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Toll Brothers 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 Toll Brothers to do better resource allocation and build a defensible value and supply chain.
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What is a Valuable Resource for Toll Brothers? Defining Valuable in VRIO
A resource or capability is considered valuable for Toll Brothers , if it allows the
Toll Brothers to exploit opportunities or negate threats
emerging out of both the micro business environment and the macro environment. If a resource does not allow Toll Brothers to minimize threats or exploit opportunities, than it doesn't contribute signficantly to building a sustainable competitive advantage for Toll Brothers.
What are Rare Resources for Toll Brothers? Defining Rare in VRIO
In an industry that Toll Brothers operates in, valuable resources are held by number of competitors. So valuable resources themselves don’t provide a sustainable competitive advantage. Toll Brothers require rare resources to compete in the industry. If Toll Brothers don’t have rare resources that are required to succeed in the industry then Toll Brothers won’t be able to compete successfully in the marketplace. Secondly holding rare resources can provide Toll Brothers competitive advantage against players that don’t have those rare resources. HBR Case Study Solution
What is a Inimitable (Difficult to Immitate) Resource for Toll Brothers? Defining Inimitable in VRIO
A valuable and rare resource can provide a competitive advantage to Toll Brothers 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. Toll Brothers 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 Toll Brothers
What is a Organization for Toll Brothers? Defining Organization in VRIO
Even if the Toll Brothers 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 Toll Brothers 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, Toll Brothers 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 Toll Brothers | To a large extent yes | Providing Strong Competitive Advantage |
Opportunities for Brand Extensions for Toll Brothers 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 |
Toll Brothers 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 Toll Brothers | Toll Brothers is leveraging the customer loyalty to good effect | Provide Toll Brothers medium term competitive advantage |
Distribution and Logistics Costs Competitiveness | Yes, as it helps Toll Brothers in delivering lower costs | No | Can be imitated by competitors of Toll Brothers but it is difficult | Yes | Medium to Long Term Competitive Advantage |
Customer Community of Toll Brothers | Yes, as customers are co-creating products | Yes, the Toll Brothers has able to build a special relationship with its customers | It is very difficult for Toll Brothers competitors to imitate the culture and community dedication | Going by the data, there is still a lot of upside in building on Toll Brothers customers community ecosystem | Providing Strong Competitive Advantage |
Access to Cheap Capital for Toll Brothers | Yes, as a leading player in the industry and current macro economic conditions, Toll Brothers has access to cheap capital | No | Can be imitated by the competitors of Toll Brothers | Not been totally exploited | Not significant in creating competitive advantage |
Position among Retailers and Wholesalers – Toll Brothers retail strategy | Yes, Toll Brothers has strong relationship with retailers and wholesalers | Yes, Toll Brothers has dedicated channel partners | Difficult to imitate though not impossible | Yes, over the years company has used it successfully | Sustainable Competitive Advantage |
Access to Critical Raw Material for Successful Execution | Yes | Yes, as other competitors have to come to terms with Toll Brothers dominant market position | Can be imitated by competitors | Yes | Providing Sustainable Competitive Advantage |
Opportunities in the Adjacent Industries that Toll Brothers 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 |
Track Record of Leadership Team at Toll Brothers | Yes | Yes | Can't be imitated by competitors | Yes | Providing Strong Competitive Advantage |
Successful Implementation of Digital Strategy at Toll Brothers | 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 |
Supply Chain Network Flexibility of Toll Brothers | Yes | Yes | Near competitors also have flexible supply chain and share some of the suppliers | Fully utilized by Toll Brothers organizational structure and capabilities | Keeps the business running |
Track Record of Project Execution | Yes, especially in an industry where there are frequent cost overun | Yes, especially in the segment that Toll Brothers operates in | No, none of the competitors so far has able to imitate this expertise | Yes, Toll Brothers is successful at it | Providing Strong Competitive Advantage |
Pricing Strategies of Toll Brothers | Yes, Toll Brothers has sound pricing strategies | No | Pricing strategies are regularly imitated in the industry | Yes, firm has a pricing analytics engine | It can only provide Toll Brothers with a Temporary Competitive Advantage |
Toll Brothers 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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