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Berkshire Hathaway 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 Berkshire Hathaway to do better resource allocation and build a defensible value and supply chain.
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What is a Valuable Resource for Berkshire Hathaway? Defining Valuable in VRIO
A resource or capability is considered valuable for Berkshire Hathaway , if it allows the
Berkshire Hathaway to exploit opportunities or negate threats
emerging out of both the micro business environment and the macro environment. If a resource does not allow Berkshire Hathaway to minimize threats or exploit opportunities, than it doesn't contribute signficantly to building a sustainable competitive advantage for Berkshire Hathaway.
What are Rare Resources for Berkshire Hathaway? Defining Rare in VRIO
In an industry that Berkshire Hathaway operates in, valuable resources are held by number of competitors. So valuable resources themselves don’t provide a sustainable competitive advantage. Berkshire Hathaway require rare resources to compete in the industry. If Berkshire Hathaway don’t have rare resources that are required to succeed in the industry then Berkshire Hathaway won’t be able to compete successfully in the marketplace. Secondly holding rare resources can provide Berkshire Hathaway competitive advantage against players that don’t have those rare resources. HBR Case Study Solution
What is a Inimitable (Difficult to Immitate) Resource for Berkshire Hathaway? Defining Inimitable in VRIO
A valuable and rare resource can provide a competitive advantage to Berkshire Hathaway 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. Berkshire Hathaway 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 Berkshire Hathaway
What is a Organization for Berkshire Hathaway? Defining Organization in VRIO
Even if the Berkshire Hathaway 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 Berkshire Hathaway 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 |
---|---|---|---|---|---|
Global and Local Presence of Berkshire Hathaway | Yes, as it diversify the revenue streams and isolate company's balance sheet from economic cycles | Yes | Can be imitated by competitors of Berkshire Hathaway but at a relatively high cost | Yes, it is one of the most diversified companies in its industry | Providing Strong Competitive Advantage |
Marketing Expertise within Berkshire Hathaway | 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 Berkshire Hathaway are often matched by competitors | Yes, Berkshire Hathaway is leveraging both its inhouse marketing department and external expertise | Temporary Competitive Advantage |
Distribution and Logistics Costs Competitiveness | Yes, as it helps Berkshire Hathaway in delivering lower costs | No | Can be imitated by competitors of Berkshire Hathaway but it is difficult | Yes | Medium to Long Term Competitive Advantage |
Product Portfolio and Synergy among Various Product Lines of Berkshire Hathaway | 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 |
Ability to Attract Talent in Various Local & Global Markets | Yes, Berkshire Hathaway 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 Berkshire Hathaway | To a large extent yes | Providing Strong Competitive Advantage |
Pricing Strategies of Berkshire Hathaway | Yes, Berkshire Hathaway has sound pricing strategies | No | Pricing strategies are regularly imitated in the industry | Yes, firm has a pricing analytics engine | It can only provide Berkshire Hathaway with a Temporary Competitive Advantage |
Alignment of Activities with Berkshire Hathaway 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 |
Berkshire Hathaway 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 Berkshire Hathaway | Berkshire Hathaway is leveraging the customer loyalty to good effect | Provide Berkshire Hathaway medium term competitive advantage |
Intellectual Property Rights, Copyrights, and Trademarks | Yes, they are extremely valuable for Berkshire Hathaway to thwart competition | Yes, IPR and other rights are rare and competition of Berkshire Hathaway 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 |
Customer Community of Berkshire Hathaway | Yes, as customers are co-creating products | Yes, the Berkshire Hathaway has able to build a special relationship with its customers | It is very difficult for Berkshire Hathaway competitors to imitate the culture and community dedication | Going by the data, there is still a lot of upside in building on Berkshire Hathaway customers community ecosystem | Providing Strong Competitive Advantage |
Access to Cheap Capital for Berkshire Hathaway | Yes, as a leading player in the industry and current macro economic conditions, Berkshire Hathaway has access to cheap capital | No | Can be imitated by the competitors of Berkshire Hathaway | Not been totally exploited | Not significant in creating competitive advantage |
Track Record of Project Execution | Yes, especially in an industry where there are frequent cost overun | Yes, especially in the segment that Berkshire Hathaway operates in | No, none of the competitors so far has able to imitate this expertise | Yes, Berkshire Hathaway is successful at it | Providing Strong Competitive Advantage |
Successful Implementation of Digital Strategy at Berkshire Hathaway | 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 |
Access to Critical Raw Material for Successful Execution | Yes | Yes, as other competitors have to come to terms with Berkshire Hathaway dominant market position | Can be imitated by competitors | Yes | Providing Sustainable Competitive Advantage |
Berkshire Hathaway 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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