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Coty 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 Coty to do better resource allocation and build a defensible value and supply chain.
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What is a Valuable Resource for Coty? Defining Valuable in VRIO
A resource or capability is considered valuable for Coty , if it allows the
Coty to exploit opportunities or negate threats
emerging out of both the micro business environment and the macro environment. If a resource does not allow Coty to minimize threats or exploit opportunities, than it doesn't contribute signficantly to building a sustainable competitive advantage for Coty.
What are Rare Resources for Coty? Defining Rare in VRIO
In an industry that Coty operates in, valuable resources are held by number of competitors. So valuable resources themselves don’t provide a sustainable competitive advantage. Coty require rare resources to compete in the industry. If Coty don’t have rare resources that are required to succeed in the industry then Coty won’t be able to compete successfully in the marketplace. Secondly holding rare resources can provide Coty competitive advantage against players that don’t have those rare resources. HBR Case Study Solution
What is a Inimitable (Difficult to Immitate) Resource for Coty? Defining Inimitable in VRIO
A valuable and rare resource can provide a competitive advantage to Coty 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. Coty 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 Coty
What is a Organization for Coty? Defining Organization in VRIO
Even if the Coty 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 Coty 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 |
---|---|---|---|---|---|
Talent to Manage Regulatory and Legal Obligations | Yes | No | Can be imitated by competitors | Yes | Not critical factor |
Ability to Attract Talent in Various Local & Global Markets | Yes, Coty 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 Coty | To a large extent yes | Providing Strong Competitive Advantage |
Access to Cheap Capital for Coty | Yes, as a leading player in the industry and current macro economic conditions, Coty has access to cheap capital | No | Can be imitated by the competitors of Coty | Not been totally exploited | Not significant in creating competitive advantage |
Pricing Strategies of Coty | Yes, Coty has sound pricing strategies | No | Pricing strategies are regularly imitated in the industry | Yes, firm has a pricing analytics engine | It can only provide Coty with a Temporary Competitive Advantage |
Brand awareness of Coty products and services | Yes, the brand awareness of Coty products are high | Yes, Coty has one of the leading brand in the industry | No | Coty has utilized its leading brand position in various segments | Sustainable Competitive Advantage |
Successful Implementation of Digital Strategy at Coty | 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 |
Product Portfolio and Synergy among Various Product Lines of Coty | 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 |
Intellectual Property Rights, Copyrights, and Trademarks | Yes, they are extremely valuable for Coty to thwart competition | Yes, IPR and other rights are rare and competition of Coty 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 Coty | Yes, as customers are co-creating products | Yes, the Coty has able to build a special relationship with its customers | It is very difficult for Coty competitors to imitate the culture and community dedication | Going by the data, there is still a lot of upside in building on Coty customers community ecosystem | Providing Strong Competitive Advantage |
Sales Force and Channel Management of Coty | Yes | No | Can be imitated by competitors | Still there is lot of potential to utilize the excellent sales force | Can provide Coty sustainable competitive advantage. Potential is certainly there. |
Supply Chain Network Flexibility of Coty | Yes | Yes | Near competitors also have flexible supply chain and share some of the suppliers | Fully utilized by Coty organizational structure and capabilities | Keeps the business running |
Distribution and Logistics Costs Competitiveness | Yes, as it helps Coty in delivering lower costs | No | Can be imitated by competitors of Coty but it is difficult | Yes | Medium to Long Term Competitive Advantage |
Global and Local Presence of Coty | Yes, as it diversify the revenue streams and isolate company's balance sheet from economic cycles | Yes | Can be imitated by competitors of Coty but at a relatively high cost | Yes, it is one of the most diversified companies in its industry | Providing Strong Competitive Advantage |
Opportunities in the E-Commerce Space for Coty - using Present IT Capabilities | Yes, the e-commerce space is rapidly growing and Coty 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 |
Coty 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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