Walmart VRIO/VRIN Analysis, Value Chain Analysis (Resource-Based View)

A VRIO and VRIN analysis of Walmart Inc. and its value chain points to sustainable
competitive advantages that include retail competencies and e-commerce capabilities
and resources that address rivalry with other retailers. A value chain analysis shows
the significance of these organizational resources and capabilities in benefiting the
business and consumers.

Walmart Inc.’s global supply chain and operations management expertise are strategic
resources in its value chain to keep competitive advantages in the international retail
industry. Such competitive advantages are identified in this VRIO and VRIN analysis
and value chain analysis of the company, within the resource-based view (RBV).
Derived from Jay B. Barney’s framework, the VRIO analysis is a strategic
management and strategic planning tool to inform decision makers about the
organizational resources and capabilities that support long-term competitive
advantages. The VRIN framework uses non-substitutability (N in VRIN) instead of
organization (O in VRIO) in determining which resources and capabilities are core
competencies for sustained competitive advantages. This internal analysis of Walmart
Inc.’s business determines VRIN and VRIO competitive advantages against other
retailers, such as Amazon, Costco, Home Depot, and Target, as well as content
delivery service providers, including Apple, Netflix, and Google. Walmart’s value chain
is analyzed with regard to the firm’s core competencies. Some of these core
competencies are directed against competitors with major online operations. This
strategic focus addresses market shifts toward e-commerce. Walmart’s strategic
objectives suit current business conditions by exploiting the corporation’s competitive
advantages for optimal value chain and operational effectiveness.

Walmart Inc. VRIO & VRIN Analysis, Table (Resource-Based View)

Competitive advantages buttress Walmart’s business performance. However, the

company needs additional competencies to protect its retail business against
aggressive and disruptive competitors. In this VRIN/VRIO analysis case, the following
resources and capabilities are the bases for Walmart’s sustainable competitive
advantages or core competencies:

Walmart’s Organizational Capabilities & Resources V R I O N

Non-core Competencies:
– Easy access to adequate human resources ✔
– Diverse product offerings ✔
– Broad set of private label brands ✔ ✔
– High-potential package delivery network ✔ ✔
Sustained Competitive Advantages:
– Inventory management systems set up for high efficiency ✔ ✔ ✔ ✔ ✔
– Strong brand value ✔ ✔ ✔ ✔ ✔
– Strong bargaining power based on organizational size ✔ ✔ ✔ ✔ ✔
 – Vast international supply chain ✔ ✔ ✔ ✔ ✔
– Major e-commerce operations ✔ ✔ ✔ ✔ ✔
– Extensive access to consumer data ✔ ✔ ✔ ✔ ✔
– Data analytics and data mining capabilities ✔ ✔ ✔ ✔ ✔

Non-core Competencies. As a retail business, Walmart Inc. has a workforce that

generally does not require highly specialized skills. Consequently, easy access to
adequate human resources is a competency considered in this VRIO/VRIN analysis.
However, despite its value to the business, this resource is not rare, is easily imitable,
and does not contribute long-term competitive advantage to fight Walmart’s
competitors. Similarly, the company’s diverse products, set of private label brands,
and package delivery network are organizational resources and capabilities that do
not satisfy all the requirements, namely Value, Rarity, Inimitability, and Organization
(VRIO framework), and Value, Rarity, Inimitability, and Non-substitutability (VRIN
framework). These four resources/capabilities are non-core competencies that help
strengthen Walmart’s value chain and competitive advantages. However, in the
resource-based view, these non-core competencies cannot sustain such competitive
advantages for long-term business growth and development.

VRIO Core Competencies (Long-Term Competitive Advantages) of Walmart.

This VRIO analysis includes the company’s inventory management systems as a core
competency for competitive advantage. In the resource-based view, these systems
are a strategic resource developed specifically for Walmart Inc.’s needs, for minimized
inventory bottlenecks and costs. These systems help the retail business maximize its
profit margins. In addition, Walmart’s strong brand value is a core competency
because it satisfies all of the VRIO variables. The brand is a valuable, rare, and
difficult-to-imitate resource. To compete against other retailers, Walmart’s
organization uses this brand throughout its operations, and applies it in the value chain
to make it easy for consumers to identify places (brick-and-mortar and online) where
affordable goods are accessible.

