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Avon Products 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 Avon Products to do better resource allocation and build a defensible value and supply chain.
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What is a Valuable Resource for Avon Products? Defining Valuable in VRIO
A resource or capability is considered valuable for Avon Products , if it allows the
Avon Products to exploit opportunities or negate threats
emerging out of both the micro business environment and the macro environment. If a resource does not allow Avon Products to minimize threats or exploit opportunities, than it doesn't contribute signficantly to building a sustainable competitive advantage for Avon Products.
What are Rare Resources for Avon Products? Defining Rare in VRIO
In an industry that Avon Products operates in, valuable resources are held by number of competitors. So valuable resources themselves don’t provide a sustainable competitive advantage. Avon Products require rare resources to compete in the industry. If Avon Products don’t have rare resources that are required to succeed in the industry then Avon Products won’t be able to compete successfully in the marketplace. Secondly holding rare resources can provide Avon Products competitive advantage against players that don’t have those rare resources. HBR Case Study Solution
What is a Inimitable (Difficult to Immitate) Resource for Avon Products? Defining Inimitable in VRIO
A valuable and rare resource can provide a competitive advantage to Avon Products 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. Avon Products 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 Avon Products
What is a Organization for Avon Products? Defining Organization in VRIO
Even if the Avon Products 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 Avon Products 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 Avon Products operates in | No, none of the competitors so far has able to imitate this expertise | Yes, Avon Products is successful at it | Providing Strong Competitive Advantage |
Access to Critical Raw Material for Successful Execution | Yes | Yes, as other competitors have to come to terms with Avon Products dominant market position | Can be imitated by competitors | Yes | Providing Sustainable Competitive Advantage |
Alignment of Activities with Avon Products 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 |
Marketing Expertise within Avon Products | 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 Avon Products are often matched by competitors | Yes, Avon Products is leveraging both its inhouse marketing department and external expertise | Temporary Competitive Advantage |
Supply Chain Network Flexibility of Avon Products | Yes | Yes | Near competitors also have flexible supply chain and share some of the suppliers | Fully utilized by Avon Products organizational structure and capabilities | Keeps the business running |
Vision of the Leadership for Next Set of Challenges | Yes | No | Can't be imitated by competitors of Avon Products | Not based on information provided in the case | Can Lead to Strong Competitive Advantage |
Financial Resources of Avon Products | Yes | No | Financial instruments and market liquidity are available to all the nearest competitors | Avon Products has reasonably sound financial position | Avon Products has relatively sustainable Competitive Advantage |
Talent to Manage Regulatory and Legal Obligations | Yes | No | Can be imitated by competitors | Yes | Not critical factor |
Avon Products 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 Avon Products | Avon Products is leveraging the customer loyalty to good effect | Provide Avon Products medium term competitive advantage |
Access to Cheap Capital for Avon Products | Yes, as a leading player in the industry and current macro economic conditions, Avon Products has access to cheap capital | No | Can be imitated by the competitors of Avon Products | Not been totally exploited | Not significant in creating competitive advantage |
Brand awareness of Avon Products products and services | Yes, the brand awareness of Avon Products products are high | Yes, Avon Products has one of the leading brand in the industry | No | Avon Products has utilized its leading brand position in various segments | Sustainable Competitive Advantage |
Sales Force and Channel Management of Avon Products | Yes | No | Can be imitated by competitors | Still there is lot of potential to utilize the excellent sales force | Can provide Avon Products sustainable competitive advantage. Potential is certainly there. |
Distribution and Logistics Costs Competitiveness | Yes, as it helps Avon Products in delivering lower costs | No | Can be imitated by competitors of Avon Products but it is difficult | Yes | Medium to Long Term Competitive Advantage |
Customer Community of Avon Products | Yes, as customers are co-creating products | Yes, the Avon Products has able to build a special relationship with its customers | It is very difficult for Avon Products competitors to imitate the culture and community dedication | Going by the data, there is still a lot of upside in building on Avon Products customers community ecosystem | Providing Strong Competitive Advantage |
Avon Products 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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