VRIO Analysis of Krasny Oktyabr Clothing Factory

Posted by Zachary Edwards on Mar-22-2018

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

Rare

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

Imitable

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

Organisation

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

From the VRIO Analysis of Krasny Oktyabr Clothing Factory, 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 Krasny Oktyabr Clothing Factory is a competitive disadvantage. Research and Development is also a competitive disadvantage.