Strong bargaining power based on organizational size is another sustainable

competitive advantage that helps Walmart fend off aggressive competitors. The
resource-based view of the company considers this organizational capability as an
enabler of the company in using cost leadership and low prices to compete, especially
against smaller retailers that do not have the sales volume to compete based on price.
This core competency empowers Walmart to compel manufacturers or suppliers to
apply price reduction, which adds value as the goods move through the company’s
value chain. According to the VRIO table, the company’s strong bargaining power is
valuable, rare, and difficult to imitate. Organized around this core competency,
Walmart requires manufacturers and suppliers to have low prices to benefit
consumers and the business.

In addition, Walmart’s vast international supply chain is an organizational resource

that creates sustainable competitive advantage, based on the VRIO analysis model.
The supply chain supports the size of the company’s operations, the cost-leadership
strategy, and low pricing, thereby ensuring an effective value chain. In the resource-
based view of Walmart’s retail business, the supply chain is a long-term competitive
advantage because it allows the company to access the cheapest or most
competitively priced goods from manufacturers. Effective supply chain management
directly contributes to Walmart’s value chain effectiveness that attracts buyers to its
stores and e-commerce website.

In the VRIO framework, major e-commerce operations are viewed as a sustained

competitive advantage of Walmart Inc. Now an e-commerce player, partly as a
strategic response to Amazon.com Inc., Walmart’s investments in information
technology and its high variety of product offerings contribute to competitiveness. This
core competency is valuable (reinforces market reach and improves customer
experience), rare (only a few firms can match e-commerce operations of this scale),
and difficult to imitate (among smaller retailers). The company’s organization around
this competency makes e-commerce operations a sustainable competitive advantage.
In the resource-based view of Walmart Inc., e-commerce operations also optimize
retail value chain efficiencies.

Extensive access to consumer data is another core competency evaluated in this

VRIO analysis of Walmart Inc. The millions of consumers in the company’s
multinational operations generate vast amounts of data about purchase behaviors.
Through this organizational resource, Walmart forecasts fluctuations in demand,
allowing managers to accurately respond to retail market changes, thereby
maintaining value chain consistency. In relation, the data analytics and data mining
capabilities included in this VRIO analysis empower Walmart to obtain high-value
information from consumer data. The company is organized around using its
consumer data resource, data analytics and data mining capabilities, and e-commerce
operations. The combination of these technological capabilities creates synergistic
and sustainable competitive advantage that is valuable, rare, and inimitable. In the
resource-based view of Walmart’s operations, these strategic capabilities and
resources are critical success factors in satisfying consumers’ needs. These
technological capabilities contribute to Walmart’s operational effectiveness and
ensure that the company’s value chain actually benefits consumers.

VRIN Resources and Capabilities of Walmart Inc. The VRIN framework requires
that an organizational resource or capability must be valuable, rare, imperfectly
imitable, and non-substitutable for it to be a core competency of the business
organization. Walmart’s VRIO core competencies are also VRIN core competencies,
as presented in the table above. For example, the company’s inventory management
systems and e-commerce operations are non-substitutable in a practical way. Also,
extensive access to Walmart’s consumer data and data analytics and data mining
capabilities are VRIN resources and capabilities because their value cannot be easily
matched with non-big-data substitutes. The company’s organizational size is another
core competency under the VRIN analysis framework. Even though competitors like
Amazon and Target are able to directly compete, Walmart Inc.’s size is a competitive
advantage against the vast majority of retailers that are smaller in organizational size,
operational scale, and market reach. The company’s value chain is optimized through
these VRIN resources and capabilities.

