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Estee Lauder 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 Estee Lauder to do better resource allocation and build a defensible value and supply chain.
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What is a Valuable Resource for Estee Lauder? Defining Valuable in VRIO
A resource or capability is considered valuable for Estee Lauder , if it allows the
Estee Lauder to exploit opportunities or negate threats
emerging out of both the micro business environment and the macro environment. If a resource does not allow Estee Lauder to minimize threats or exploit opportunities, than it doesn't contribute signficantly to building a sustainable competitive advantage for Estee Lauder.
What are Rare Resources for Estee Lauder? Defining Rare in VRIO
In an industry that Estee Lauder operates in, valuable resources are held by number of competitors. So valuable resources themselves don’t provide a sustainable competitive advantage. Estee Lauder require rare resources to compete in the industry. If Estee Lauder don’t have rare resources that are required to succeed in the industry then Estee Lauder won’t be able to compete successfully in the marketplace. Secondly holding rare resources can provide Estee Lauder competitive advantage against players that don’t have those rare resources. HBR Case Study Solution
What is a Inimitable (Difficult to Immitate) Resource for Estee Lauder? Defining Inimitable in VRIO
A valuable and rare resource can provide a competitive advantage to Estee Lauder 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. Estee Lauder 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 Estee Lauder
What is a Organization for Estee Lauder? Defining Organization in VRIO
Even if the Estee Lauder 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 Estee Lauder 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 |
---|---|---|---|---|---|
Track Record of Project Execution | Yes, especially in an industry where there are frequent cost overun | Yes, especially in the segment that Estee Lauder operates in | No, none of the competitors so far has able to imitate this expertise | Yes, Estee Lauder is successful at it | Providing Strong Competitive Advantage |
Intellectual Property Rights, Copyrights, and Trademarks | Yes, they are extremely valuable for Estee Lauder to thwart competition | Yes, IPR and other rights are rare and competition of Estee Lauder 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 |
Talent to Manage Regulatory and Legal Obligations | Yes | No | Can be imitated by competitors | Yes | Not critical factor |
Opportunities for Brand Extensions for Estee Lauder 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 |
Brand Positioning of Estee Lauder 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 |
Opportunities in the Adjacent Industries that Estee Lauder 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 |
Access to Cheap Capital for Estee Lauder | Yes, as a leading player in the industry and current macro economic conditions, Estee Lauder has access to cheap capital | No | Can be imitated by the competitors of Estee Lauder | Not been totally exploited | Not significant in creating competitive advantage |
Supply Chain Network Flexibility of Estee Lauder | Yes | Yes | Near competitors also have flexible supply chain and share some of the suppliers | Fully utilized by Estee Lauder organizational structure and capabilities | Keeps the business running |
Track Record of Leadership Team at Estee Lauder | Yes | Yes | Can't be imitated by competitors | Yes | Providing Strong Competitive Advantage |
Position among Retailers and Wholesalers – Estee Lauder retail strategy | Yes, Estee Lauder has strong relationship with retailers and wholesalers | Yes, Estee Lauder 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 Estee Lauder | Yes, as it diversify the revenue streams and isolate company's balance sheet from economic cycles | Yes | Can be imitated by competitors of Estee Lauder but at a relatively high cost | Yes, it is one of the most diversified companies in its industry | Providing Strong Competitive Advantage |
Financial Resources of Estee Lauder | Yes | No | Financial instruments and market liquidity are available to all the nearest competitors | Estee Lauder has reasonably sound financial position | Estee Lauder has relatively sustainable Competitive Advantage |
Estee Lauder 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 Estee Lauder | Estee Lauder is leveraging the customer loyalty to good effect | Provide Estee Lauder medium term competitive advantage |
Marketing Expertise within Estee Lauder | 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 Estee Lauder are often matched by competitors | Yes, Estee Lauder is leveraging both its inhouse marketing department and external expertise | Temporary Competitive Advantage |
Estee Lauder 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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