Firm Resources and Sustainable Competitive Advantages (VRIN)
Exhibit 3.6
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Determining whether the internal resources are valuable, rare, difficult to imitate, or difficult to substitute (VRIN) can help a firm sustain a competitive advantage. See Chapter 3, Exhibit 3.6.
McDonald’s
Q2. Internal Analysis, cont.
- McDonald’s doesn’t appear to have any resources that are clearly valuable, rare, in-imitable or non-substitutable.
- This indicates that McDonald’s may have a major challenge sustaining a competitive advantage, especially since any strategy it implements can be quickly imitated by competitors.
- McDonald’s core capability appears to be its operations focus on the original vision and mission. This has allowed its brand reputation to remain solid over the years.
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Applying the VRIN analysis, McDonald’s doesn’t appear to have any resources that are clearly valuable, rare, in-imitable, or non-substitutable. This indicates that McDonald’s may have a major challenge sustaining a competitive advantage, especially since any strategy it implements can be quickly imitated by competitors. However, McDonald’s core capability appears to be its operations focus on the original vision and mission. This has allowed its brand reputation to remain solid over the years.
McDonald’s
Q2. Internal Analysis, cont.
- Intellectual capital
- Reputation, employee loyalty and commitment, customer relationships, company values, brand names, and the experience and skills of employees
- Human capital
- Individual capabilities, knowledge, skills, and experience of the company’s employees and managers
- McDonald’s has some valuable intangible assets to help it carry out its mission – but these need to be further developed, especially with a more franchise-based model. Thompson’s leadership is key.
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Consider the concepts of intellectual capital and human capital, both of which are intangible assets that a company such as McDonald’s needs to have in order to compete successfully. Intellectual capital is a measure of the value of a firm’s intangible assets, its reputation, employee loyalty and commitment, customer relationships, company values, brand names, and the experience and skills of employees. Human capital involves the individual capabilities, knowledge, skills, and experience of the company’s employees and managers. McDonald’s has some valuable intangible assets to help it carry out its mission – but these need to be further developed, especially now that the company has transitioned to a more franchise-based model. Thompson’s leadership is key! Given McDonald’s challenges both internally and externally, he must make some good choices about how to compete going forward.