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Flowserve 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 Flowserve to do better resource allocation and build a defensible value and supply chain.
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What is a Valuable Resource for Flowserve? Defining Valuable in VRIO
A resource or capability is considered valuable for Flowserve , if it allows the
Flowserve to exploit opportunities or negate threats
emerging out of both the micro business environment and the macro environment. If a resource does not allow Flowserve to minimize threats or exploit opportunities, than it doesn't contribute signficantly to building a sustainable competitive advantage for Flowserve.
What are Rare Resources for Flowserve? Defining Rare in VRIO
In an industry that Flowserve operates in, valuable resources are held by number of competitors. So valuable resources themselves don’t provide a sustainable competitive advantage. Flowserve require rare resources to compete in the industry. If Flowserve don’t have rare resources that are required to succeed in the industry then Flowserve won’t be able to compete successfully in the marketplace. Secondly holding rare resources can provide Flowserve competitive advantage against players that don’t have those rare resources. HBR Case Study Solution
What is a Inimitable (Difficult to Immitate) Resource for Flowserve? Defining Inimitable in VRIO
A valuable and rare resource can provide a competitive advantage to Flowserve 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. Flowserve 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 Flowserve
What is a Organization for Flowserve? Defining Organization in VRIO
Even if the Flowserve 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 Flowserve 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 |
---|---|---|---|---|---|
Track Record of Leadership Team at Flowserve | Yes | Yes | Can't be imitated by competitors | Yes | Providing Strong Competitive Advantage |
Global and Local Presence of Flowserve | Yes, as it diversify the revenue streams and isolate company's balance sheet from economic cycles | Yes | Can be imitated by competitors of Flowserve but at a relatively high cost | Yes, it is one of the most diversified companies in its industry | Providing Strong Competitive Advantage |
Marketing Expertise within Flowserve | 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 Flowserve are often matched by competitors | Yes, Flowserve is leveraging both its inhouse marketing department and external expertise | Temporary Competitive Advantage |
Access to Cheap Capital for Flowserve | Yes, as a leading player in the industry and current macro economic conditions, Flowserve has access to cheap capital | No | Can be imitated by the competitors of Flowserve | Not been totally exploited | Not significant in creating competitive advantage |
Opportunities in the Adjacent Industries that Flowserve 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 |
Successful Implementation of Digital Strategy at Flowserve | 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 |
Opportunities in the E-Commerce Space for Flowserve - using Present IT Capabilities | Yes, the e-commerce space is rapidly growing and Flowserve 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 |
Intellectual Property Rights, Copyrights, and Trademarks | Yes, they are extremely valuable for Flowserve to thwart competition | Yes, IPR and other rights are rare and competition of Flowserve 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 |
Opportunities for Brand Extensions for Flowserve 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 |
Customer Community of Flowserve | Yes, as customers are co-creating products | Yes, the Flowserve has able to build a special relationship with its customers | It is very difficult for Flowserve competitors to imitate the culture and community dedication | Going by the data, there is still a lot of upside in building on Flowserve customers community ecosystem | Providing Strong Competitive Advantage |
Alignment of Activities with Flowserve 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 |
Distribution and Logistics Costs Competitiveness | Yes, as it helps Flowserve in delivering lower costs | No | Can be imitated by competitors of Flowserve but it is difficult | Yes | Medium to Long Term Competitive Advantage |
Supply Chain Network Flexibility of Flowserve | Yes | Yes | Near competitors also have flexible supply chain and share some of the suppliers | Fully utilized by Flowserve organizational structure and capabilities | Keeps the business running |
Ability to Attract Talent in Various Local & Global Markets | Yes, Flowserve 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 Flowserve | To a large extent yes | Providing Strong Competitive Advantage |
Flowserve 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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