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Burberry VRIO Help

The VRIO framework analyzes a firm's resources and capabilities to determine if they provide a sustainable competitive advantage by being valuable, rare, hard to imitate, and exploited organizationally. It benefits multinational corporations by helping them identify what makes them unique compared to competitors. For Burberry, their British identity and trench coats were valuable, rare, and difficult for competitors to imitate. Under a new CEO, Burberry refocused on its core competency of luxury outwear like trench coats which facilitated expanding globally while maintaining its competitive advantage.

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2K views2 pages

Burberry VRIO Help

The VRIO framework analyzes a firm's resources and capabilities to determine if they provide a sustainable competitive advantage by being valuable, rare, hard to imitate, and exploited organizationally. It benefits multinational corporations by helping them identify what makes them unique compared to competitors. For Burberry, their British identity and trench coats were valuable, rare, and difficult for competitors to imitate. Under a new CEO, Burberry refocused on its core competency of luxury outwear like trench coats which facilitated expanding globally while maintaining its competitive advantage.

Uploaded by

faryal
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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1. What is the VRIO framework and what benefits does it have for MNCs?

The VRIO framework is a compliment to a SWOT analysis and tasks managers to

ascertain a firm’s strengths and weaknesses on an activity-by-activity basis, relative to rivals.

The VRIO framework analyzes a firm’s resources and capabilities to discern if they constitute a

sustainable competitive advantage. Under this framework, resources contribute to a sustainable

competitive advantage only if they are valuable, rare, hard-to-imitate, and are organizationally

embedded and exploited. The VRIO framework benefits MNCs by helping them to look

internally and map out what specifically they do to compete with competitors and what makes

their company unique.

2. Discuss each of the 4 components of the VRIO framework in relation to Burberry.


Value: Burberry’s greatest resource lies in its Britishness – specifically their trench coat

roots. Having been founded in 1856 and being known for their coats, the image of Burberry’s

trench coats is very valuable. Rare: A focus on Burberry’s British country-of-origin image

would be rare in a global industry over populated by French and Italian luxury brands.

Imitability: Emphasizing their long history which goes back to 1856, and popularized by British

soldiers fighting in the trenches while wearing Burberry coats during WWI, the British identity

would be impossible to imitate by competitors. Organizational: Burberry instituted centralized

and consistent design and concentrated its trench coat production at the Castleford factory in the

north of England, adding more than 1,000 jobs in the UK. The organizational changes and

bringing the majority of production back to England further solidified the organizational

structure that encapsulated the company and its British identity.

By focusing on their British heritage, a Burberry trench coat designed and manufactured

in the UK became valuable, rare, and impossible to imitate by rivals. The company was also able
to employ this strategy in a successful manner, proving that the strategy was organizationally

successful.

3. Why did Burberry choose to focus on outwear rather than selling unrelated products?
Burberry decided to focus on outwear instead of selling unrelated products because

outwear, namely the trench coat, was the company’s core competency and fit with their luxury

image. By the mid-2000s, Burberry had extended its brand too far and was selling items outside

of its company’s core competency and image. Being a luxury brand, Burberry had lowered the

quality of their products by extending their product lines to unrelated and less “exclusive” items.

By focusing on outwear again, Burberry could present itself as an exclusive and luxury British

brand.

4. How did Burberry expand its sales to global markets in its recent strategic turnaround,
and to what extent did the VRIO framework facilitate these efforts?
Burberry was able to expand its sales to global markets by reevaluating the company’s

image, the products they sold, and figuring out what resources and capabilities made the

company unique. I believe the VRIO framework was a key variable in facilitating these efforts.

Using the VRIO framework, former CEO Angela Ahrendts realized that Burberry had extended

its products too far and lost focus on being a luxury brand. To bring the company back to its

former image, Burberry needed to isolate its competitive resource – which was its British

identity. By using their British identity as a key resource, Burberry centralized their organization

and focused on luxury trench coats that exemplified Britishness. In doing so, the company

became one of the fastest growing global brands in 2011 and this brand constituted a sustainable

competitive advantage for the firm.

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