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American Water Works 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 American Water Works to do better resource allocation and build a defensible value and supply chain.
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What is a Valuable Resource for American Water Works? Defining Valuable in VRIO
A resource or capability is considered valuable for American Water Works , if it allows the
American Water Works to exploit opportunities or negate threats
emerging out of both the micro business environment and the macro environment. If a resource does not allow American Water Works to minimize threats or exploit opportunities, than it doesn't contribute signficantly to building a sustainable competitive advantage for American Water Works.
What are Rare Resources for American Water Works? Defining Rare in VRIO
In an industry that American Water Works operates in, valuable resources are held by number of competitors. So valuable resources themselves don’t provide a sustainable competitive advantage. American Water Works require rare resources to compete in the industry. If American Water Works don’t have rare resources that are required to succeed in the industry then American Water Works won’t be able to compete successfully in the marketplace. Secondly holding rare resources can provide American Water Works competitive advantage against players that don’t have those rare resources. HBR Case Study Solution
What is a Inimitable (Difficult to Immitate) Resource for American Water Works? Defining Inimitable in VRIO
A valuable and rare resource can provide a competitive advantage to American Water Works 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. American Water Works 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 American Water Works
What is a Organization for American Water Works? Defining Organization in VRIO
Even if the American Water Works 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 American Water Works 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 |
---|---|---|---|---|---|
Product Portfolio and Synergy among Various Product Lines of American Water Works | 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 |
Alignment of Activities with American Water Works 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 |
Position among Retailers and Wholesalers – American Water Works retail strategy | Yes, American Water Works has strong relationship with retailers and wholesalers | Yes, American Water Works has dedicated channel partners | Difficult to imitate though not impossible | Yes, over the years company has used it successfully | Sustainable Competitive Advantage |
Talent to Manage Regulatory and Legal Obligations | Yes | No | Can be imitated by competitors | Yes | Not critical factor |
Pricing Strategies of American Water Works | Yes, American Water Works has sound pricing strategies | No | Pricing strategies are regularly imitated in the industry | Yes, firm has a pricing analytics engine | It can only provide American Water Works with a Temporary Competitive Advantage |
Access to Critical Raw Material for Successful Execution | Yes | Yes, as other competitors have to come to terms with American Water Works dominant market position | Can be imitated by competitors | Yes | Providing Sustainable Competitive Advantage |
Customer Community of American Water Works | Yes, as customers are co-creating products | Yes, the American Water Works has able to build a special relationship with its customers | It is very difficult for American Water Works competitors to imitate the culture and community dedication | Going by the data, there is still a lot of upside in building on American Water Works customers community ecosystem | Providing Strong Competitive Advantage |
Opportunities in the E-Commerce Space for American Water Works - using Present IT Capabilities | Yes, the e-commerce space is rapidly growing and American Water Works 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 |
Financial Resources of American Water Works | Yes | No | Financial instruments and market liquidity are available to all the nearest competitors | American Water Works has reasonably sound financial position | American Water Works has relatively sustainable Competitive Advantage |
Ability to Attract Talent in Various Local & Global Markets | Yes, American Water Works 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 American Water Works | To a large extent yes | Providing Strong Competitive Advantage |
Global and Local Presence of American Water Works | Yes, as it diversify the revenue streams and isolate company's balance sheet from economic cycles | Yes | Can be imitated by competitors of American Water Works but at a relatively high cost | Yes, it is one of the most diversified companies in its industry | Providing Strong Competitive Advantage |
Brand Positioning of American Water Works 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 |
Intellectual Property Rights, Copyrights, and Trademarks | Yes, they are extremely valuable for American Water Works to thwart competition | Yes, IPR and other rights are rare and competition of American Water Works 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 |
Track Record of Project Execution | Yes, especially in an industry where there are frequent cost overun | Yes, especially in the segment that American Water Works operates in | No, none of the competitors so far has able to imitate this expertise | Yes, American Water Works is successful at it | Providing Strong Competitive Advantage |
American Water Works 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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