especially in the segment that Cummins operates in	No, none of the competitors so far has able to imitate this expertise	Yes, Cummins is successful at it	Providing Strong Competitive Advantage
Successful Implementation of Digital Strategy at Cummins	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
Customer Community of Cummins	Yes, as customers are co-creating products	Yes, the Cummins has able to build a special relationship with its customers	It is very difficult for Cummins competitors to imitate the culture and community dedication	Going by the data, there is still a lot of upside in building on Cummins customers community ecosystem	Providing Strong Competitive Advantage
Product Portfolio and Synergy among Various Product Lines of Cummins	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
Access to Cheap Capital for Cummins	Yes, as a leading player in the industry and current macro economic conditions, Cummins has access to cheap capital	No	Can be imitated by the competitors of Cummins	Not been totally exploited	Not significant in creating competitive advantage
Supply Chain Network Flexibility of Cummins	Yes	Yes	Near competitors also have flexible supply chain and share some of the suppliers	Fully utilized by Cummins organizational structure and capabilities	Keeps the business running

Cummins 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