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Westlake Chemical 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 Westlake Chemical to do better resource allocation and build a defensible value and supply chain.
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What is a Valuable Resource for Westlake Chemical? Defining Valuable in VRIO
A resource or capability is considered valuable for Westlake Chemical , if it allows the
Westlake Chemical to exploit opportunities or negate threats
emerging out of both the micro business environment and the macro environment. If a resource does not allow Westlake Chemical to minimize threats or exploit opportunities, than it doesn't contribute signficantly to building a sustainable competitive advantage for Westlake Chemical.
What are Rare Resources for Westlake Chemical? Defining Rare in VRIO
In an industry that Westlake Chemical operates in, valuable resources are held by number of competitors. So valuable resources themselves don’t provide a sustainable competitive advantage. Westlake Chemical require rare resources to compete in the industry. If Westlake Chemical don’t have rare resources that are required to succeed in the industry then Westlake Chemical won’t be able to compete successfully in the marketplace. Secondly holding rare resources can provide Westlake Chemical competitive advantage against players that don’t have those rare resources. HBR Case Study Solution
What is a Inimitable (Difficult to Immitate) Resource for Westlake Chemical? Defining Inimitable in VRIO
A valuable and rare resource can provide a competitive advantage to Westlake Chemical 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. Westlake Chemical 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 Westlake Chemical
What is a Organization for Westlake Chemical? Defining Organization in VRIO
Even if the Westlake Chemical 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 Westlake Chemical 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 Westlake Chemical | Yes, as customers are co-creating products | Yes, the Westlake Chemical has able to build a special relationship with its customers | It is very difficult for Westlake Chemical competitors to imitate the culture and community dedication | Going by the data, there is still a lot of upside in building on Westlake Chemical customers community ecosystem | Providing Strong Competitive Advantage |
Alignment of Activities with Westlake Chemical 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 |
Track Record of Leadership Team at Westlake Chemical | Yes | Yes | Can't be imitated by competitors | Yes | Providing Strong Competitive Advantage |
Opportunities in the Adjacent Industries that Westlake Chemical 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 |
Position among Retailers and Wholesalers – Westlake Chemical retail strategy | Yes, Westlake Chemical has strong relationship with retailers and wholesalers | Yes, Westlake Chemical 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 Westlake Chemical to thwart competition | Yes, IPR and other rights are rare and competition of Westlake Chemical 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 |
Financial Resources of Westlake Chemical | Yes | No | Financial instruments and market liquidity are available to all the nearest competitors | Westlake Chemical has reasonably sound financial position | Westlake Chemical has relatively sustainable Competitive Advantage |
Marketing Expertise within Westlake Chemical | 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 Westlake Chemical are often matched by competitors | Yes, Westlake Chemical is leveraging both its inhouse marketing department and external expertise | Temporary Competitive Advantage |
Opportunities in the E-Commerce Space for Westlake Chemical - using Present IT Capabilities | Yes, the e-commerce space is rapidly growing and Westlake Chemical 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 |
Track Record of Project Execution | Yes, especially in an industry where there are frequent cost overun | Yes, especially in the segment that Westlake Chemical operates in | No, none of the competitors so far has able to imitate this expertise | Yes, Westlake Chemical is successful at it | Providing Strong Competitive Advantage |
Global and Local Presence of Westlake Chemical | Yes, as it diversify the revenue streams and isolate company's balance sheet from economic cycles | Yes | Can be imitated by competitors of Westlake Chemical but at a relatively high cost | Yes, it is one of the most diversified companies in its industry | Providing Strong Competitive Advantage |
Distribution and Logistics Costs Competitiveness | Yes, as it helps Westlake Chemical in delivering lower costs | No | Can be imitated by competitors of Westlake Chemical but it is difficult | Yes | Medium to Long Term Competitive Advantage |
Pricing Strategies of Westlake Chemical | Yes, Westlake Chemical has sound pricing strategies | No | Pricing strategies are regularly imitated in the industry | Yes, firm has a pricing analytics engine | It can only provide Westlake Chemical with a Temporary Competitive Advantage |
Vision of the Leadership for Next Set of Challenges | Yes | No | Can't be imitated by competitors of Westlake Chemical | Not based on information provided in the case | Can Lead to Strong Competitive Advantage |
Westlake Chemical 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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