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PayPal Holdings 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 PayPal Holdings to do better resource allocation and build a defensible value and supply chain.
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What is a Valuable Resource for PayPal Holdings? Defining Valuable in VRIO
A resource or capability is considered valuable for PayPal Holdings , if it allows the
PayPal Holdings to exploit opportunities or negate threats
emerging out of both the micro business environment and the macro environment. If a resource does not allow PayPal Holdings to minimize threats or exploit opportunities, than it doesn't contribute signficantly to building a sustainable competitive advantage for PayPal Holdings.
What are Rare Resources for PayPal Holdings? Defining Rare in VRIO
In an industry that PayPal Holdings operates in, valuable resources are held by number of competitors. So valuable resources themselves don’t provide a sustainable competitive advantage. PayPal Holdings require rare resources to compete in the industry. If PayPal Holdings don’t have rare resources that are required to succeed in the industry then PayPal Holdings won’t be able to compete successfully in the marketplace. Secondly holding rare resources can provide PayPal Holdings competitive advantage against players that don’t have those rare resources. HBR Case Study Solution
What is a Inimitable (Difficult to Immitate) Resource for PayPal Holdings? Defining Inimitable in VRIO
A valuable and rare resource can provide a competitive advantage to PayPal Holdings 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. PayPal Holdings 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 PayPal Holdings
What is a Organization for PayPal Holdings? Defining Organization in VRIO
Even if the PayPal Holdings 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 PayPal Holdings 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 |
---|---|---|---|---|---|
Financial Resources of PayPal Holdings | Yes | No | Financial instruments and market liquidity are available to all the nearest competitors | PayPal Holdings has reasonably sound financial position | PayPal Holdings has relatively 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 PayPal Holdings operates in | No, none of the competitors so far has able to imitate this expertise | Yes, PayPal Holdings is successful at it | Providing Strong Competitive Advantage |
Track Record of Leadership Team at PayPal Holdings | Yes | Yes | Can't be imitated by competitors | Yes | Providing Strong Competitive Advantage |
Access to Cheap Capital for PayPal Holdings | Yes, as a leading player in the industry and current macro economic conditions, PayPal Holdings has access to cheap capital | No | Can be imitated by the competitors of PayPal Holdings | Not been totally exploited | Not significant in creating competitive advantage |
Brand Positioning of PayPal Holdings 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 for Brand Extensions for PayPal Holdings 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 |
Supply Chain Network Flexibility of PayPal Holdings | Yes | Yes | Near competitors also have flexible supply chain and share some of the suppliers | Fully utilized by PayPal Holdings organizational structure and capabilities | Keeps the business running |
Ability to Attract Talent in Various Local & Global Markets | Yes, PayPal Holdings 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 PayPal Holdings | To a large extent yes | Providing Strong Competitive Advantage |
Access to Critical Raw Material for Successful Execution | Yes | Yes, as other competitors have to come to terms with PayPal Holdings dominant market position | Can be imitated by competitors | Yes | Providing Sustainable Competitive Advantage |
Opportunities in the Adjacent Industries that PayPal Holdings 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 |
Pricing Strategies of PayPal Holdings | Yes, PayPal Holdings has sound pricing strategies | No | Pricing strategies are regularly imitated in the industry | Yes, firm has a pricing analytics engine | It can only provide PayPal Holdings with a Temporary Competitive Advantage |
Marketing Expertise within PayPal Holdings | 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 PayPal Holdings are often matched by competitors | Yes, PayPal Holdings is leveraging both its inhouse marketing department and external expertise | Temporary Competitive Advantage |
Distribution and Logistics Costs Competitiveness | Yes, as it helps PayPal Holdings in delivering lower costs | No | Can be imitated by competitors of PayPal Holdings but it is difficult | Yes | Medium to Long Term Competitive Advantage |
Product Portfolio and Synergy among Various Product Lines of PayPal Holdings | 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 |
PayPal Holdings 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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