Walmart Value Chain Analysis: How the VRIN/VRIO Resources and Capabilities
Relate to the Value Chain
In analyzing Walmart’s value chain, the creation and provision of value to target
consumers are linked to the core competencies identified through the VRIO and VRIN
analysis frameworks. These competencies allow the company to add value to the
goods that come from manufacturers or suppliers. The movement of these goods
involves Walmart’s value-adding logistics and retail operations, illustrated in the
following value chain diagram:

A top-level diagram of Walmart’s value chain and its components, and how this value
chain relates to other business organizations in the retail industry’s value system.
Walmart’s core competencies (VRIO/VRIN organizational resources and capabilities)
increase the value (and price) of these goods. The combination of value chains in the
industry brings manufacturers’ goods to consumers. (Image: Copyright ©
Rancord.org)

The above diagram depicts the retail industry value system and how Walmart’s value
chain relates with the other components of this system. An industry value system is
the set of all value chains involved in the industry, which in this case is the retail
industry. According to Michael E. Porter, strategic business units determine the
activities involved in the value chain. In this internal analysis case of Walmart Inc.,
these business units include the distribution centers, distribution network, fulfillment
centers, retail stores, and delivery network represented in the value chain diagram.
Through the supply chain, goods are moved from manufacturers and distributors to
the company’s value chain. These goods exit Walmart’s value chain and reach the
target customers, who are the consumers in the retail market. The delivery network is
used in e-commerce operations where customers opt to have their purchased goods
delivered. The network involves Walmart’s delivery operations as well as the
operations of delivery service providers like FedEx. The network is a link or interface
between the company and its target customers. The delivery network is only partially
in Walmart’s value chain.

In moving goods through Walmart’s value chain, competitive advantage is created by

using the company’s core organizational resources and capabilities, as assessed
through the VRIN/VRIO analysis of the retail business. Such competitive advantage
equates to reaching the company’s value proposition, which is to provide conveniently
accessible and affordable goods to consumers. In the resource-based view of Walmart
Inc., the core competencies are utilized in every step of the value chain. For example,
the company’s strong bargaining power adds value for consumers by minimizing costs
and prices. In addition, Walmart’s e-commerce operations add value by increasing the
convenience of purchasing affordable goods. Also, the company uses its inventory
management systems as a strategic resource for supply chain management, which
determines costs and availability of goods to consumers. Thus, in light of the resource-
based view, this value chain is a set of processes where Walmart Inc. utilizes its
VRIO/VRIN resources and capabilities. Through this value chain, the company gains
profits and the consumer benefits from low-cost goods that are convenient to access
through Walmart’s stores and e-commerce website.

Key Points from the VRIN/VRIO Analysis and Value Chain Analysis of Walmart
Inc.

Walmart has at least seven sustainable competitive advantages, which are shown in
the VRIO/VRIN analysis table. The non-core competencies are organizational
resources and capabilities that the retail business uses to protect its market share from
further erosion due to competition. The aggressiveness of various online retailers,
especially Amazon, threatens Walmart’s online and non-online revenues. In the
resource-based view of the retail business, these non-core competencies may create
advantages, but not necessarily for the long-term, as other retailers can employ the
same strategic approaches and develop similar non-core competencies. Walmart Inc.
needs to maintain a competitive and effective value chain by building up these
strategic resources and capabilities, create new ones (such as through new ventures
or acquisitions), and establish better synergies among them.

Some Recommendations. E-commerce and online shopping continues to rise. Thus,

Walmart should continue expanding its strategic resources and capabilities relevant
to online retail. For example, the company can improve its supporting services to
maximize its e-commerce expansion. This VRIO/VRIN analysis and value chain
analysis show that Walmart already has a high-potential package delivery network.
However, this network is not yet comprehensive in reaching all target customers in
markets where the company already operates. To improve Walmart’s value chain, it
is essential to continue expanding the delivery network. Also, the corporation can
integrate its information technology capabilities into this network to make it difficult to
imitate. In the resource-based view, this strategic action can make the high-potential
package delivery network a new sustainable competitive advantage that fulfills the
VRIO requirements and VRIN requirements for Walmart’s core competencies.