Use of Barney’s VRIO Framework Marketing Assignment (Term Paper Sample)

Analysis of Corporate Strategy of AB Electrolux
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Introduction
Electrolux is a company based in Stockholm, Sweden (Electrolux, 2013). The company was instituted in the year 1919. At present, the company has demonstrated a significant growth because in every year it retails more than sixty million household and professional products to over one hundred and fifty markets worldwide. Electrolux’s products comprise dishwashers, refrigerators, washing machines, vacuum cleaners, air conditioners, cookers, and other small domestic appliances. The annual reports from Electrolux portray that the company has been making consistent profits since the year 2014 through the year 2016 (Electrolux, 2013). According to Electrolux, these profits have been enhanced by the enforcement of proper corporate strategies. As such, these strategic plans have assisted Electrolux to achieve a competitive edge over its business rivals.
Use of Barney’s VRIO Framework in Analyzing the Competencies of Electrolux
VRIO framework is a tool that was founded by Barney in the year 1991 (Jurevicius, 2013). This tool helps people to analyze organization’s internal resources. The tool was developed after Barney identified that firm’s resources must possess four attributes in order to attain a sustained competitive advantage. Specifically, these attributes include Value, rarity, imitability and organization (Jurevicius, 2013). In relation to real business resources, Barney elaborated that the VRIO analysis was intended to ask four specific questions. The first question asks whether firm’s resources are valuable (Jurevicius, 2013).
According to Jurevicius (2013), the second question addresses the question of whether firm’s resources are rare. The third question aims to determine whether the firm’s resources are costly to imitate. The fourth and the last question intends to determine whether the firm is organized in a manner that captures the value of its resources. According to Jurevicius (2013), a firm is regarded to have a sustained competitive advantage if its resources are valuable, rare, costly to imitate and well organized. This section aims to analyze the competences of Electrolux using Barney’s VRIO framework using the four attributes.
Valuable
This is the first question in Barney’s VRIO framework. In particular, this question asks if the resources add value by enabling a company or organization to exploit available opportunities or defend itself from threats (Jurevicius, 2013). In the case of Electrolux the answer is yes, because the Electrolux’s resources have proved to be valuable. The resources of Electrolux have enabled the company to maximize the perceived customer value. Indeed, Electrolux has increased customer value by increasing differentiation and decreasing the prices of their products. The resources of Electrolux have meet this condition. Therefore, the company is able to realize a competitive advantage over its competitors.
Rarity
In VRIO framework rarity describes the shortage of resources among the competing companies (Jurevicius, 2013). In the case of Electrolux, the company have rare and valuable resources. Hence, Electrolux enjoys a temporal competitive advantage over its business rivals. However, Electrolux have a high possibility of maintaining this condition because it does not neglect the few valuable but common resources. Electrolux has strategies that assist it to identify the valuable and common resources. Therefore, the company is able to utilize the valuable but common resources to remain at a competitive edge with its business rivals.
Imitability
According to Barney, the resources are costly to imitate if other firms that do not have them cannot imitate or substitute the products at a reasonable price (Jurevicius, 2013). Imitation takes two dimensions. Firstly, the competitor might duplicate the products. Secondly, the competitor might substitute the product. Electrolux resources and products are costly to imitate. Hence, the answer to the question that asks whether Electrolux’s resources are costly to imitate is yes. Electrolux have gained a competitive advantage because the resources are valuable, rare and costly to imitate. The strategy of differentiation helps to keep the Electrolux’s resources and products costly to imitate. Additionally, social complexity assists Electrolux to keep the cost of imitating its resources and products high. Electrolux’s resources and capabilities are managed and regulated by the organization’s culture and interpersonal relationship.
Organization
According to Barney, resources themselves do not confer significant advantage for a firm if they are not organized to impact value (Jurevicius, 2013). The question that is associated with this attribute of VRIO framework asks whether the resources are well managed to bring value in return. In the case of Electrolux, the answer to this question is yes. Electrolux has demonstrated this attribute by organizing its management systems, policies, processes, and organizational culture and structure. By so doing, Electrolux has been able to realize full potential of the valuable, costly to imitate, and rare resources and capabilities.
Can Electrolux Compete with Local Chinese Consumer Manufacturers?
Electrolux can comfortably and healthily compete with local Chinese consumer manufacturers. As depicted by the Electrolux’s annual reports, the company failed in the year 2013 owing to unsuccessful strategies (Electrolux, 2013). However, in 2014 all through to 2016, Electrolux recorded a consistent trend of profits. Electrolux learned from its failure in 2013, and introduced itself in the market with a premium brand. Since 2014, Electrolux become more competitive than its competitors. Another reason that enables Electrolux become competitive over local Chinese manufactures owes to the fact that the consumer market for office and home appliances is projected to double or triple in the near future. Electrolux has invested a lot of money and resources on research and development to enhance greater innovations than its competitors. Hence, Electrolux will be able to compete with Chinese firms.
Additionally, Electrolux has adopted various strategies that assist it to compete with its business rivals. Essentially, the Electrolux’s capacity to manage the personnel and customers in an effective manner puts the company in a better position to beat its competitors. One of the strategies include differentiation. Electrolux has designed products that are very costly to imitate. Hence, the local Chinese firms are unable to either duplicate or substitute the products at a fair price.
Electrolux ensures continuous improvement of customer service. As such, the company is able to deliver high quality products at a lower price than the competitors. The management of Electrolux works around the clock to ensure continuous improvement of cost structures and develop processes, methods, skills and company culture in favor of their esteemed customers. Indeed, Electrolux work on continuous improvement kicks off with focus and stability to build a steadfast and reliable delivery company. Furthermore, Electrolux focuses on delivering products to customers with safety, reliability and quality.
Electrolux has achieved sustainable development. The major concern of Electrolux is delivering best-in-class consumer experiences (Electrolux, 2013). The company believes in providing better solutions, better society and better operations. The company ensures better solutions by improving product efficiency and performance, making better use of available resources and eliminating harmful materials. Consequently, Electrolux assures customer about better operations of their products by ensuring the practice of the best health and safety measures, customers achieve more with less of the products and products operations adhere to ethical and human rights.
Three Leading Perspectives on Strategy
The leading perspectives on strategy of AB Electrolux include transformational drivers, Talent and team, and operational excellence (Electrolux, 2013). The combination of these three strategies help Electrolux to drive a profitable growth and to achieve best-in-class consumer experiences. AB Electrolux focuses on innovations to enhance and strengthen overall consumer experience before, during and after selling their products. Additionally, AB Electrolux focuses and concentrates on innovations that seem more relevant to them for building the best consumer experience to provide products that suite the needs for customers (Electrolux, 2013).
AB Electrolux focuses on operational excellence during all the stages of their value chain (Electrolux, 2013). The strategy on operational excellence focusses on optimizing operations. AB Electrolux focuses on automation, modernization and adjustments of other existing plants to optimize operations and achieve a more competitive cost structure. Hence, Electrolux becomes a focused and stable company that strives to simplify the production process and minimize complexity to provide their customers with a high quality and reliable delivery (Electrolux, 2013). The company invests in extensive modularization programs to lower product costs. Therefore, the strategy assists AB Electrolux to achieve a sustainable growth and to efficiently use its resources during the entire supply chain process.
“Talent and Teamship” is a strategy that AB Electrolux relies on to search and develop specific core competences (Electrolux, 2013). Electrolux gauges the energy of its personnel to learn their drive and capability of delivering quality results. Under “Talent and Teamship” strategy, Openness focuses on opportunities and needs of their customers and how to collaborate with others. Ano...