It is the dream of almost every organization to have a competitive advantage over competitors within its line of business. The only means is to ensure you have full control over a given market such that competitors cannot substitute or imitate your products or services. The VRIO frameworks are used in identifying an organization's competitive advantage by categorizing its resources into for main dimensions Valuable, Rare, Inimitable, and Organized (Pesic Milic & Stankovic, 2013). The following VRIO framework will analyze Wal-Mart Inc. competitive advantage and what resources shall enable it to take control of the Dubai market.
Valuable
A valuable resource provides an organization with a benefit. However, for Wal-Mart to have such resources and attain a competitive advantage, the resources should not be hard to imitate nor rare. Wal-Mart has highly valuable financial resources. This means that the company can easily invest in the Dubai market and help it in combating any external threats. The company’s products are also highly differentiated from competitors, and this makes them valuable. Customers can quickly determine the value the products give them. The firm’s employees are highly valued as they have enough training and customer relationship management skills. This has made the firm to have low turnover rates and higher productivity. Another valuable resource is its distribution networks, which shall enable it to reach many customers.
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Rare
For a company to have a rare resource, it must be unique and commonly owned by many organizations. Rare and valuable resources give a firm a competitive advantage. Wal-Mart’s distribution network is for competitors. They will be forced to make considerable investments in laying such a network. Wal-Mart has patents for some of its unique products, and this makes them rare. Competitors cannot produce similar products as they will face litigations. However, the local foods sources are not are for Wal-Mart as they are still sought after by competitors. Another rare resource is financial capability. Wal-Mart is a leading retail giant, and this means it has enough capital to launch investments in Dubai without fail.
Inimitable
Costly resources make it hard for other companies to imitate. Moreover, if resources are legally protected, organizations cannot copy. Wal-Mart's financial resources are not easily imitable. Having been founded in 1962, the company has accumulated profits over the years and thus can be used for further investments (Wal-Mart, 2020). Imitating Wal-Mart’s patents is very difficult for competition as it will be a legal breach and can lead to lawsuits. However, Wal-Mart’s employees are not hard to imitate as competitors can also train their employees to meet the standards or even offer better salaries to employees and gives Wal-Mart a little competitive advantage.
Organization
An organization is said to be organized if its culture, processes, and structure supports its ability to generate value to customers. Wal-Mart's distribution network is well organized, and this allows the firm to capture even the most remote of customers (Wal-Mart, 2020). Through its distribution network, Wal-Mart can maintain its cost leadership structure that gives it a competitive advantage.
From the VRIO analysis, Wal-Mart has at least four sustainable competitive advantages that can enable it to expand into the Dubai market. The financial resources, distribution network, and patent give Wal-Mart a sustained competitive advantage in Dubai. However, the employees provide the firm with temporary competitive advantages as its competitors can easily imitate these resources while the local foods have a competitive parity.
SWOT Analysis
The SWOT analysis helps an organization in laying a foundation for developing its business strategy, whether it is in a new or existing market (Gurel & Tat, 2017). It comprises four main factors Strengths, Weaknesses, Opportunities, and Threats. The internal factors include strengths and weaknesses, while external factors include opportunities and threats.
Strengths
Wal-Mart has a strong financial position. In 2019, the firm had income amounting to $514.4 billion (Wal-Mart, 2020). This indicates that the firm has enough capital to support its investment in Dubai without requiring external financial aid such as loans from creditors.
Strong Brad portfolio-Since its foundation, Wal-Mart could build a strong brand in its operational market. This makes it easily known amongst customers across the globe, including Dubai, and thus people can easily relate with the company.
Cost leadership- Wal-Mart is known for its low priced items that have driven mots competitors out of business. This makes it one of the cheapest places to shop in the world and thus will attract many customers in Dubai who want high-quality products using low prices.
Weaknesses
Wal-Mart has a poor record with its employee treatment (Abrams, 2017). The firms have been accused of paying employees low wages, and this arises from their low-cost products. The firm has a very high attrition rate. Its expansions into Dubai can see the company not easily accessing employees from the city.
Wal-Mart has little investments in its research and development. This means that it will not provide its customers with innovative services and products. Dubai, being a city that loves innovative products and services, can see the company failing to reach its expected target market.
Opportunities
Wal-Mart can create strategic alliances with leading retail firms in Dubai, including Carrefour Hypermarket and Baqer Mohei Supermarket. The firm can also opt to acquire some small firms which can be profitable for the firm.
Wal-Mart can also improve its human resource practices. This will be a favorable opportunity for the company as it will attract many local employees.
Threats
The globe has undertaken measures to curb environmental degradations. Esty & Bell (2018) state that these new measures that are agreed on, such as the Paris Agreement of 2016, could affect Wal-Mart’s ability to produce specific products in Dubai.
The political and legal frameworks in Dubai can affect Wal-Mart's ability to operate adequately. In case it does not meet some of the requirements, it means it cannot set up business in the city. In UAE, it requires that 51% ownership should be held by a UAE national or company for any foreign business.
References
Abrams, R. (2017, June 1). Wal-Mart is accused of punishing workers for a sick day . The New York Times. Retrieved April 14, 2020, from https://www.nytimes.com/2017/06/01/business/walmart-workers-sick-days.html
Esty, D. C., & Bell, M. L. (2018). Business leadership in global climate change responses. American Journal of Public Health , 108 (S2), S80-S84.
Gürel, E., & Tat, M. (2017). SWOT analysis: a theoretical review. Journal of International Social Research , 10 (51).
Pesic, M. A., Milic, V. J., & Stankovic, J. (2013). Application of vrio framework for analyzing human resources ‘role in providing a competitive advantage. Tourism & Management Studies , 575-586.
Wal-Mart. (2019). Wal-Mart releases the 2019 annual report and proxy statement . Retrieved April 14, 2020, from https://corporate.walmart.com/newsroom/2019/04/23/walmart-releases-2019-annual-report-and-proxy-statement
Wal-Mart. (2020). Our history . Retrieved April 14, 2020, from https://corporate.walmart.com/our-story/our-history
