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American Family Insurance Group 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 American Family Insurance Group to do better resource allocation and build a defensible value and supply chain.
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What is a Valuable Resource for American Family Insurance Group? Defining Valuable in VRIO
A resource or capability is considered valuable for American Family Insurance Group , if it allows the
American Family Insurance Group to exploit opportunities or negate threats
emerging out of both the micro business environment and the macro environment. If a resource does not allow American Family Insurance Group to minimize threats or exploit opportunities, than it doesn't contribute signficantly to building a sustainable competitive advantage for American Family Insurance Group.
What are Rare Resources for American Family Insurance Group? Defining Rare in VRIO
In an industry that American Family Insurance Group operates in, valuable resources are held by number of competitors. So valuable resources themselves don’t provide a sustainable competitive advantage. American Family Insurance Group require rare resources to compete in the industry. If American Family Insurance Group don’t have rare resources that are required to succeed in the industry then American Family Insurance Group won’t be able to compete successfully in the marketplace. Secondly holding rare resources can provide American Family Insurance Group competitive advantage against players that don’t have those rare resources. HBR Case Study Solution
What is a Inimitable (Difficult to Immitate) Resource for American Family Insurance Group? Defining Inimitable in VRIO
A valuable and rare resource can provide a competitive advantage to American Family Insurance Group 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. American Family Insurance Group 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 American Family Insurance Group
What is a Organization for American Family Insurance Group? Defining Organization in VRIO
Even if the American Family Insurance Group 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 American Family Insurance Group 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 |
---|---|---|---|---|---|
Successful Implementation of Digital Strategy at American Family Insurance Group | 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 |
Position among Retailers and Wholesalers – American Family Insurance Group retail strategy | Yes, American Family Insurance Group has strong relationship with retailers and wholesalers | Yes, American Family Insurance Group has dedicated channel partners | Difficult to imitate though not impossible | Yes, over the years company has used it successfully | Sustainable Competitive Advantage |
Customer Community of American Family Insurance Group | Yes, as customers are co-creating products | Yes, the American Family Insurance Group has able to build a special relationship with its customers | It is very difficult for American Family Insurance Group competitors to imitate the culture and community dedication | Going by the data, there is still a lot of upside in building on American Family Insurance Group customers community ecosystem | Providing Strong Competitive Advantage |
Opportunities in the E-Commerce Space for American Family Insurance Group - using Present IT Capabilities | Yes, the e-commerce space is rapidly growing and American Family Insurance Group 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 |
Talent to Manage Regulatory and Legal Obligations | Yes | No | Can be imitated by competitors | Yes | Not critical factor |
Track Record of Leadership Team at American Family Insurance Group | Yes | Yes | Can't be imitated by competitors | Yes | Providing Strong Competitive Advantage |
Marketing Expertise within American Family Insurance Group | 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 American Family Insurance Group are often matched by competitors | Yes, American Family Insurance Group is leveraging both its inhouse marketing department and external expertise | Temporary Competitive Advantage |
Alignment of Activities with American Family Insurance Group 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 |
Brand awareness of American Family Insurance Group products and services | Yes, the brand awareness of American Family Insurance Group products are high | Yes, American Family Insurance Group has one of the leading brand in the industry | No | American Family Insurance Group has utilized its leading brand position in various segments | Sustainable Competitive Advantage |
Intellectual Property Rights, Copyrights, and Trademarks | Yes, they are extremely valuable for American Family Insurance Group to thwart competition | Yes, IPR and other rights are rare and competition of American Family Insurance Group 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 |
Pricing Strategies of American Family Insurance Group | Yes, American Family Insurance Group has sound pricing strategies | No | Pricing strategies are regularly imitated in the industry | Yes, firm has a pricing analytics engine | It can only provide American Family Insurance Group with a Temporary Competitive Advantage |
Access to Cheap Capital for American Family Insurance Group | Yes, as a leading player in the industry and current macro economic conditions, American Family Insurance Group has access to cheap capital | No | Can be imitated by the competitors of American Family Insurance Group | Not been totally exploited | Not significant in creating competitive advantage |
Distribution and Logistics Costs Competitiveness | Yes, as it helps American Family Insurance Group in delivering lower costs | No | Can be imitated by competitors of American Family Insurance Group but it is difficult | Yes | Medium to Long Term Competitive Advantage |
Global and Local Presence of American Family Insurance Group | Yes, as it diversify the revenue streams and isolate company's balance sheet from economic cycles | Yes | Can be imitated by competitors of American Family Insurance Group but at a relatively high cost | Yes, it is one of the most diversified companies in its industry | Providing Strong Competitive Advantage |
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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