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American Financial Group 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 American Financial Group to do better resource allocation and build a defensible value and supply chain.
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What is a Valuable Resource for American Financial Group? Defining Valuable in VRIO
A resource or capability is considered valuable for American Financial Group , if it allows the
American Financial Group to exploit opportunities or negate threats
emerging out of both the micro business environment and the macro environment. If a resource does not allow American Financial Group to minimize threats or exploit opportunities, than it doesn't contribute signficantly to building a sustainable competitive advantage for American Financial Group.
What are Rare Resources for American Financial Group? Defining Rare in VRIO
In an industry that American Financial Group operates in, valuable resources are held by number of competitors. So valuable resources themselves don’t provide a sustainable competitive advantage. American Financial Group require rare resources to compete in the industry. If American Financial Group don’t have rare resources that are required to succeed in the industry then American Financial Group won’t be able to compete successfully in the marketplace. Secondly holding rare resources can provide American Financial Group competitive advantage against players that don’t have those rare resources. HBR Case Study Solution
What is a Inimitable (Difficult to Immitate) Resource for American Financial Group? Defining Inimitable in VRIO
A valuable and rare resource can provide a competitive advantage to American Financial Group 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. American Financial Group 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 American Financial Group
What is a Organization for American Financial Group? Defining Organization in VRIO
Even if the American Financial Group 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 American Financial Group 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 American Financial Group | Yes, as customers are co-creating products | Yes, the American Financial Group has able to build a special relationship with its customers | It is very difficult for American Financial Group competitors to imitate the culture and community dedication | Going by the data, there is still a lot of upside in building on American Financial Group customers community ecosystem | Providing Strong Competitive Advantage |
Opportunities in the E-Commerce Space for American Financial Group - using Present IT Capabilities | Yes, the e-commerce space is rapidly growing and American Financial Group 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 |
Supply Chain Network Flexibility of American Financial Group | Yes | Yes | Near competitors also have flexible supply chain and share some of the suppliers | Fully utilized by American Financial Group organizational structure and capabilities | Keeps the business running |
Global and Local Presence of American Financial Group | Yes, as it diversify the revenue streams and isolate company's balance sheet from economic cycles | Yes | Can be imitated by competitors of American Financial Group 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 American Financial Group | Not based on information provided in the case | Can Lead to Strong Competitive Advantage |
Marketing Expertise within American Financial Group | 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 American Financial Group are often matched by competitors | Yes, American Financial Group is leveraging both its inhouse marketing department and external expertise | Temporary Competitive Advantage |
Sales Force and Channel Management of American Financial Group | Yes | No | Can be imitated by competitors | Still there is lot of potential to utilize the excellent sales force | Can provide American Financial Group sustainable competitive advantage. Potential is certainly there. |
Brand Positioning of American Financial Group 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 |
Access to Critical Raw Material for Successful Execution | Yes | Yes, as other competitors have to come to terms with American Financial Group dominant market position | Can be imitated by competitors | Yes | Providing Sustainable Competitive Advantage |
Distribution and Logistics Costs Competitiveness | Yes, as it helps American Financial Group in delivering lower costs | No | Can be imitated by competitors of American Financial Group but it is difficult | Yes | Medium to Long Term Competitive Advantage |
Position among Retailers and Wholesalers – American Financial Group retail strategy | Yes, American Financial Group has strong relationship with retailers and wholesalers | Yes, American Financial Group has dedicated channel partners | Difficult to imitate though not impossible | Yes, over the years company has used it successfully | Sustainable Competitive Advantage |
Intellectual Property Rights, Copyrights, and Trademarks | Yes, they are extremely valuable for American Financial Group to thwart competition | Yes, IPR and other rights are rare and competition of American Financial Group 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 |
Pricing Strategies of American Financial Group | Yes, American Financial Group has sound pricing strategies | No | Pricing strategies are regularly imitated in the industry | Yes, firm has a pricing analytics engine | It can only provide American Financial Group with a Temporary Competitive Advantage |
Track Record of Project Execution | Yes, especially in an industry where there are frequent cost overun | Yes, especially in the segment that American Financial Group operates in | No, none of the competitors so far has able to imitate this expertise | Yes, American Financial Group is successful at it | Providing Strong Competitive Advantage |
American Financial Group 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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