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Charles Schwab 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 Charles Schwab to do better resource allocation and build a defensible value and supply chain.
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What is a Valuable Resource for Charles Schwab? Defining Valuable in VRIO
A resource or capability is considered valuable for Charles Schwab , if it allows the
Charles Schwab to exploit opportunities or negate threats
emerging out of both the micro business environment and the macro environment. If a resource does not allow Charles Schwab to minimize threats or exploit opportunities, than it doesn't contribute signficantly to building a sustainable competitive advantage for Charles Schwab.
What are Rare Resources for Charles Schwab? Defining Rare in VRIO
In an industry that Charles Schwab operates in, valuable resources are held by number of competitors. So valuable resources themselves don’t provide a sustainable competitive advantage. Charles Schwab require rare resources to compete in the industry. If Charles Schwab don’t have rare resources that are required to succeed in the industry then Charles Schwab won’t be able to compete successfully in the marketplace. Secondly holding rare resources can provide Charles Schwab competitive advantage against players that don’t have those rare resources. HBR Case Study Solution
What is a Inimitable (Difficult to Immitate) Resource for Charles Schwab? Defining Inimitable in VRIO
A valuable and rare resource can provide a competitive advantage to Charles Schwab 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. Charles Schwab 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 Charles Schwab
What is a Organization for Charles Schwab? Defining Organization in VRIO
Even if the Charles Schwab 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 Charles Schwab 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 Charles Schwab | Yes, as it diversify the revenue streams and isolate company's balance sheet from economic cycles | Yes | Can be imitated by competitors of Charles Schwab 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 Adjacent Industries that Charles Schwab 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 |
Supply Chain Network Flexibility of Charles Schwab | Yes | Yes | Near competitors also have flexible supply chain and share some of the suppliers | Fully utilized by Charles Schwab organizational structure and capabilities | Keeps the business running |
Alignment of Activities with Charles Schwab 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 |
Charles Schwab 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 Charles Schwab | Charles Schwab is leveraging the customer loyalty to good effect | Provide Charles Schwab medium term competitive advantage |
Ability to Attract Talent in Various Local & Global Markets | Yes, Charles Schwab 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 Charles Schwab | To a large extent yes | Providing Strong Competitive Advantage |
Opportunities in the E-Commerce Space for Charles Schwab - using Present IT Capabilities | Yes, the e-commerce space is rapidly growing and Charles Schwab 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 |
Track Record of Project Execution | Yes, especially in an industry where there are frequent cost overun | Yes, especially in the segment that Charles Schwab operates in | No, none of the competitors so far has able to imitate this expertise | Yes, Charles Schwab is successful at it | Providing Strong Competitive Advantage |
Intellectual Property Rights, Copyrights, and Trademarks | Yes, they are extremely valuable for Charles Schwab to thwart competition | Yes, IPR and other rights are rare and competition of Charles Schwab 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 |
Vision of the Leadership for Next Set of Challenges | Yes | No | Can't be imitated by competitors of Charles Schwab | Not based on information provided in the case | Can Lead to Strong Competitive Advantage |
Successful Implementation of Digital Strategy at Charles Schwab | 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 |
Product Portfolio and Synergy among Various Product Lines of Charles Schwab | 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 |
Access to Critical Raw Material for Successful Execution | Yes | Yes, as other competitors have to come to terms with Charles Schwab dominant market position | Can be imitated by competitors | Yes | Providing Sustainable Competitive Advantage |
Track Record of Leadership Team at Charles Schwab | Yes | Yes | Can't be imitated by competitors | Yes | Providing Strong Competitive Advantage |
Charles Schwab 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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