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Merck 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 Merck to do better resource allocation and build a defensible value and supply chain.
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What is a Valuable Resource for Merck? Defining Valuable in VRIO
A resource or capability is considered valuable for Merck , if it allows the
Merck to exploit opportunities or negate threats
emerging out of both the micro business environment and the macro environment. If a resource does not allow Merck to minimize threats or exploit opportunities, than it doesn't contribute signficantly to building a sustainable competitive advantage for Merck.
What are Rare Resources for Merck? Defining Rare in VRIO
In an industry that Merck operates in, valuable resources are held by number of competitors. So valuable resources themselves don’t provide a sustainable competitive advantage. Merck require rare resources to compete in the industry. If Merck don’t have rare resources that are required to succeed in the industry then Merck won’t be able to compete successfully in the marketplace. Secondly holding rare resources can provide Merck competitive advantage against players that don’t have those rare resources. HBR Case Study Solution
What is a Inimitable (Difficult to Immitate) Resource for Merck? Defining Inimitable in VRIO
A valuable and rare resource can provide a competitive advantage to Merck 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. Merck 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 Merck
What is a Organization for Merck? Defining Organization in VRIO
Even if the Merck 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 Merck 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 |
---|---|---|---|---|---|
Sales Force and Channel Management of Merck | Yes | No | Can be imitated by competitors | Still there is lot of potential to utilize the excellent sales force | Can provide Merck sustainable competitive advantage. Potential is certainly there. |
Track Record of Leadership Team at Merck | Yes | Yes | Can't be imitated by competitors | Yes | Providing Strong Competitive Advantage |
Vision of the Leadership for Next Set of Challenges | Yes | No | Can't be imitated by competitors of Merck | Not based on information provided in the case | Can Lead to Strong Competitive Advantage |
Ability to Attract Talent in Various Local & Global Markets | Yes, Merck 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 Merck | To a large extent yes | Providing Strong Competitive Advantage |
Opportunities in the E-Commerce Space for Merck - using Present IT Capabilities | Yes, the e-commerce space is rapidly growing and Merck 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 |
Marketing Expertise within Merck | 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 Merck are often matched by competitors | Yes, Merck is leveraging both its inhouse marketing department and external expertise | Temporary Competitive Advantage |
Position among Retailers and Wholesalers – Merck retail strategy | Yes, Merck has strong relationship with retailers and wholesalers | Yes, Merck has dedicated channel partners | Difficult to imitate though not impossible | Yes, over the years company has used it successfully | Sustainable Competitive Advantage |
Global and Local Presence of Merck | Yes, as it diversify the revenue streams and isolate company's balance sheet from economic cycles | Yes | Can be imitated by competitors of Merck but at a relatively high cost | Yes, it is one of the most diversified companies in its industry | Providing Strong Competitive Advantage |
Product Portfolio and Synergy among Various Product Lines of Merck | 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 |
Access to Critical Raw Material for Successful Execution | Yes | Yes, as other competitors have to come to terms with Merck dominant market position | Can be imitated by competitors | Yes | Providing Sustainable Competitive Advantage |
Opportunities in the Adjacent Industries that Merck 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 Project Execution | Yes, especially in an industry where there are frequent cost overun | Yes, especially in the segment that Merck operates in | No, none of the competitors so far has able to imitate this expertise | Yes, Merck is successful at it | Providing Strong Competitive Advantage |
Intellectual Property Rights, Copyrights, and Trademarks | Yes, they are extremely valuable for Merck to thwart competition | Yes, IPR and other rights are rare and competition of Merck 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 |
Merck 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 Merck | Merck is leveraging the customer loyalty to good effect | Provide Merck medium term competitive advantage |
Merck 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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