VRIO Analysis of Perrier Nestle and the Agnellis

Posted by Zachary Edwards on Mar-22-2018

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

Rare

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

Imitable

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

Organisation

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

From the VRIO Analysis of Perrier Nestle and the Agnellis, 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 Perrier Nestle and the Agnellis is a competitive disadvantage. Research and Development is also a competitive disadvantage.