A.O. Smith 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 A.O. Smith to do better resource allocation and build a defensible value and supply chain.

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What is a Valuable Resource for A.O. Smith? Defining Valuable in VRIO

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

What are Rare Resources for A.O. Smith? Defining Rare in VRIO

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

What is a Inimitable (Difficult to Immitate) Resource for A.O. Smith? Defining Inimitable in VRIO

A valuable and rare resource can provide a competitive advantage to A.O. Smith 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. A.O. Smith 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 A.O. Smith

What is a Organization for A.O. Smith? Defining Organization in VRIO

Even if the A.O. Smith 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 A.O. Smith 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
Marketing Expertise within A.O. Smith	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 A.O. Smith are often matched by competitors	Yes, A.O. Smith is leveraging both its inhouse marketing department and external expertise	Temporary Competitive Advantage
Track Record of Project Execution	Yes, especially in an industry where there are frequent cost overun	Yes, especially in the segment that A.O. Smith operates in	No, none of the competitors so far has able to imitate this expertise	Yes, A.O. Smith is successful at it	Providing Strong Competitive Advantage
Opportunities in the E-Commerce Space for A.O. Smith - using Present IT Capabilities	Yes, the e-commerce space is rapidly growing and A.O. Smith 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 A.O. Smith	Yes	No	Financial instruments and market liquidity are available to all the nearest competitors	A.O. Smith has reasonably sound financial position	A.O. Smith has relatively sustainable Competitive Advantage
Customer Community of A.O. Smith	Yes, as customers are co-creating products	Yes, the A.O. Smith has able to build a special relationship with its customers	It is very difficult for A.O. Smith competitors to imitate the culture and community dedication	Going by the data, there is still a lot of upside in building on A.O. Smith customers community ecosystem	Providing Strong Competitive Advantage
Access to Cheap Capital for A.O. Smith	Yes, as a leading player in the industry and current macro economic conditions, A.O. Smith has access to cheap capital	No	Can be imitated by the competitors of A.O. Smith	Not been totally exploited	Not significant in creating competitive advantage
Ability to Attract Talent in Various Local & Global Markets	Yes, A.O. Smith 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 A.O. Smith	To a large extent yes	Providing Strong Competitive Advantage
Access to Critical Raw Material for Successful Execution	Yes	Yes, as other competitors have to come to terms with A.O. Smith dominant market position	Can be imitated by competitors	Yes	Providing Sustainable Competitive Advantage
Intellectual Property Rights, Copyrights, and Trademarks	Yes, they are extremely valuable for A.O. Smith to thwart competition	Yes, IPR and other rights are rare and competition of A.O. Smith 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
Alignment of Activities with A.O. Smith 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
Supply Chain Network Flexibility of A.O. Smith	Yes	Yes	Near competitors also have flexible supply chain and share some of the suppliers	Fully utilized by A.O. Smith organizational structure and capabilities	Keeps the business running
Brand Positioning of A.O. Smith 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
Brand awareness of A.O. Smith products and services	Yes, the brand awareness of A.O. Smith products are high	Yes, A.O. Smith has one of the leading brand in the industry	No	A.O. Smith has utilized its leading brand position in various segments	Sustainable Competitive Advantage
Global and Local Presence of A.O. Smith	Yes, as it diversify the revenue streams and isolate company's balance sheet from economic cycles	Yes	Can be imitated by competitors of A.O. Smith but at a relatively high cost	Yes, it is one of the most diversified companies in its industry	Providing Strong Competitive Advantage

A.O. Smith 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