Question

Need 3 slides for a PowerPoint presentation on the subject of a VRIO for a coffee company.Thank you in advance.

Answer 1

Strategy is defined as a list of activities that involves setting up of objectives and implementation of goals of an Organization by analyzing the internal and external business forces and formulation of plans that help achieving the overall Organizational goals. In this regard, Porter’s VRIO model can be used to undertake an appropriate strategy. VRIO Framework is an outline to analyze a business which is in turn a subset of larger strategic goals of an Organization. The foundation activity of any business line depends upon the formulation of Vision statement, followed by the Objectives to achieve such Vision, analysis of overall business line, be it internal or external and thenceforth creation of Strategic choices, both at Corporate and Business level and implementation of the same.

VRIO is an acronym to ask four question framework to ask about Organization's Resource capability. VRIO refers to the Question of:

• Value: Whether an Organization can tap new opportunity available in the market or to deal with external threats, with its available resources.
• Rarity: How rare is the available resources in the hands of the Organization.
• Imitable: How difficult would it be for the Organization to imitate, duplicate or adopt an available technique from a given market.
• Organization: What way to tap the resources?

Let us apply VRIO to one of the major Coffee making Company, Starbucks.

VALUE:

• Brand Equity: The strong brand image of Starbucks forms the basis for good reputation among the consumers in the market, which is in turn banked upon for further marketing activities. Brand equity facilitates the growth of the consumer base of the Company as well. Brand equity hence is a valuable resource for Starbucks.
• Variants and Quality: Starbucks is known in the market for offering a wide variants of coffee such as unique flavors, thereby luring more customers towards its products. Quality and variants are the valuable resource therefore for Starbucks.
• Service Quality: Good customer service relations enables Starbucks to retain its customers that vouch for its quality. Customer service is yet another valuable resource.
• Ambience of the Stores: The environment in which Starbucks’ set up their stores, is also a significant valuable resource to attract the customers.
• Effective Supply chain channel: Ensuring right quality and quantity of raw materials to the stores in the seamless manner, also forms an important valuable resource for Starbucks.
• Global name: It is the name to reckon with globally for ‘coffee lovers’. Their presence is further across the globe and hence forms a valuable resource.

RARE:

• Brand equity: To consistently maintain its position in the global market at all times is also not a common phenomenon. Hence a rare quality for Starbucks.
• Variants & Quality: Offering various special flavors of the coffee, makes its products outperform the contemporaries in the market. Further, it vouches for its quality and taste. Therefore, this is a rare characteristic.
• Service quality: The persistent efforts to hear to the feedback of the customers and make attempts to improvise their products, forms the base of effective customer services, which is rare as well.
• Strong Supply channel: Without appropriate strategy and a good amount of investment done into the Supply chain channel, such a phenomenon is also rare. Starbucks, however, have succeeded to achieve the same.
• Global name: It may be a name to reckon with. However, what is rare is the enormous financial investment that the Company has done to achieve the same. It is hence not every player’s cup of coffee to follow the same and therefore rare.

IMITABLE:

• Brand equity: In short-run at least, this could be difficult to be imitated by the other players in the market.
• Variants & Quality: It requires consistency in efforts to maintain the quality of the vast range of variants of its coffee and products alike, in the market. Hence, it could be difficult to imitate.
• Service Quality: Another difficult factor that may occur as a hindrance to the other players in the market, could be that of the customer service. Special Quality circles are required to ensure the process.
• Strong supply chain channel: The sourcing of raw materials keeping pace with quality and ensuring seamless supply of the same, could pose as a challenge for many players.
• Global name: To earn the global name requires a good amount of investment because the Company shall look into venturing to various countries across the globe to make their presence felt. Such a vast investment may be difficult to imitate.

ORGANIZED:

• Brand equity: Strong brand name gives the Company’s image an organized form.
• Variants & Quality: Well organized strategy that distinguishes Starbucks from other players in the market and enables the retention of customers.
• Service quality: This is as well an important factor that has kept the Company going since it is known for offering good customer services.
• Ambience of the Store: This also forms a significant part in ensuring that the footfalls of the customers are more at the stores, hence part of its marketing strategy as well.
• Supply chain channel: Strong and effective supply chain channels, ensures the supply of high quality of coffee beans to maintain the quality of coffee of Starbucks at all times.