To understand the company’s resources and capabilities, VRIO analysis is a valuable tool. The VRIO framework evaluates a company’s resources and capabilities to determine sustained competitive advantages. VRIO stands for Value, Rarity, Imitability, and Organization, and it provides a comprehensive analysis of Dell’s strengths and weaknesses. With a detailed VRIO analysis, businesses and investors can gain a deeper understanding of the company’s competitive position and make informed decisions.
Dell, the multinational technology company based in America, has made a name for itself in the computer technology industry. With over 165,000 employees worldwide, Dell is a leading player in the technology market, selling personal computers, data storage devices, software, servers, network switches, computer peripherals, cameras, HDTVs, printers, electronics, and media players from other developers.
Value
The first component of the VRIO framework is identifying the valuable resource of the company. The valuable resources and capabilities of the company is very important as it helps the company in exploiting the strengths and opportunities of the company. The valuable resource of Dell is the Direct Sales model, which the company uses since the beginning. This model brings the value in the company as it helps the organization in cutting the dealer or retailer costs when it has to come to store the computer components. This is because Dell only buys the needed components. Dell has also maintained a good reputation and contact among the product buyers of Dell which adds value (Steffen, 2016).
Rarity
Rarity is the second component of the VRIO framework. It means resources are needed to be acquired by only or few companies, or else every competitors will use such resources for own benefits. Dell has achieved rare resources, like concept of e-commerce and online sales is not rare but the adoption of the strategy by Dell- a PC manufacturer is not common. Dell company uses its strong reputation and develop strong brand image. The company also obtains the cost advantages over rivals which have stores and retailers containing the physical merchandise. The supply chain management and distribution system of Dell are not very rare however, it is working hard to develop the strategies which should be imitate (Tan, 2015).
Imitability
Imitability is the third component of the VRIO framework. Resources and capabilities are needed to be hard to replicate or difficult to find substitute for. The company should make sure its resources and capabilities are hard to imitate or expensive. Dell’s supply chain management model is expensive to imitate for the current rivals as the initial costs of capital would be high. However, as the strategies like Lean production and JIT are adopted, companies can reduce their costs. Moreover, direct selling model is also expensive for the competitors as they will have to re-organize the structure, assets and model (Tan, 2015).
Organization
This is the last and fourth component of the VRIO model. The component deals in organizing all the resources and capabilities of the company. Company can achieve sustained competitive advantage by achieving all four components of the model. Dell as organized and well-managed model and hierarchy. The company operates efficiently with the help of dedicated and organized human resources. Moreover, its operations, culture, structure, business models, supply chain, etc are working effectively with proper management (Dudovskiy, 2015).
Conclusion
the VRIO analysis of Dell shows that the company has valuable, rare, and difficult to imitate resources and capabilities, along with an organized and well-managed structure. The company’s Direct Sales model and strong reputation bring value, its supply chain management and distribution system is rare, and expensive to imitate. The company’s well-organized operations, culture, and structure contribute to its sustained competitive advantage.
| V | R | I | O | ||
| Supply Chain | ✓ | ✓ | ✓ | Temporarily competitive advantage | |
| Direct sales model | ✓ | ✓ | ✓ | ✓ | Sustainable competitive advantage |
| Brand Equity | ✓ | ✓ | ✓ | ✓ | Sustainable competitive advantage |
| Marketing | ✓ | ✓ | ✓ | ✓ | Sustainable competitive advantage |
| Product quality | ✓ | ✓ | ✓ | ✓ | Sustainable competitive advantage |
| Product range | ✓ | ✓ | ✓ | ✓ | Sustainable competitive advantage |
References
Dell, 2020. About us- overview. [Online], Available at: https://corporate.delltechnologies.com/en-us/about-us.htm, [Accessed on: 3rd May, 2020].
Dudovskiy, J. 2015. Dell value chain analysis. [Online], Available at: https://research-methodology.net/dell-value-chain-analysis/, [Accessed on: 3rd May, 2020].
Steffen, G. 2016. External and Internal analysis of Dell Computers. [Online], Available at: https://www.academia.edu/23613022/External_and_Internal_analysis_of_Dell_computers, [Accessed on: 3rd May, 2020].
Tan, R. 2015. Dell-Strategy analysis. [Online], Available at: https://www.slideshare.net/RoryTan2/dell-strategy-analysis, [Accessed on: 3rd May, 2020].