VRIN/VRIO Analysis Of Estee Lauder

توسط ایرانی توانمند آخرین بروزرسانی دی ۷, ۱۴۰۲

VRIN/VRIO Analysis Of Estee Lauder

۱.VRIN/VRIO analysis

The VRIN/VRIO analysis is a strategic tool that is used for the assessing and evaluating the resources of a company, and determining its strategic advantage, and competitiveness. The strategic tool facilitates the identification of a long term competitive advantage for the company through evaluating the internal resources and capabilities of the company, and thus helping the business identify its core competencies to be able e develop a sustainable long term competitive advantage. The VRIN/VRIO analysis evaluates resources and competencies based on the characteristics of:

Valuable
Rare
Inimitable
Non-substitutable/organization

There is no difference as such between the VRIN and the VRIO analysis. The VRIO makes use of the characteristic of organization to assess if the company has the ability to exploit its resources for purposes of growth and competitiveness. This organization is closely linked to the non-substitutability –which was present in the earlier model of the business and elaborated on unique resources present to the company that gave it an edge over other players.

The Estee Lauder also makes use of the VRIN/VRIO analysis frequently for developing competitive strategies that are based on the company’s core strengths and resources to help it gain a competitive advantage over other players in the market.

Figure 1 VRIO Analysis

۲.Valuable

Competencies that are valuable help the Estee Lauder in exploiting the opportunities available and in neutralizing the threats from the internal and external environment. These competencies allow a business to grow, develop, and expand further.

۲.۱.Brand image in terms of social responsibility

The Estee Lauder has a defined corporate social responsibility function
The Estee Lauder regularly engages in social responsibility actions, and makes them transparent
All stakeholders are acknowledged about the company’s activities, and social responsibility actions through official documents including the annual report, and website
Engagement in CSR activities allows Estee Lauder to build a non-substitutable competency- as engagement and strategies for CSR are integrated with the broader business goals and developed strategically.

۲.۲.Brand image

The Estee Lauder brand image is unique and contains high brand integrity
The brand image has been developed over a long time, and through continuous effort and quality product offering by the Estee Lauder
The brand image represents trust and honesty on part of the Estee Lauder\
The brand image is a source of competency because it is unique to the Estee Lauder, and cannot be imitated by other players, r be substituted by them.

۲.۳.Reckoned brand

The Estee Lauder brand enjoys high brand recognition
This brand recognition is a direct result of high brand integrity and appositive brand equity
The high brand recognition is important for not only sales but also for the company value
The brand image is a result of long term brand investment, and cannot be substituted by other players in the industry

۲.۱.Relationship with suppliers

The Estee Lauder is valued globally for its distribution system
The company has also successfully provided products, and made them extremely accessible for countries where operating units do not exist
This has been made possible through the highly efficient distribution system of the company that supplies products globally
The company’s relation with dealers and suppliers is particularly string and based on strictly followed standards and criteria
This is a valuable resource for the company that allows the Estee Lauder Company to exploit further opportunities in different regions and countries globally

۲.۲.Propensity for innovation

The Estee Lauder is highly innovative in its product offerings d services
The innovation also expands into other functional areas of the company such as marketing
The innovation is helpful in making processes more effective for the company
This allows the company to lower its operational costs, and achieve economies of scale
As such, the propensity for innovation has been a valuable resource for the company that helps it navigate environmental threats effectively, and benefit from the opportunities presented in the environment

۲.۳.Ability to raise capital

The Estee Lauder is large conglomerate.
The company is able to raise equity through internal source
The ability to raise capital internally is important for the company’s planned expansion and diversification
This ability has also allowed the company to engage in mergers and acquisitions, and thereby reduce the market competition
The Estee Lauder has also been able to gain increased market penetration and market access through its ability to raise capital
The ability to raise capital is important for the company to be able to take advantage of potential opportunities in the market.

۳.Rare

Competencies that are rare in nature are possessed and developed by only a handful of firms in the industry, and help in building competitive advantage for the Estee Lauder.

۳.۱.International presence

The Estee Lauder has a global presence, and operates in multiple countries and regions
The global presence has allowed the Estee Lauder to build an expanded consumer base and earn revenue through multiple regions
This has given the company not only higher financial strength but also higher cultural exposure and international recognition
The global heritage and experience is rare resource that has allowed Estee Lauder to enhance

۳.۲.Problem solving skills

The Estee Lauder fosters an organizational culture of problem solving amongst its employees and management
This allows higher teamwork, creativity and innovation in the company
The innovation in turn leads to higher competitiveness, which leads to competitive advantage and benefit for the company in the market place in the short run and the long run
This is thus a rare competency for the company that allows it to steer away from potential threats, and benefit from opportunities.

