Question

Assume you are starting your own coffee company in China, create a VRIO analysis and present your case. Please write as much as you can and cite your source.

Thank you in advance!

Answer 1

VRIO analysis is a tool which is used by companies in order to find out their competitive advantage in the market and how easy or difficult will it be to carry out the business. It is even used before starting up a new business as it will help in analyzing the real picture of the market.

VRIO is the acronym for:

• V: Value It means how expensive the resources are and how difficult will it be to gather the resources. Also what are the capabilities of the business. Moreover, what will be its overall value to the business.
• R: Rareness It means how rarely the resources are available in the market and how much efforts will have to be put to reach out to those resources.
• I: Imitability It means that is it easy or difficult to copy the resources or find out proper substitute for the resources.
• O: Organization It means that if the organization will be able to use the resources effectively or will it be easy for managing the resources.

For a coffee company to be started, following can be the VRIO analysis:

Capability/ resource: Availability of coffee beans

• V: the coffee beans to be used for making coffee need to be purchased for different nations by using lots of money, which will also lead to high performance of business in future.
• R: the coffee beans are very rarely available and lots of resources need to be employed for its purchase.
• I: the ideas to make coffee are so rare that it cannot be copied by any competitors in the future to come. Hence competitive advantage to the company.
• O: the company is strong enough and organized enough to run the business and serve the Chinese market because of its skilled workforce.