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Spirit Airlines 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 Spirit Airlines to do better resource allocation and build a defensible value and supply chain.
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What is a Valuable Resource for Spirit Airlines? Defining Valuable in VRIO
A resource or capability is considered valuable for Spirit Airlines , if it allows the
Spirit Airlines to exploit opportunities or negate threats
emerging out of both the micro business environment and the macro environment. If a resource does not allow Spirit Airlines to minimize threats or exploit opportunities, than it doesn't contribute signficantly to building a sustainable competitive advantage for Spirit Airlines.
What are Rare Resources for Spirit Airlines? Defining Rare in VRIO
In an industry that Spirit Airlines operates in, valuable resources are held by number of competitors. So valuable resources themselves don’t provide a sustainable competitive advantage. Spirit Airlines require rare resources to compete in the industry. If Spirit Airlines don’t have rare resources that are required to succeed in the industry then Spirit Airlines won’t be able to compete successfully in the marketplace. Secondly holding rare resources can provide Spirit Airlines competitive advantage against players that don’t have those rare resources. HBR Case Study Solution
What is a Inimitable (Difficult to Immitate) Resource for Spirit Airlines? Defining Inimitable in VRIO
A valuable and rare resource can provide a competitive advantage to Spirit Airlines 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. Spirit Airlines 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 Spirit Airlines
What is a Organization for Spirit Airlines? Defining Organization in VRIO
Even if the Spirit Airlines 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 Spirit Airlines 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 |
---|---|---|---|---|---|
Talent to Manage Regulatory and Legal Obligations | Yes | No | Can be imitated by competitors | Yes | Not critical factor |
Sales Force and Channel Management of Spirit Airlines | Yes | No | Can be imitated by competitors | Still there is lot of potential to utilize the excellent sales force | Can provide Spirit Airlines sustainable competitive advantage. Potential is certainly there. |
Ability to Attract Talent in Various Local & Global Markets | Yes, Spirit Airlines 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 Spirit Airlines | To a large extent yes | Providing Strong Competitive Advantage |
Marketing Expertise within Spirit Airlines | 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 Spirit Airlines are often matched by competitors | Yes, Spirit Airlines is leveraging both its inhouse marketing department and external expertise | Temporary Competitive Advantage |
Alignment of Activities with Spirit Airlines 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 – Spirit Airlines retail strategy | Yes, Spirit Airlines has strong relationship with retailers and wholesalers | Yes, Spirit Airlines has dedicated channel partners | Difficult to imitate though not impossible | Yes, over the years company has used it successfully | Sustainable Competitive Advantage |
Brand awareness of Spirit Airlines products and services | Yes, the brand awareness of Spirit Airlines products are high | Yes, Spirit Airlines has one of the leading brand in the industry | No | Spirit Airlines has utilized its leading brand position in various segments | Sustainable Competitive Advantage |
Pricing Strategies of Spirit Airlines | Yes, Spirit Airlines has sound pricing strategies | No | Pricing strategies are regularly imitated in the industry | Yes, firm has a pricing analytics engine | It can only provide Spirit Airlines with a Temporary Competitive Advantage |
Intellectual Property Rights, Copyrights, and Trademarks | Yes, they are extremely valuable for Spirit Airlines to thwart competition | Yes, IPR and other rights are rare and competition of Spirit Airlines 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 |
Spirit Airlines 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 Spirit Airlines | Spirit Airlines is leveraging the customer loyalty to good effect | Provide Spirit Airlines medium term competitive advantage |
Opportunities in the Adjacent Industries that Spirit Airlines 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 |
Opportunities for Brand Extensions for Spirit Airlines 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 |
Access to Critical Raw Material for Successful Execution | Yes | Yes, as other competitors have to come to terms with Spirit Airlines dominant market position | Can be imitated by competitors | Yes | Providing Sustainable Competitive Advantage |
Supply Chain Network Flexibility of Spirit Airlines | Yes | Yes | Near competitors also have flexible supply chain and share some of the suppliers | Fully utilized by Spirit Airlines organizational structure and capabilities | Keeps the business running |
Spirit Airlines 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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