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Norfolk Southern 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 Norfolk Southern to do better resource allocation and build a defensible value and supply chain.
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What is a Valuable Resource for Norfolk Southern? Defining Valuable in VRIO
A resource or capability is considered valuable for Norfolk Southern , if it allows the
Norfolk Southern to exploit opportunities or negate threats
emerging out of both the micro business environment and the macro environment. If a resource does not allow Norfolk Southern to minimize threats or exploit opportunities, than it doesn't contribute signficantly to building a sustainable competitive advantage for Norfolk Southern.
What are Rare Resources for Norfolk Southern? Defining Rare in VRIO
In an industry that Norfolk Southern operates in, valuable resources are held by number of competitors. So valuable resources themselves don’t provide a sustainable competitive advantage. Norfolk Southern require rare resources to compete in the industry. If Norfolk Southern don’t have rare resources that are required to succeed in the industry then Norfolk Southern won’t be able to compete successfully in the marketplace. Secondly holding rare resources can provide Norfolk Southern competitive advantage against players that don’t have those rare resources. HBR Case Study Solution
What is a Inimitable (Difficult to Immitate) Resource for Norfolk Southern? Defining Inimitable in VRIO
A valuable and rare resource can provide a competitive advantage to Norfolk Southern 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. Norfolk Southern 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 Norfolk Southern
What is a Organization for Norfolk Southern? Defining Organization in VRIO
Even if the Norfolk Southern 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 Norfolk Southern 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 Norfolk Southern | 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 Norfolk Southern are often matched by competitors | Yes, Norfolk Southern is leveraging both its inhouse marketing department and external expertise | Temporary Competitive Advantage |
Sales Force and Channel Management of Norfolk Southern | Yes | No | Can be imitated by competitors | Still there is lot of potential to utilize the excellent sales force | Can provide Norfolk Southern sustainable competitive advantage. Potential is certainly there. |
Access to Critical Raw Material for Successful Execution | Yes | Yes, as other competitors have to come to terms with Norfolk Southern dominant market position | Can be imitated by competitors | Yes | Providing Sustainable Competitive Advantage |
Supply Chain Network Flexibility of Norfolk Southern | Yes | Yes | Near competitors also have flexible supply chain and share some of the suppliers | Fully utilized by Norfolk Southern organizational structure and capabilities | Keeps the business running |
Distribution and Logistics Costs Competitiveness | Yes, as it helps Norfolk Southern in delivering lower costs | No | Can be imitated by competitors of Norfolk Southern but it is difficult | Yes | Medium to Long Term Competitive Advantage |
Alignment of Activities with Norfolk Southern 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 |
Talent to Manage Regulatory and Legal Obligations | Yes | No | Can be imitated by competitors | Yes | Not critical factor |
Vision of the Leadership for Next Set of Challenges | Yes | No | Can't be imitated by competitors of Norfolk Southern | Not based on information provided in the case | Can Lead to Strong Competitive Advantage |
Financial Resources of Norfolk Southern | Yes | No | Financial instruments and market liquidity are available to all the nearest competitors | Norfolk Southern has reasonably sound financial position | Norfolk Southern has relatively sustainable Competitive Advantage |
Opportunities for Brand Extensions for Norfolk Southern 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 Norfolk Southern | Yes, as it diversify the revenue streams and isolate company's balance sheet from economic cycles | Yes | Can be imitated by competitors of Norfolk Southern 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 Norfolk Southern | 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 |
Track Record of Project Execution | Yes, especially in an industry where there are frequent cost overun | Yes, especially in the segment that Norfolk Southern operates in | No, none of the competitors so far has able to imitate this expertise | Yes, Norfolk Southern is successful at it | Providing Strong Competitive Advantage |
Track Record of Leadership Team at Norfolk Southern | Yes | Yes | Can't be imitated by competitors | Yes | Providing Strong Competitive Advantage |
Norfolk Southern 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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