VRIN Framework, Amazon
VRIN Framework, Amazon
Introduction .............................................................................................................................. 2
Resources and Competences .................................................................................................... 2
VRIN Strategic Capability and Competitive Advantages ................................................. 3
Activity Systems ........................................................................................................................ 4
Summary ................................................................................................................................... 6
REFERENCES ......................................................................................................................... 7
APPENDICES........................................................................................................................... 8
Introduction
E-Commerce giant Amazon is one of the major players in the online business sphere and
since being founded in the 1990s has reshaped the way consumers and retailers interact with
each other.
As Amazon has grown as a company it has moved away from its original mission statement
which was to become the worlds biggest and best online bookstore and in the process has
aggressively morphed into a market leader in E-Commerce providing a diverse set of products
and services. Their products and services portfolio ranges from selling electronic devices and
media content to facilitating an online marketplace for small businesses.
This report takes the position that; Amazons growth strategy allows the company to leverage
its core capabilities across different businesses and therefore assures business success in the
long-term despite short-term decreases in profitability due to growth related investments.
The analysis will be informed by using the VRIN and Activity Systems frameworks. The
argument for the position will be made in support of Amazons current strategy by taking into
account the companys resources and key competencies which enable it to strategically
generate the core capabilities that set it up for achieving effective long-term success.
This report aims to spell out that in choosing to continue with its current strategy Amazon will
be able to sustain its competitive advantage in the long-term.
or potential competitors and when these other firms are unable to duplicate the benefits of this
strategy.
When a company holds such an advantage over its competitors a possible outcome of this
scenario can be an overall increase in market share.
The foundations of a sustainable competitive advantage can be divided into four specific key
criteria that make up the VRIN framework:
1. A specific capability should offer value, and be Valuable to customers. For example
customers are willing to pay for Amazons one day delivery service.
2. The Rarity of a companys capability is also crucial. The capability should not be
possessed, or easily possessed by competitors in the marketplace.
3. A sustainable competitive advantage should be Inimitable for example a product or
service that competitors are unable to copy.
4. The risk of non-substitutability should be low enough for the capabilities so that
competitors would not be able to replace it.
Appendix 2 lists the six core strategic capabilities that are key to the success of Amazon.
The VRIN framework is applied to determine if these six capabilities can strengthen the
foundations of a sustainable competitive advantage and their overall impact on long-term
success.
Looking at Amazon within the structure of VRIN shows that they definitely have sustainable
competitive advantages in Diversified Product Categories, Technology Infrastructure and
Logistics in which Amazon met all the four criteria laid out by VRIN, and therefore imply
long-term success for the company.
Although the Negotiation Ability of the Senior Management Team and the Online Marketing
Channels and Promotions do not fulfill all four criteria of VRIN (they are Temporary
Competitive Advantages), there is still a possibility that they can contribute towards the longterm success of the company.
Activity Systems
Mapping out Amazons high order themes activities through an Activity System map allows
further exploration of Amazons value creating operations, as well as highlighting their value
to customers.
Senior Management, as illustrated in the Activity Systems map that allows Amazon to be
flexible in the expansion of their businesses.
The linkages between the activities laid out in the Activity Systems map demonstrate that a
long-term sustainable competitive advantage is possible when Amazons model of business
interdependently benefits the varying sides.
Summary
In summary this report has illustrated the strategic capabilities that Amazon possess, and that
support the companys long-term strategy of growth and expansion.
Through looking at the Amazon in 2013: Online Success case study, and analyzing the
companys Resources and Capabilities as well as observing Amazon through the VRIN and
Activity Systems frameworks the follows points were made:
Resources and Capabilities
Through utilizing their resources and capabilities Amazon has successfully pioneered and
developed products and services within the E-Commerce market over a long period of time.
Based on the analysis of the strategic capabilities of Amazon it is clear that they have the key
competencies to survive and continue to be successful in the long-term.
VRIN
Using the VRIN framework facilitated an analysis of whether Amazon as a company
correlated with the 6 core competencies and resources as laid out in Appendix 2. Analysis
showed that Amazon had a sustainable competitive advantage in 3 areas (Diversified Product
Categories, Technology Infrastructure and Logistics). These sustainable advantages point to a
successful commercial future in the long-term. Although Temporary and not sustainable it is
notable that Amazon has a competitive advantage in regards to Negotiation of the Senior
Management Team as well as in Online Marketing Channels and Promotion which both point
to long-term success
Activity Systems
Through mapping Amazons high order themes and activities via the Activity System
framework, the analysis has shown that Amazon benefits from interdependent nature of their
different themes and activities (which they continue to invest in) that offers continuous value
to their customers in the present and in the long term.
REFERENCES
1. AMAZON.COM
(2014)
Inside
Amazon.
[ONLINE]
Available
at:
http://www.amazon.com/Inside-Careers-Homepage/b?node=239367011
[Accessed 28th October 2014].
2. BARNEY, J. (1991) Firm resources and sustained competitive advantage. Journal of
Management, vol 17.
3. DONNIE, T. (2014) Amazon losses widen as it braces for rocky holiday quarter.
[ONLINE] Available at:
http://www.cnet.com/news/amazon-q3-loss-widens-as-it-braces-for-rocky-holidayquarter/%23ftag=/
[Accessed 27th October 2014].
4. Euromonitor InternationaL: Amazon.com Inc. in retailing (world). 2014. [ONLINE]
Available at :
https://attachment.fbsbx.com/file_download.php?id=473424456130302&eid=ASv76p
gycCtNMQ9SgZao1Lw7JkA_BTIzrLWFC5OMqXN7iMapi8FDbwQ5PQuKM0Nzgn
E&inline=1&ext=1414548067&hash=ASugdE0U6uGK-8e0
[Accessed 27th October 2014].
5. HOPE, J. and PLAYER, S. (2012) Beyond Performance Management. Cambridge:
Harvard Business Review Press
6. JOHNSON, G., WHITTINGTON, R. and SCHOLES, K. (2011) Exploring Strategy.
9th ed. Prentice Hall
7. JOHNSON, G. et al. (2013) Exploring Strategy Text & Case. 10th ed. Edinburgh:
Pearson.
8. VASUDHA, M. and RAKAKUMARI, D.J. (2013) Amazon in 2013: Online success case study. Reference no 313-285-1
APPENDICES
Apendix 1: Resources and Competences
Easy for competitors to Difficult for competitors to imitate
imitate
and
etc.)
Warehouses
Product development
Customer database
Marketing Technology infrastructure (Amazon
Web Services - EC2 and S3)
channels and promotions
Online
Brand popularity
Kindle services
Negotiation
ability
of
Senior
Resource
capability
Impact
on
or
NonCompetitive
Value Rarity Inimitability
longsubstitutability implication
term
success
Sustained
Low
competitive
advantage
Diversified
product
categories
Technology
infrastructure
(Amazon Web
services
EC2
and S3)
Logistics
Negotiation
ability
of
Senior
Management
team
(Vast
acquisitions
and low prices
with
third
party)
Flexibility
of
business
expansion
Online
Marketing
channels and
promotions
Low
Sustained
competitive
advantage
Low
Sustained
competitive
advantage
Medium
Temporary
competitive
advantage
High
Competitive
parity
High
Temporary
competitive
advantage
or
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