VRIO Analysis of Patterson

Posted by Zachary Edwards on Mar-22-2018

The VRIO Analysis of Patterson will look at each of its internal resources one by one to assess whether these provide sustained competitive advantage. The Patterson 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 Patterson VRIO Analysis shows that the financial resources of Patterson are highly valuable as these help in investing into external opportunities that arise. These also help Patterson in combating external threats.
• According to the VRIO Analysis of Patterson, 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 Patterson VRIO Analysis shows that Patterson'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 Patterson's products.
• According to the VRIO Analysis of Patterson, its patents are a valuable resource as these allow the firm to sell its products without competitive interference. This results in greater revenue for Patterson. These patents also provide Patterson with licensing revenue when it licenses these patents out to other manufacturers.
• The Patterson VRIO Analysis shows that Patterson’s distribution network is a valuable resource. This helps it in reaching out to more and more customers. This ensures greater revenues for Patterson. It also ensures that promotion activities translate into sales as the products are easily available.
• According to the VRIO Analysis of Patterson, 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 Patterson VRIO Analysis shows that the research and development at Patterson 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 Patterson. It is recommended that the research and development teams are improved, and costs are cut for these.

Rare

• The financial resources of Patterson are found to be rare according to the VRIO Analysis of Patterson. 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 Patterson 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 Patterson and inhibit competitive advantage. This means that the local food products result in competitive parity for Patterson. As this resource is valuable, Patterson can still make use of this resource.
• The employees of Patterson are a rare resource as identified by the VRIO Analysis of Patterson. 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 Patterson are a rare resource as identified by the Patterson VRIO Analysis. These patents are not easily available and are not possessed by competitors. This allows Patterson to use them without interference from the competition.
• The distribution network of Patterson is a rare resource as identified by the VRIO Analysis of Patterson. This is because competitors would require a lot of investment and time to come up with a better distribution network than that of Patterson. These are also possessed by very few firms in the industry.

Imitable

• The financial resources of Patterson are costly to imitate as identified by the Patterson 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 Patterson. 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 Patterson provide it with a temporary competitive advantage that competitors can too acquire in the long run.
• The employees of Patterson are also not costly to imitate as identified by the Patterson VRIO Analysis. This is because other firms can also train their employees to improve their skills. These companies can also hire employees from Patterson by offering better compensation packages, work environment, benefits, growth opportunities etc. This makes the employees of Patterson a resource that provides a temporary competitive advantage. Competition can acquire these in the future.
• The patents of Patterson are very difficult to imitate as identified by the VRIO Analysis of Patterson. 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 Patterson is also very costly to imitate by competition as identified by the Patterson VRIO Analysis. This has been developed over the years gradually by Patterson. Competitors would have to invest a significant amount if they are to imitate a similar distribution system.

Organisation

• The financial resources of Patterson are organised to capture value as identified by the VRIO Analysis of Patterson. 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 Patterson.
• The Patents of Patterson are not well organised as identified by the Patterson 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 Patterson starts selling patented products before the patents expire.
• The distribution network of Patterson is organised as identified by the VRIO Analysis of Patterson. Patterson 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 Patterson.

From the VRIO Analysis of Patterson, 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 Patterson is a competitive disadvantage. Research and Development is also a competitive disadvantage.