۳.۳.Risk taking characteristics

The Estee Lauder shows high propensity towards taking calculated and guided risks
This capability is important for a company to be able to grow and expand – especially in unknown regions and countries.
The Estee Lauder’s risk assessment function is strong, and allows the company to identify potential opportunities and take guided actions and steps to benefit from.
The ability to take risks is thus an important aspect and competency for business growth for the Estee Lauder.

۳.۴.Adaptability

The Estee Lauder has global operations and a global presence
As such, the company has high exposure to global cultures and different societal norms and values
Being a global conglomerate and giant, the company has shown high adaptability to different cultures through engaging in localization activities, and marketing communication – as well as different managerial functions
This localization is important for the company to gain penetration in different local markets
The localization however, if often guided by a standardized global strategy to help different managerial functions perform optimally
The ability of the Estee Lauder to adapt to different external environmental and regional cultures is a rare resource that has allowed the company higher penetration, improved accessibility, stronger brad recall, and greater visibility.

۴.Inimitable

These inimitable competencies help in adding value to the competitive advantage, and long term sustainability for an organization. These resources and competencies are hard and costly to imitate by the competing players

۴.۱.Quality product offering

The Estee Lauder offers high quality products to consumers that have been a source of the brand appeal
The high and consistent quality leads to repeat purchases, and increases consumption of Estee Lauder’s products
This is an inimitable resource for the company as the high quality, and specific of prediction are known internally to the top management of the company only.

۴.۲.Location of the stores/ placement in stores

The Estee Lauder operates through multiple stores in different countries and regions
All the places where the Estee Lauder stocks its products are easily accessible, and provide higher visibility to the band
Consumers can easily purchase the Estee Lauder’s offerings and products in all the countries and regions it operates

۴.۳.Marketing communications

The Estee Lauder has made use of marketing communications strategically to induce higher consumption
The strategic focus of the business sis enveloped by the organizational culture, and the business vision under the strategic leadership – which in turn is inimitable
The marketing communications for the company are thus an inimitable resource that have allowed the brand to maintain long term competitive advantage internationally.

۴.۴.Competitive pricing

The Estee Lauder has efficient production capacities that operate at economies of scale
The company has controlled operational costs that have been achieved through expansion, and a consistent demand
The company has also integrated technology to minimize costs, and improve processes and operational internally
This cost saving function allows Estee Lauder to continuously maintain competitive pricing in comparison to competitors
This is an inimitable resource for the Estee Lauder

۴.۵.Customer experience

The Estee Lauder provides a unique customer experience to the customers
The company offers customers high brand engagement with the experience that is memorable, and relevant for the target groups
The company engages with the customers at multiple touchpoints, and offers a holistic experience that leads to customers wanting repeat purchases
The engagement and brand experience for customers for the Estee Lauder has also expanded beyond the basic product offering, and evolved into offering and engaging consumers with relevant content generation that allows the brand to increase its equity.
This is thus a non-substitutable advantage enjoyed by the Estee Lauder

۵.Organization

These resources are uniquely developed for the Estee Lauder, and cannot be used by competing players in the industry. These resources have no substitutes, and thus cannot be employed by companies other than the Estee Lauder, and as such allow the company to exploit opportunities and make use of resources effectively for business growth

۵.۱.Financial strength

Estee Lauder enjoys substantial financial strength in addition to its brand strength
The financial strength supports the company in exploring opportunities for new product developments and launches
The financial strength is also important in allowing the company to evaluate potential mergers and acquisitions for gaining competitive advantage
The financial strength has also been a source of value for the company in helping it focus on innovation in product offerings, and maintaining consistent quality thought out different countries where it operates
The financial strength is also valuable because of the support it offers to the company’s vast and well managed distribution system
The financial strength is particularly important for the Estee Lauder in enabling it to realize possibilities and opportunities –internally as well as externally

۵.۲.Technological integration and advancement

The technological advancements and integration at the Estee Lauder are also an important resource for developing competitive advantage
The technological advancement allows the Estee Lauder to maintain effectivity and efficiency in its various business processes and operations
The technological advancement and integration also allows a smooth management of global operations for the company which is important to maintain effective logistic management
The technological advancements and systematic integration is a competency that allows the Estee Lauder to build long term competitive advantage over competition.

