Running Head: VRIO

VRIO Analysis
Sara Hayes
BUSI 6503
09/06/2015
Dr. Michael Snell D.B.A., M.B.A.
VRIO Analysis of Wal-Mart 2

Financial Crisis Case Analysis

Introduction

A VRIO (value, rarity, imitability, and organization) analysis makes it possible for an

organization “to develop a set of tools for analyzing all the different resources and capabilities a

firm might possess and the potential of each of these to generate competitive advantages”

(Barney and Hesterly, pg 66). So this analysis will show the VRIO framework of Wal-Mart

which will ask the four questions: the question of value, the question of rarity, the question of

imitability and the question of organization in order to see if a resource has the potential to be a

competitive advantage for Wal-Mart.

Question of Value

The question of value is what the company doing as whole with its resources and

capabilities allowing it to neutralize any threats? Wal-Mart staying to true to Sam Walton’s

leadership shows that the company values its customers, employees and its drive for low costs.

The low cost to its consumers will keep them coming back to store and when the consumers

know that the leaderships cares about people in general they will continue to do business with

them. Wal-mart building in medium to small markets also shows its value because this will bring

jobs to the area and help out the average household save some money which other retailers are

not able to do. According to the Meg Marco (2007) “Just the very presence of Wal-Mart saves

Americans an average of $2,500 a year whether they’re Wal-Mart shoppers or not.” This is

mostly due to the lower cost that Wal-Mart can bring into an area other retail stores will have to

drop their prices or they will be put out of business.

Question of Rarity
VRIO Analysis of Wal-Mart 3

This question will analyze the company’s strategy in rarity and if this will help set it apart from

other retailers in the industry. The cability to leverage information technology in Wal-Mart’s

favor makes them a rare in the industry. They use the point of sale (POS) data to make store

arrangements and to forecast what sales might be and what they might need to stock up on. The

POS system is rare to see in the industry and sets Wal-Mart apart from others. They are also

rare in the relationships that they have with their suppliers. They have better buying power

because of the shear volume that they do with their vendors. They are also known for their

integrity and reputation in the industry which this makes vendors want to do business with them

as long as they can meet their demands.

Question of Imitability

This is a question of if a firm does not have a resource that other retailers have will they

face a cost disadvantage in obtaining it? Wal-Mart has more distribution systems than its

competitors which would cause them to pay more to get their products to them. They have low

inventory cost because of their cross-docking ability. This allows them to keep inventory on the

shelves not sitting in the warehouse where it does not make them any money. In order for

another retailer to get to this efficient of inventory and shipping would take a great deal of time

and money.

Question of Organization

This question looks at an organizations policies and procedures to see if it is organized in

such a manner as to support an company that is valuable, rare and costly to imitate. Wal-Mart’s

organization is built to empower the department managers to manage their store with in a store in

a way that they see fit with in the company’s regulations. They have recently re-structured their

management and made it very lean but effective. Wal-Mart has a management staff that is very
VRIO Analysis of Wal-Mart 4

knowledgeable in all aspects of the store and of its customer issues this allows the store to run

very effectively.

Conclusion

The VRIO analysis is a very effective tool for companies to use for internal use to see if a

change or a resource will be viable for them to make or to take on. In this analysis of Wal-Mart

as a whole it is easy to see as to why they are the retail giant that they are. They do a lot of

things that other retailers can not accomplish and they take advantage of their abilties from being

the top retailer.

VRIO Analysis of Wal-Mart 5

References

Barney, J., & Hesterly, W. (2015). Strategic management and competitive advantage: Concepts
and cases (5th ed.). Hoboken, New Jersey: Pearson Education.

Marco, M. (2007, November 13). Walmart "Saves The Average Family $2,500 A Year," But
You Don't Actually Have To Shop There. Retrieved September 7, 2015, from
http://consumerist.com/2007/11/13/walmart-saves-the-average-family-2500-a-year-but-you-
dont-actually-have-to-shop-there/