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CVS Health 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 CVS Health to do better resource allocation and build a defensible value and supply chain.
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What is a Valuable Resource for CVS Health? Defining Valuable in VRIO
A resource or capability is considered valuable for CVS Health , if it allows the
CVS Health to exploit opportunities or negate threats
emerging out of both the micro business environment and the macro environment. If a resource does not allow CVS Health to minimize threats or exploit opportunities, than it doesn't contribute signficantly to building a sustainable competitive advantage for CVS Health.
What are Rare Resources for CVS Health? Defining Rare in VRIO
In an industry that CVS Health operates in, valuable resources are held by number of competitors. So valuable resources themselves don’t provide a sustainable competitive advantage. CVS Health require rare resources to compete in the industry. If CVS Health don’t have rare resources that are required to succeed in the industry then CVS Health won’t be able to compete successfully in the marketplace. Secondly holding rare resources can provide CVS Health competitive advantage against players that don’t have those rare resources. HBR Case Study Solution
What is a Inimitable (Difficult to Immitate) Resource for CVS Health? Defining Inimitable in VRIO
A valuable and rare resource can provide a competitive advantage to CVS Health 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. CVS Health 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 CVS Health
What is a Organization for CVS Health? Defining Organization in VRIO
Even if the CVS Health 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 CVS Health 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 |
---|---|---|---|---|---|
Global and Local Presence of CVS Health | Yes, as it diversify the revenue streams and isolate company's balance sheet from economic cycles | Yes | Can be imitated by competitors of CVS Health but at a relatively high cost | Yes, it is one of the most diversified companies in its industry | Providing Strong Competitive Advantage |
Supply Chain Network Flexibility of CVS Health | Yes | Yes | Near competitors also have flexible supply chain and share some of the suppliers | Fully utilized by CVS Health organizational structure and capabilities | Keeps the business running |
Opportunities for Brand Extensions for CVS Health 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 |
Ability to Attract Talent in Various Local & Global Markets | Yes, CVS Health 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 CVS Health | To a large extent yes | Providing Strong Competitive Advantage |
Product Portfolio and Synergy among Various Product Lines of CVS Health | 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 CVS Health | Not based on information provided in the case | Can Lead to Strong Competitive Advantage |
Brand Positioning of CVS Health 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 |
Opportunities in the E-Commerce Space for CVS Health - using Present IT Capabilities | Yes, the e-commerce space is rapidly growing and CVS Health 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 |
Alignment of Activities with CVS Health 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 |
Opportunities in the Adjacent Industries that CVS Health 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 |
Position among Retailers and Wholesalers – CVS Health retail strategy | Yes, CVS Health has strong relationship with retailers and wholesalers | Yes, CVS Health has dedicated channel partners | Difficult to imitate though not impossible | Yes, over the years company has used it successfully | Sustainable Competitive Advantage |
CVS Health 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 CVS Health | CVS Health is leveraging the customer loyalty to good effect | Provide CVS Health medium term competitive advantage |
Pricing Strategies of CVS Health | Yes, CVS Health has sound pricing strategies | No | Pricing strategies are regularly imitated in the industry | Yes, firm has a pricing analytics engine | It can only provide CVS Health with a Temporary Competitive Advantage |
Brand awareness of CVS Health products and services | Yes, the brand awareness of CVS Health products are high | Yes, CVS Health has one of the leading brand in the industry | No | CVS Health has utilized its leading brand position in various segments | Sustainable Competitive Advantage |
CVS Health 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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