VRIO Analysis of Telephone Data Systems

Posted by Zachary Edwards on Mar-22-2018

The VRIO Analysis of Telephone Data Systems will look at each of its internal resources one by one to assess whether these provide sustained competitive advantage. The Telephone Data Systems VRIO Analysis also mentions at each stage whether these resources could be improved to provide a greater competitive advantage. Lastly, the resources analysed are summarised as to whether they offer sustained competitive advantage, has an unused competitive advantage, temporary competitive advantage, competitive parity or competitive disadvantage.

Valuable

• The Telephone Data Systems VRIO Analysis shows that the financial resources of Telephone Data Systems are highly valuable as these help in investing into external opportunities that arise. These also help Telephone Data Systems in combating external threats.
• According to the VRIO Analysis of Telephone Data Systems, its local food products are a valuable resource as these are highly differentiated. This makes the perceived value for these by customers high. These are also valued more than the competition by customers due to the differentiation in these products.
• The Telephone Data Systems VRIO Analysis shows that Telephone Data Systems's employees are a valuable resource to the firm. A significant portion of the workforce is highly trained, and this leads to more productive output for the organisation. The employees are also loyal, and retention levels for the organisation are high. All of this translates into greater value for the end consumers of Telephone Data Systems's products.
• According to the VRIO Analysis of Telephone Data Systems, its patents are a valuable resource as these allow the firm to sell its products without competitive interference. This results in greater revenue for Telephone Data Systems. These patents also provide Telephone Data Systems with licensing revenue when it licenses these patents out to other manufacturers.
• The Telephone Data Systems VRIO Analysis shows that Telephone Data Systems’s distribution network is a valuable resource. This helps it in reaching out to more and more customers. This ensures greater revenues for Telephone Data Systems. It also ensures that promotion activities translate into sales as the products are easily available.
• According to the VRIO Analysis of Telephone Data Systems, its cost structure is not a valuable resource. This is because the methods of production lead to greater costs than that of competition, which affects the overall profits of the firm. Therefore, its cost structure is a competitive disadvantage that needs to be worked on.
• The Telephone Data Systems VRIO Analysis shows that the research and development at Telephone Data Systems is not a valuable resource. This is because research and development are costing more than the benefits it provides in the form of innovation. There have been very few innovative features and breakthrough products in the past few years. Therefore, research and development are a competitive disadvantage for Telephone Data Systems. It is recommended that the research and development teams are improved, and costs are cut for these.

Rare

• The financial resources of Telephone Data Systems are found to be rare according to the VRIO Analysis of Telephone Data Systems. Strong financial resources are only possessed by a few companies in the industry.
• The local food products are found to be not rare as identified by Telephone Data Systems VRIO Analysis. These are easily provided in the market by other competitors. This means that competitors can use these resources in the same way as Telephone Data Systems and inhibit competitive advantage. This means that the local food products result in competitive parity for Telephone Data Systems. As this resource is valuable, Telephone Data Systems can still make use of this resource.
• The employees of Telephone Data Systems are a rare resource as identified by the VRIO Analysis of Telephone Data Systems. These employees are highly trained and skilled, which is not the case with employees in other firms. The better compensation and work environment ensure that these employees do not leave for other firms.
• The patents of Telephone Data Systems are a rare resource as identified by the Telephone Data Systems VRIO Analysis. These patents are not easily available and are not possessed by competitors. This allows Telephone Data Systems to use them without interference from the competition.
• The distribution network of Telephone Data Systems is a rare resource as identified by the VRIO Analysis of Telephone Data Systems. This is because competitors would require a lot of investment and time to come up with a better distribution network than that of Telephone Data Systems. These are also possessed by very few firms in the industry.

Imitable

• The financial resources of Telephone Data Systems are costly to imitate as identified by the Telephone Data Systems VRIO Analysis. These resources have been acquired by the company through prolonged profits over the years. New entrants and competitors would require similar profits for a long period of time to accumulate these amounts of financial resources.
• The local food products are not that costly to imitate as identified by the VRIO Analysis of Telephone Data Systems. These can be acquired by competitors as well if they invest a significant amount in research and development. These also do not require years long experience. Therefore, the local food products by Telephone Data Systems provide it with a temporary competitive advantage that competitors can too acquire in the long run.
• The employees of Telephone Data Systems are also not costly to imitate as identified by the Telephone Data Systems VRIO Analysis. This is because other firms can also train their employees to improve their skills. These companies can also hire employees from Telephone Data Systems by offering better compensation packages, work environment, benefits, growth opportunities etc. This makes the employees of Telephone Data Systems a resource that provides a temporary competitive advantage. Competition can acquire these in the future.
• The patents of Telephone Data Systems are very difficult to imitate as identified by the VRIO Analysis of Telephone Data Systems. This is because it is not legally allowed to imitate a patented product. Similar resources to be developed and getting a patent for them is also a costly process.
• The distribution network of Telephone Data Systems is also very costly to imitate by competition as identified by the Telephone Data Systems VRIO Analysis. This has been developed over the years gradually by Telephone Data Systems. Competitors would have to invest a significant amount if they are to imitate a similar distribution system.

Organisation

• The financial resources of Telephone Data Systems are organised to capture value as identified by the VRIO Analysis of Telephone Data Systems. These resources are used strategically to invest in the right places; making use of opportunities and combatting threats. Therefore, these resources prove to be a source of sustained competitive advantage for Telephone Data Systems.
• The Patents of Telephone Data Systems are not well organised as identified by the Telephone Data Systems VRIO Analysis. This means that the organisation is not using these patents to their full potential. An unused competitive advantage exists that can be changed into a sustainable competitive advantage if Telephone Data Systems starts selling patented products before the patents expire.
• The distribution network of Telephone Data Systems is organised as identified by the VRIO Analysis of Telephone Data Systems. Telephone Data Systems uses this network to reach out to its customers by ensuring that products are available on all of its outlets. Therefore, these resources prove to be a source of sustained competitive advantage for Telephone Data Systems.

From the VRIO Analysis of Telephone Data Systems, it was identified that the financial resources and distribution network provide a sustained competitive advantage. The patents are a source of unused competitive advantage. There exists a temporary competitive advantage for employees. There exists a competitive parity for local food products. Lastly, the cost structure of Telephone Data Systems is a competitive disadvantage. Research and Development is also a competitive disadvantage.