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Steel Dynamics 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 Steel Dynamics to do better resource allocation and build a defensible value and supply chain.
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What is a Valuable Resource for Steel Dynamics? Defining Valuable in VRIO
A resource or capability is considered valuable for Steel Dynamics , if it allows the
Steel Dynamics to exploit opportunities or negate threats
emerging out of both the micro business environment and the macro environment. If a resource does not allow Steel Dynamics to minimize threats or exploit opportunities, than it doesn't contribute signficantly to building a sustainable competitive advantage for Steel Dynamics.
What are Rare Resources for Steel Dynamics? Defining Rare in VRIO
In an industry that Steel Dynamics operates in, valuable resources are held by number of competitors. So valuable resources themselves don’t provide a sustainable competitive advantage. Steel Dynamics require rare resources to compete in the industry. If Steel Dynamics don’t have rare resources that are required to succeed in the industry then Steel Dynamics won’t be able to compete successfully in the marketplace. Secondly holding rare resources can provide Steel Dynamics competitive advantage against players that don’t have those rare resources. HBR Case Study Solution
What is a Inimitable (Difficult to Immitate) Resource for Steel Dynamics? Defining Inimitable in VRIO
A valuable and rare resource can provide a competitive advantage to Steel Dynamics 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. Steel Dynamics 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 Steel Dynamics
What is a Organization for Steel Dynamics? Defining Organization in VRIO
Even if the Steel Dynamics 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 Steel Dynamics 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 Steel Dynamics | Yes | No | Financial instruments and market liquidity are available to all the nearest competitors | Steel Dynamics has reasonably sound financial position | Steel Dynamics 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 Steel Dynamics operates in | No, none of the competitors so far has able to imitate this expertise | Yes, Steel Dynamics is successful at it | Providing Strong Competitive Advantage |
Global and Local Presence of Steel Dynamics | Yes, as it diversify the revenue streams and isolate company's balance sheet from economic cycles | Yes | Can be imitated by competitors of Steel Dynamics but at a relatively high cost | Yes, it is one of the most diversified companies in its industry | Providing Strong Competitive Advantage |
Vision of the Leadership for Next Set of Challenges | Yes | No | Can't be imitated by competitors of Steel Dynamics | Not based on information provided in the case | Can Lead to Strong Competitive Advantage |
Sales Force and Channel Management of Steel Dynamics | Yes | No | Can be imitated by competitors | Still there is lot of potential to utilize the excellent sales force | Can provide Steel Dynamics sustainable competitive advantage. Potential is certainly there. |
Alignment of Activities with Steel Dynamics 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 |
Track Record of Leadership Team at Steel Dynamics | Yes | Yes | Can't be imitated by competitors | Yes | Providing Strong Competitive Advantage |
Opportunities in the Adjacent Industries that Steel Dynamics 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 |
Product Portfolio and Synergy among Various Product Lines of Steel Dynamics | 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 |
Talent to Manage Regulatory and Legal Obligations | Yes | No | Can be imitated by competitors | Yes | Not critical factor |
Access to Cheap Capital for Steel Dynamics | Yes, as a leading player in the industry and current macro economic conditions, Steel Dynamics has access to cheap capital | No | Can be imitated by the competitors of Steel Dynamics | Not been totally exploited | Not significant in creating competitive advantage |
Position among Retailers and Wholesalers – Steel Dynamics retail strategy | Yes, Steel Dynamics has strong relationship with retailers and wholesalers | Yes, Steel Dynamics has dedicated channel partners | Difficult to imitate though not impossible | Yes, over the years company has used it successfully | Sustainable Competitive Advantage |
Opportunities in the E-Commerce Space for Steel Dynamics - using Present IT Capabilities | Yes, the e-commerce space is rapidly growing and Steel Dynamics 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 |
Brand Positioning of Steel Dynamics 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 |
Steel Dynamics 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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