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Xcel Energy 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 Xcel Energy to do better resource allocation and build a defensible value and supply chain.
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What is a Valuable Resource for Xcel Energy? Defining Valuable in VRIO
A resource or capability is considered valuable for Xcel Energy , if it allows the
Xcel Energy to exploit opportunities or negate threats
emerging out of both the micro business environment and the macro environment. If a resource does not allow Xcel Energy to minimize threats or exploit opportunities, than it doesn't contribute signficantly to building a sustainable competitive advantage for Xcel Energy.
What are Rare Resources for Xcel Energy? Defining Rare in VRIO
In an industry that Xcel Energy operates in, valuable resources are held by number of competitors. So valuable resources themselves don’t provide a sustainable competitive advantage. Xcel Energy require rare resources to compete in the industry. If Xcel Energy don’t have rare resources that are required to succeed in the industry then Xcel Energy won’t be able to compete successfully in the marketplace. Secondly holding rare resources can provide Xcel Energy competitive advantage against players that don’t have those rare resources. HBR Case Study Solution
What is a Inimitable (Difficult to Immitate) Resource for Xcel Energy? Defining Inimitable in VRIO
A valuable and rare resource can provide a competitive advantage to Xcel Energy 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. Xcel Energy 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 Xcel Energy
What is a Organization for Xcel Energy? Defining Organization in VRIO
Even if the Xcel Energy 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 Xcel Energy 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 |
---|---|---|---|---|---|
Brand Positioning of Xcel Energy 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 |
Position among Retailers and Wholesalers – Xcel Energy retail strategy | Yes, Xcel Energy has strong relationship with retailers and wholesalers | Yes, Xcel Energy has dedicated channel partners | Difficult to imitate though not impossible | Yes, over the years company has used it successfully | Sustainable Competitive Advantage |
Track Record of Project Execution | Yes, especially in an industry where there are frequent cost overun | Yes, especially in the segment that Xcel Energy operates in | No, none of the competitors so far has able to imitate this expertise | Yes, Xcel Energy is successful at it | Providing Strong Competitive Advantage |
Opportunities for Brand Extensions for Xcel Energy 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 |
Global and Local Presence of Xcel Energy | Yes, as it diversify the revenue streams and isolate company's balance sheet from economic cycles | Yes | Can be imitated by competitors of Xcel Energy but at a relatively high cost | Yes, it is one of the most diversified companies in its industry | Providing Strong Competitive Advantage |
Access to Critical Raw Material for Successful Execution | Yes | Yes, as other competitors have to come to terms with Xcel Energy dominant market position | Can be imitated by competitors | Yes | Providing Sustainable Competitive Advantage |
Xcel Energy 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 Xcel Energy | Xcel Energy is leveraging the customer loyalty to good effect | Provide Xcel Energy medium term competitive advantage |
Opportunities in the Adjacent Industries that Xcel Energy 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 |
Alignment of Activities with Xcel Energy Corporate Strategy | Yes | No | Each of the firm has its own strategy | Yes, company has organizational skills to extract the maximum out of it. | Still lots of potential to build on it |
Financial Resources of Xcel Energy | Yes | No | Financial instruments and market liquidity are available to all the nearest competitors | Xcel Energy has reasonably sound financial position | Xcel Energy has relatively sustainable Competitive Advantage |
Brand awareness of Xcel Energy products and services | Yes, the brand awareness of Xcel Energy products are high | Yes, Xcel Energy has one of the leading brand in the industry | No | Xcel Energy has utilized its leading brand position in various segments | Sustainable Competitive Advantage |
Customer Community of Xcel Energy | Yes, as customers are co-creating products | Yes, the Xcel Energy has able to build a special relationship with its customers | It is very difficult for Xcel Energy competitors to imitate the culture and community dedication | Going by the data, there is still a lot of upside in building on Xcel Energy customers community ecosystem | Providing Strong Competitive Advantage |
Pricing Strategies of Xcel Energy | Yes, Xcel Energy has sound pricing strategies | No | Pricing strategies are regularly imitated in the industry | Yes, firm has a pricing analytics engine | It can only provide Xcel Energy with a Temporary Competitive Advantage |
Opportunities in the E-Commerce Space for Xcel Energy - using Present IT Capabilities | Yes, the e-commerce space is rapidly growing and Xcel Energy 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 |
Xcel Energy 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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