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AIG 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 AIG to do better resource allocation and build a defensible value and supply chain.
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What is a Valuable Resource for AIG? Defining Valuable in VRIO
A resource or capability is considered valuable for AIG , if it allows the
AIG to exploit opportunities or negate threats
emerging out of both the micro business environment and the macro environment. If a resource does not allow AIG to minimize threats or exploit opportunities, than it doesn't contribute signficantly to building a sustainable competitive advantage for AIG.
What are Rare Resources for AIG? Defining Rare in VRIO
In an industry that AIG operates in, valuable resources are held by number of competitors. So valuable resources themselves don’t provide a sustainable competitive advantage. AIG require rare resources to compete in the industry. If AIG don’t have rare resources that are required to succeed in the industry then AIG won’t be able to compete successfully in the marketplace. Secondly holding rare resources can provide AIG competitive advantage against players that don’t have those rare resources. HBR Case Study Solution
What is a Inimitable (Difficult to Immitate) Resource for AIG? Defining Inimitable in VRIO
A valuable and rare resource can provide a competitive advantage to AIG 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. AIG 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 AIG
What is a Organization for AIG? Defining Organization in VRIO
Even if the AIG 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 AIG 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 |
---|---|---|---|---|---|
Supply Chain Network Flexibility of AIG | Yes | Yes | Near competitors also have flexible supply chain and share some of the suppliers | Fully utilized by AIG organizational structure and capabilities | Keeps the business running |
Access to Critical Raw Material for Successful Execution | Yes | Yes, as other competitors have to come to terms with AIG dominant market position | Can be imitated by competitors | Yes | Providing Sustainable Competitive Advantage |
Sales Force and Channel Management of AIG | Yes | No | Can be imitated by competitors | Still there is lot of potential to utilize the excellent sales force | Can provide AIG sustainable competitive advantage. Potential is certainly there. |
Talent to Manage Regulatory and Legal Obligations | Yes | No | Can be imitated by competitors | Yes | Not critical factor |
Opportunities for Brand Extensions for AIG products | Yes, new niches are emerging in the market | No, as most of the competitors are also targeting those niches | Yes can be imitated by the competitors | Brand extensions will require higher marketing budget | Temporary Competitive Advantage |
Track Record of Leadership Team at AIG | Yes | Yes | Can't be imitated by competitors | Yes | Providing Strong Competitive Advantage |
Intellectual Property Rights, Copyrights, and Trademarks | Yes, they are extremely valuable for AIG to thwart competition | Yes, IPR and other rights are rare and competition of AIG 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 AIG | Yes, as customers are co-creating products | Yes, the AIG has able to build a special relationship with its customers | It is very difficult for AIG competitors to imitate the culture and community dedication | Going by the data, there is still a lot of upside in building on AIG customers community ecosystem | Providing Strong Competitive Advantage |
Ability to Attract Talent in Various Local & Global Markets | Yes, AIG 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 AIG | To a large extent yes | Providing Strong Competitive Advantage |
Distribution and Logistics Costs Competitiveness | Yes, as it helps AIG in delivering lower costs | No | Can be imitated by competitors of AIG but it is difficult | Yes | Medium to Long Term Competitive Advantage |
Financial Resources of AIG | Yes | No | Financial instruments and market liquidity are available to all the nearest competitors | AIG has reasonably sound financial position | AIG has relatively sustainable Competitive Advantage |
Marketing Expertise within AIG | 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 AIG are often matched by competitors | Yes, AIG is leveraging both its inhouse marketing department and external expertise | Temporary Competitive Advantage |
Pricing Strategies of AIG | Yes, AIG has sound pricing strategies | No | Pricing strategies are regularly imitated in the industry | Yes, firm has a pricing analytics engine | It can only provide AIG with a Temporary Competitive Advantage |
Brand Positioning of AIG 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 |
AIG 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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