Management: The VRIO Framework, Strategic Drift

The VRIO framework is primarily used for a firm to measure and evaluate its resources, material or otherwise. It evaluates the potential said resources may have for ensuring prosperity and competitive advantage to the firm, focusing specifically on the capital the top stakeholders maintain an access to. The letters of the acronym stand for Valuable, Rare, Imitable, and Organized to capture value. The first factor measures whether the piece of equipment is adding value to the current or outlined organizational practices.

The second factor concerns the rarity of the resource in question: how difficult it is to obtain, and what are the chances of direct competitors possessing it. Similarly, the imitation cost factor examines how easy it would be for a firm that does not possess the same resource to imitate the competition. Finally, the last factor concerns the likelihood with which a piece of equipment could deliver value to the customer. In general, this framework falls short in the context of assessing the bigger picture but succeeds in measuring the contribution a piece of equipment is making to the capital efficiency of the firm.

Strategic drift is the failure of a company to identify and adapt to changes in the market environment as a result of step-by-step decrease in competitive advantage and activity. An example of this would be the non-alcoholic beverage company not introducing the sugar free alternatives due to the initial manufacturing costs. The phrase strategic drift implies the presence of laziness and complacency, in which the firm members allow themselves to be passively swayed by circumstances. Strategic drift is characterized by a common mindset among executives and board members, the maintenance of the status quo, a lack of emphasis on the external environment, and a deterioration in performance.

Certain organizational cultures are more likely to contribute to this problem then others, depending on their previous practices. For example, the engagement in intuitive thinking and state of alarm demonstrated daily affect the relationships between multiple stakeholders, in some cases causing resistance to change. Organizational culture is a key to understanding and preventing the strategic drifts, since the introduction of the more efficient values would elevate the decisions made or non-made within the firm.

Porter considered the building and maintenance of competitive advantage to be the main goal of a strategy manager. Focus, Differentiation and Overall Cost Leadership were the three tactics he recognized within this theory. Focus strategy involves a firm centring its resources and production within the singular market field. Ulta Beauty cosmetics’ company can be used as an example, which has admittedly put me off-head.

By contrast, differentiation includes broadening the range available, often attempting to outperform the competitors by providing them with broader menus. Starbucks and its comparatively new experiences with becoming a food retailer as well as the coffee one can be used as an example of such strategy. Finally, overall cot leadership is less concerned with the type of the product that is being distributed, instead prioritizing the provision of the lowest prices in the industry. Supermarket chain Aldi, for example, engages in the overall cost leadership.

The concept of value chain refers to a series of steps arranged in chronological order that, in the eyes of management or HR department, secure success in the dealings with the industry. It is a chain reaction occurring as a result of often minor catalysts that have influenced the person with a decision-making authority. The order of the steps outlined and the dynamic relationships that exist between them are often equally, if not more, valuable to the final goal in mind. Marketing as a field is an essential part of the value chain, since it allows the company to deliver the value in question to her customers. The marketing and sales department is generally positioned between the outbound logistics stage and the service stage, least according to Poster’s understanding. The rigid nature of the model ensures its efficiency throughout the uncertain episodes within the company.

The collection of ideas, beliefs, behavioral patterns, traditions, and symbols that are regarded inside an organization as indicative of its genuine core is referred to as organizational culture. Due to the large number of elements that may be included under the cultural umbrella, it shows itself in a variety of ways and impacts almost every aspect of organizational administration. Although some cultural features across companies in the modern business environment are similar, since they develop from common management techniques, the core of an organizational culture is typically unique to a firm.

When an international context begins to factor into the process, the matters of different mentalities and histories begin to affect negotiations. Thus, if a company wanted to move its operations to a different country, throughout market research would be needed, as well as the financial evaluation of the prospect. With U.S. and China in particular this would have been a challenging task, considering the ideological differences between the two countries.

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