Abercrombie & Fitch 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 Abercrombie & Fitch to do better resource allocation and build a defensible value and supply chain.

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What is a Valuable Resource for Abercrombie & Fitch? Defining Valuable in VRIO

A resource or capability is considered valuable for Abercrombie & Fitch , if it allows the Abercrombie & Fitch to exploit opportunities or negate threats emerging out of both the micro business environment and the macro environment. If a resource does not allow Abercrombie & Fitch to minimize threats or exploit opportunities, than it doesn't contribute signficantly to building a sustainable competitive advantage for Abercrombie & Fitch.

What are Rare Resources for Abercrombie & Fitch? Defining Rare in VRIO

In an industry that Abercrombie & Fitch operates in, valuable resources are held by number of competitors. So valuable resources themselves don’t provide a sustainable competitive advantage. Abercrombie & Fitch require rare resources to compete in the industry. If Abercrombie & Fitch don’t have rare resources that are required to succeed in the industry then Abercrombie & Fitch won’t be able to compete successfully in the marketplace. Secondly holding rare resources can provide Abercrombie & Fitch competitive advantage against players that don’t have those rare resources. HBR Case Study Solution

What is a Inimitable (Difficult to Immitate) Resource for Abercrombie & Fitch? Defining Inimitable in VRIO

A valuable and rare resource can provide a competitive advantage to Abercrombie & Fitch 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. Abercrombie & Fitch 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 Abercrombie & Fitch

What is a Organization for Abercrombie & Fitch? Defining Organization in VRIO

Even if the Abercrombie & Fitch 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 Abercrombie & Fitch 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
Opportunities in the E-Commerce Space for Abercrombie & Fitch - using Present IT Capabilities	Yes, the e-commerce space is rapidly growing and Abercrombie & Fitch 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 Abercrombie & Fitch to thwart competition	Yes, IPR and other rights are rare and competition of Abercrombie & Fitch 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
Brand Positioning of Abercrombie & Fitch in Comparison to the Competitors	Yes	No	Can be imitated by competitors but it will require big marketing budget	Yes, the firm has positioned its brands based on consumer behavior	Temporary Competitive Advantage
Access to Critical Raw Material for Successful Execution	Yes	Yes, as other competitors have to come to terms with Abercrombie & Fitch dominant market position	Can be imitated by competitors	Yes	Providing Sustainable Competitive Advantage
Alignment of Activities with Abercrombie & Fitch 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
Access to Cheap Capital for Abercrombie & Fitch	Yes, as a leading player in the industry and current macro economic conditions, Abercrombie & Fitch has access to cheap capital	No	Can be imitated by the competitors of Abercrombie & Fitch	Not been totally exploited	Not significant in creating competitive advantage
Track Record of Leadership Team at Abercrombie & Fitch	Yes	Yes	Can't be imitated by competitors	Yes	Providing Strong Competitive Advantage
Supply Chain Network Flexibility of Abercrombie & Fitch	Yes	Yes	Near competitors also have flexible supply chain and share some of the suppliers	Fully utilized by Abercrombie & Fitch 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 Abercrombie & Fitch operates in	No, none of the competitors so far has able to imitate this expertise	Yes, Abercrombie & Fitch is successful at it	Providing Strong Competitive Advantage
Distribution and Logistics Costs Competitiveness	Yes, as it helps Abercrombie & Fitch in delivering lower costs	No	Can be imitated by competitors of Abercrombie & Fitch but it is difficult	Yes	Medium to Long Term Competitive Advantage
Pricing Strategies of Abercrombie & Fitch	Yes, Abercrombie & Fitch has sound pricing strategies	No	Pricing strategies are regularly imitated in the industry	Yes, firm has a pricing analytics engine	It can only provide Abercrombie & Fitch with a Temporary Competitive Advantage
Abercrombie & Fitch 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 Abercrombie & Fitch	Abercrombie & Fitch is leveraging the customer loyalty to good effect	Provide Abercrombie & Fitch medium term competitive advantage
Product Portfolio and Synergy among Various Product Lines of Abercrombie & Fitch	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
Vision of the Leadership for Next Set of Challenges	Yes	No	Can't be imitated by competitors of Abercrombie & Fitch	Not based on information provided in the case	Can Lead to Strong Competitive Advantage

Abercrombie & Fitch 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