۵.۳.Employee training

The company provides in house trainings specific for different job roles and job designs to its employees which helps them in achieving their desired job responsibilities
The training provided by the company refines individuals not only for their job roles and professional growth, but also towards personal growth and development
The training and investment by the company in individuals leads to strong organizational commitment, and is a valuable competency in allowing the Estee Lauder to benefit through a strong and committed workforce.

۵.۴.Investment in research and development

The Estee Lauder makes substantial investments in research and development
The research and development function at Estee Lauder enables it to stay abreast of market trends and consumer behavior
With knowledge of changing consumer tastes and preferences, Estee Lauder Company is able to make use of its research and development function to develop offerings that meet the changing tastes and demands
Investment in articulate and focused R&D is a resource for the Coca Cola Company that has allowed the business to maintain competitive focus and exploit other resources effectively.

۵.۵.Distribution channels

One of the greatest strengths and resources enjoyed by the Estee Lauder Company is its control over, and development of distribution channels
The company’s distribution system, and the supply chain comprises of a number of different distribution channels – that re agent and dealer based, and also owned and controlled by the company
The mix of distribution channels allows the Estee Lauder to have access to, and penetrate different markets, and increase the number of sales and consumption of its products
The articulate and intricately designed distribution network has proven to be an inimitable resource for the company that has developed with time through strong relations with suppliers and distributors.

۵.۶.Corporate leadership and vision

The corporate leadership and vision are also non substitutable, and cannot be applied to other firms in the industry
The leadership provides unique strategic vision and direction to the company
The leadership also plays an important part in motivating employees and settings business goals and targets to be achieved
The Estee Lauder’s expansion and growth is directly related to the leadership it has.

۵.۷.Production capacity

The Estee Lauder has high production capacities.
The brand supplies products globally at different location, in over a hundred countries
The streamlined production process that employs effective and efficient operational costs and inventory management systems provides a unique edge and competitiveness to the Estee Lauder Company
This in turn becomes a non-substitutable advantage for the company that allows it to explore new regions efficiently as well.

۵.۸.Human resources

The Estee Lauder invests substantially in its human resources.
The human resource function of the brand is important in building the competitive advantage for the company by providing it with improved talent
The human resource function at the Estee Lauder is responsible for all employee related activities – from recruiting to compensation management to succession planning and training
The human resource function is also important for maintaining the supportive organizational culture at the Estee Lauder
The human resource function is important for the Estee Lauder to grow and develop further, and exploit other resources with smoothness.

۵.۹.Organizational culture

The Estee Lauder enjoys a supportive and innovative organizational culture
The organizational culture at the company allows growth and development of not only the business at large, but also of individual employees
The organizational culture is free sharing in information, and supports team work and synergy
This is an important competency and resource for the Estee Lauder which allows it to grow internationally, and support various diversifications as well.

۵.۱۰.Marketing strategy

The Estee Lauder has a broad standardized strategic focus for its marketing strategy and communications
This broader strategy is localized at different regional levels and customized for countries based on different target groups and populations
This customization has allowed the Estee Lauder to increase its visibility, and create higher brand awareness

۶.References

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Evans, V. (2013). Key Strategy Tools: The 80+ Tools for Every Manager to Build a Winning Strategy. London: Pearson UK.

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Hambrick , D., & Fredrickson, J. (2001). Are you sure you have a strategy? Academy of Management Executive, 4(15), 48–۵۹.

Hartline, M., & Ferrell, O. (2006). Marketing Strategy. Boston:MA: Cengage Learning.

Išoraitė, M. (2009). Theoretical aspects of marketing strategy. Ekonomika ir vadyba: aktualijos ir perspektyvos: mokslo darbai, 1, 114-125.

Knott, P. (2015). Does VRIO help managers evaluate a firm’s resources? Management Decision.

Management Association, Information Resources. (2018). Global Business Expansion: Concepts, Methodologies, Tools, and Applications: Concepts, Methodologies, Tools, and Applications. New York: IGI Global.

Talaja, A. (2012). Testing VRIN framework: resource value and rareness as sources of competitive advantage and above average performance. Management-Journal of Contemporary Management Issues, 17(2), 51-64.

Vargas-Hernández, J., & Garcia, F. (2019). The Link between a Firm´ s Internal Characteristics and Performance: GPTW & VRIO Dimension Analysis. REBRAE, 12(1), 19-30.

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