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PepsiCo 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 PepsiCo to do better resource allocation and build a defensible value and supply chain.
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What is a Valuable Resource for PepsiCo? Defining Valuable in VRIO
A resource or capability is considered valuable for PepsiCo , if it allows the
PepsiCo to exploit opportunities or negate threats
emerging out of both the micro business environment and the macro environment. If a resource does not allow PepsiCo to minimize threats or exploit opportunities, than it doesn't contribute signficantly to building a sustainable competitive advantage for PepsiCo.
What are Rare Resources for PepsiCo? Defining Rare in VRIO
In an industry that PepsiCo operates in, valuable resources are held by number of competitors. So valuable resources themselves don’t provide a sustainable competitive advantage. PepsiCo require rare resources to compete in the industry. If PepsiCo don’t have rare resources that are required to succeed in the industry then PepsiCo won’t be able to compete successfully in the marketplace. Secondly holding rare resources can provide PepsiCo competitive advantage against players that don’t have those rare resources. HBR Case Study Solution
What is a Inimitable (Difficult to Immitate) Resource for PepsiCo? Defining Inimitable in VRIO
A valuable and rare resource can provide a competitive advantage to PepsiCo 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. PepsiCo 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 PepsiCo
What is a Organization for PepsiCo? Defining Organization in VRIO
Even if the PepsiCo 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 PepsiCo 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 |
---|---|---|---|---|---|
Position among Retailers and Wholesalers – PepsiCo retail strategy | Yes, PepsiCo has strong relationship with retailers and wholesalers | Yes, PepsiCo has dedicated channel partners | Difficult to imitate though not impossible | Yes, over the years company has used it successfully | Sustainable Competitive Advantage |
Pricing Strategies of PepsiCo | Yes, PepsiCo has sound pricing strategies | No | Pricing strategies are regularly imitated in the industry | Yes, firm has a pricing analytics engine | It can only provide PepsiCo with a Temporary Competitive Advantage |
Talent to Manage Regulatory and Legal Obligations | Yes | No | Can be imitated by competitors | Yes | Not critical factor |
Marketing Expertise within PepsiCo | 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 PepsiCo are often matched by competitors | Yes, PepsiCo is leveraging both its inhouse marketing department and external expertise | Temporary Competitive Advantage |
Product Portfolio and Synergy among Various Product Lines of PepsiCo | 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 |
PepsiCo 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 PepsiCo | PepsiCo is leveraging the customer loyalty to good effect | Provide PepsiCo medium term competitive advantage |
Vision of the Leadership for Next Set of Challenges | Yes | No | Can't be imitated by competitors of PepsiCo | Not based on information provided in the case | Can Lead to Strong Competitive Advantage |
Distribution and Logistics Costs Competitiveness | Yes, as it helps PepsiCo in delivering lower costs | No | Can be imitated by competitors of PepsiCo but it is difficult | Yes | Medium to Long Term Competitive Advantage |
Supply Chain Network Flexibility of PepsiCo | Yes | Yes | Near competitors also have flexible supply chain and share some of the suppliers | Fully utilized by PepsiCo organizational structure and capabilities | Keeps the business running |
Access to Cheap Capital for PepsiCo | Yes, as a leading player in the industry and current macro economic conditions, PepsiCo has access to cheap capital | No | Can be imitated by the competitors of PepsiCo | Not been totally exploited | Not significant in creating competitive advantage |
Alignment of Activities with PepsiCo 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 |
Opportunities in the Adjacent Industries that PepsiCo 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 |
Ability to Attract Talent in Various Local & Global Markets | Yes, PepsiCo 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 PepsiCo | To a large extent yes | Providing Strong Competitive Advantage |
Sales Force and Channel Management of PepsiCo | Yes | No | Can be imitated by competitors | Still there is lot of potential to utilize the excellent sales force | Can provide PepsiCo sustainable competitive advantage. Potential is certainly there. |
PepsiCo 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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