Netflix 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 Netflix to do better resource allocation and build a defensible value and supply chain.

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What is a Valuable Resource for Netflix? Defining Valuable in VRIO

A resource or capability is considered valuable for Netflix , if it allows the Netflix to exploit opportunities or negate threats emerging out of both the micro business environment and the macro environment. If a resource does not allow Netflix to minimize threats or exploit opportunities, than it doesn't contribute signficantly to building a sustainable competitive advantage for Netflix.

What are Rare Resources for Netflix? Defining Rare in VRIO

In an industry that Netflix operates in, valuable resources are held by number of competitors. So valuable resources themselves don’t provide a sustainable competitive advantage. Netflix require rare resources to compete in the industry. If Netflix don’t have rare resources that are required to succeed in the industry then Netflix won’t be able to compete successfully in the marketplace. Secondly holding rare resources can provide Netflix competitive advantage against players that don’t have those rare resources. HBR Case Study Solution

What is a Inimitable (Difficult to Immitate) Resource for Netflix? Defining Inimitable in VRIO

A valuable and rare resource can provide a competitive advantage to Netflix 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. Netflix 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 Netflix

What is a Organization for Netflix? Defining Organization in VRIO

Even if the Netflix 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 Netflix 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
Customer Community of Netflix	Yes, as customers are co-creating products	Yes, the Netflix has able to build a special relationship with its customers	It is very difficult for Netflix competitors to imitate the culture and community dedication	Going by the data, there is still a lot of upside in building on Netflix customers community ecosystem	Providing Strong Competitive Advantage
Global and Local Presence of Netflix	Yes, as it diversify the revenue streams and isolate company's balance sheet from economic cycles	Yes	Can be imitated by competitors of Netflix but at a relatively high cost	Yes, it is one of the most diversified companies in its industry	Providing Strong Competitive Advantage
Opportunities in the E-Commerce Space for Netflix - using Present IT Capabilities	Yes, the e-commerce space is rapidly growing and Netflix 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
Opportunities in the Adjacent Industries that Netflix 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 Netflix	Yes, Netflix has sound pricing strategies	No	Pricing strategies are regularly imitated in the industry	Yes, firm has a pricing analytics engine	It can only provide Netflix with a Temporary Competitive Advantage
Track Record of Leadership Team at Netflix	Yes	Yes	Can't be imitated by competitors	Yes	Providing Strong Competitive Advantage
Supply Chain Network Flexibility of Netflix	Yes	Yes	Near competitors also have flexible supply chain and share some of the suppliers	Fully utilized by Netflix organizational structure and capabilities	Keeps the business running
Netflix 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 Netflix	Netflix is leveraging the customer loyalty to good effect	Provide Netflix medium term competitive advantage
Brand awareness of Netflix products and services	Yes, the brand awareness of Netflix products are high	Yes, Netflix has one of the leading brand in the industry	No	Netflix has utilized its leading brand position in various segments	Sustainable Competitive Advantage
Marketing Expertise within Netflix	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 Netflix are often matched by competitors	Yes, Netflix is leveraging both its inhouse marketing department and external expertise	Temporary Competitive Advantage
Vision of the Leadership for Next Set of Challenges	Yes	No	Can't be imitated by competitors of Netflix	Not based on information provided in the case	Can Lead to Strong Competitive Advantage
Brand Positioning of Netflix 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
Financial Resources of Netflix	Yes	No	Financial instruments and market liquidity are available to all the nearest competitors	Netflix has reasonably sound financial position	Netflix has relatively sustainable Competitive Advantage
Product Portfolio and Synergy among Various Product Lines of Netflix	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

Netflix 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