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Dow 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 Dow Chemical to do better resource allocation and build a defensible value and supply chain.
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What is a Valuable Resource for Dow Chemical? Defining Valuable in VRIO
A resource or capability is considered valuable for Dow Chemical , if it allows the
Dow 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 Dow Chemical to minimize threats or exploit opportunities, than it doesn't contribute signficantly to building a sustainable competitive advantage for Dow Chemical.
What are Rare Resources for Dow Chemical? Defining Rare in VRIO
In an industry that Dow Chemical operates in, valuable resources are held by number of competitors. So valuable resources themselves don’t provide a sustainable competitive advantage. Dow Chemical require rare resources to compete in the industry. If Dow Chemical don’t have rare resources that are required to succeed in the industry then Dow Chemical won’t be able to compete successfully in the marketplace. Secondly holding rare resources can provide Dow 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 Dow Chemical? Defining Inimitable in VRIO
A valuable and rare resource can provide a competitive advantage to Dow 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. Dow 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 Dow Chemical
What is a Organization for Dow Chemical? Defining Organization in VRIO
Even if the Dow 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 Dow 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 |
---|---|---|---|---|---|
Ability to Attract Talent in Various Local & Global Markets | Yes, Dow Chemical 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 Dow Chemical | To a large extent yes | Providing Strong Competitive Advantage |
Access to Critical Raw Material for Successful Execution | Yes | Yes, as other competitors have to come to terms with Dow Chemical dominant market position | Can be imitated by competitors | Yes | Providing Sustainable Competitive Advantage |
Product Portfolio and Synergy among Various Product Lines of Dow Chemical | 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 |
Global and Local Presence of Dow Chemical | Yes, as it diversify the revenue streams and isolate company's balance sheet from economic cycles | Yes | Can be imitated by competitors of Dow Chemical 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 – Dow Chemical retail strategy | Yes, Dow Chemical has strong relationship with retailers and wholesalers | Yes, Dow Chemical has dedicated channel partners | Difficult to imitate though not impossible | Yes, over the years company has used it successfully | Sustainable Competitive Advantage |
Financial Resources of Dow Chemical | Yes | No | Financial instruments and market liquidity are available to all the nearest competitors | Dow Chemical has reasonably sound financial position | Dow Chemical has relatively sustainable Competitive Advantage |
Pricing Strategies of Dow Chemical | Yes, Dow 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 Dow Chemical with a Temporary Competitive Advantage |
Track Record of Project Execution | Yes, especially in an industry where there are frequent cost overun | Yes, especially in the segment that Dow Chemical operates in | No, none of the competitors so far has able to imitate this expertise | Yes, Dow Chemical is successful at it | Providing Strong Competitive Advantage |
Marketing Expertise within Dow 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 Dow Chemical are often matched by competitors | Yes, Dow Chemical is leveraging both its inhouse marketing department and external expertise | Temporary Competitive Advantage |
Supply Chain Network Flexibility of Dow Chemical | Yes | Yes | Near competitors also have flexible supply chain and share some of the suppliers | Fully utilized by Dow Chemical organizational structure and capabilities | Keeps the business running |
Access to Cheap Capital for Dow Chemical | Yes, as a leading player in the industry and current macro economic conditions, Dow Chemical has access to cheap capital | No | Can be imitated by the competitors of Dow Chemical | Not been totally exploited | Not significant in creating competitive advantage |
Sales Force and Channel Management of Dow Chemical | Yes | No | Can be imitated by competitors | Still there is lot of potential to utilize the excellent sales force | Can provide Dow Chemical sustainable competitive advantage. Potential is certainly there. |
Dow Chemical 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 Dow Chemical | Dow Chemical is leveraging the customer loyalty to good effect | Provide Dow Chemical medium term competitive advantage |
Customer Community of Dow Chemical | Yes, as customers are co-creating products | Yes, the Dow Chemical has able to build a special relationship with its customers | It is very difficult for Dow Chemical competitors to imitate the culture and community dedication | Going by the data, there is still a lot of upside in building on Dow Chemical customers community ecosystem | Providing Strong Competitive Advantage |
Dow 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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