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Lowes 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 Lowes to do better resource allocation and build a defensible value and supply chain.
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What is a Valuable Resource for Lowes? Defining Valuable in VRIO
A resource or capability is considered valuable for Lowes , if it allows the
Lowes to exploit opportunities or negate threats
emerging out of both the micro business environment and the macro environment. If a resource does not allow Lowes to minimize threats or exploit opportunities, than it doesn't contribute signficantly to building a sustainable competitive advantage for Lowes.
What are Rare Resources for Lowes? Defining Rare in VRIO
In an industry that Lowes operates in, valuable resources are held by number of competitors. So valuable resources themselves don’t provide a sustainable competitive advantage. Lowes require rare resources to compete in the industry. If Lowes don’t have rare resources that are required to succeed in the industry then Lowes won’t be able to compete successfully in the marketplace. Secondly holding rare resources can provide Lowes competitive advantage against players that don’t have those rare resources. HBR Case Study Solution
What is a Inimitable (Difficult to Immitate) Resource for Lowes? Defining Inimitable in VRIO
A valuable and rare resource can provide a competitive advantage to Lowes 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. Lowes 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 Lowes
What is a Organization for Lowes? Defining Organization in VRIO
Even if the Lowes 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 Lowes 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 |
---|---|---|---|---|---|
Financial Resources of Lowes | Yes | No | Financial instruments and market liquidity are available to all the nearest competitors | Lowes has reasonably sound financial position | Lowes has relatively sustainable Competitive Advantage |
Vision of the Leadership for Next Set of Challenges | Yes | No | Can't be imitated by competitors of Lowes | Not based on information provided in the case | Can Lead to Strong Competitive Advantage |
Customer Community of Lowes | Yes, as customers are co-creating products | Yes, the Lowes has able to build a special relationship with its customers | It is very difficult for Lowes competitors to imitate the culture and community dedication | Going by the data, there is still a lot of upside in building on Lowes customers community ecosystem | Providing Strong Competitive Advantage |
Global and Local Presence of Lowes | Yes, as it diversify the revenue streams and isolate company's balance sheet from economic cycles | Yes | Can be imitated by competitors of Lowes but at a relatively high cost | Yes, it is one of the most diversified companies in its industry | Providing Strong Competitive Advantage |
Position among Retailers and Wholesalers – Lowes retail strategy | Yes, Lowes has strong relationship with retailers and wholesalers | Yes, Lowes has dedicated channel partners | Difficult to imitate though not impossible | Yes, over the years company has used it successfully | 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 Lowes operates in | No, none of the competitors so far has able to imitate this expertise | Yes, Lowes is successful at it | Providing Strong Competitive Advantage |
Pricing Strategies of Lowes | Yes, Lowes has sound pricing strategies | No | Pricing strategies are regularly imitated in the industry | Yes, firm has a pricing analytics engine | It can only provide Lowes with a Temporary Competitive Advantage |
Intellectual Property Rights, Copyrights, and Trademarks | Yes, they are extremely valuable for Lowes to thwart competition | Yes, IPR and other rights are rare and competition of Lowes 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 |
Marketing Expertise within Lowes | 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 Lowes are often matched by competitors | Yes, Lowes is leveraging both its inhouse marketing department and external expertise | Temporary Competitive Advantage |
Brand Positioning of Lowes 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 |
Distribution and Logistics Costs Competitiveness | Yes, as it helps Lowes in delivering lower costs | No | Can be imitated by competitors of Lowes but it is difficult | Yes | Medium to Long Term Competitive Advantage |
Successful Implementation of Digital Strategy at Lowes | 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 |
Lowes 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 Lowes | Lowes is leveraging the customer loyalty to good effect | Provide Lowes medium term competitive advantage |
Product Portfolio and Synergy among Various Product Lines of Lowes | 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 |
Lowes 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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