VRIO Analysis of Distinctive Resources

Running head: STRATEGIC MANAGEMENT OF JEEP STRATEGIC MANAGEMENT OF JEEP Name of the Student Name of the University Author Note 1 STRATEGIC MANAGEMENT OF JEEP Executive Summary The automotive industry plays a huge part in determining the growth of the world economy. It is an essential industry where a huge chunk of investment goes and therefore has a huge part to pla y in the economy. In this paper there is a strategic management analysis of Jeep where the external and internal analysis of the company is provided. The paper focuses on the drivers of change for the automobile industry. There is a detailed analysis of the basic and distinctive resources of the compan y as well. There is also an analysis of the distinctive capabilities and resources using the VRIO analysis in order to show the place of the organization in the industry. 2 STRATEGIC MANAGEMENT OF JEEP Table of Contents Introduction ................................ ................................ ................................ ................................ 3 Discussion ................................ ................................ ................................ ................................ .. 3 Technology Driver of Change ................................ ................................ ............................... 4 Rivalry among the existing organizations ................................ ................................ .............. 6 Threat of Substitute products ................................ ................................ ................................ . 7 Bargaining power of the suppliers ................................ ................................ ......................... 7 Bargaining power of the customers ................................ ................................ ....................... 8 Threat of New entrants in the market ................................ ................................ .................... 9 Resources audit of the company ................................ ................................ ................................ 9 Organizational Culture ................................ ................................ ................................ ............. 10 Analysis of capabilities ................................ ................................ ................................ ............ 11 VRIO analysis of distinctive resources and capabilities. ................................ ......................... 12 Conclusion ................................ ................................ ................................ ............................... 12 References ................................ ................................ ................................ ................................ 13 3 STRATEGIC MANAGEMENT OF JEEP Introduction The procedure of s trategic management involves the administration of the resources of a company to accomplish its objectives and goals. Strategic Management includes setting goals, evaluation of the strategic and co mpetitive environment, examination of the internal aspects of the organization, assessing plans and strategies, and guaranteeing that the management carries out those procedures across the association (Hunger 2020) . Although, a company's upper level administration is fundamentally answerable for the systems and strategies, the actual procedures are generally initiated by the thoughts and activities from the lower -level workers and managers. A company may involve a few workers who are committed to the methodology in contrast to depending exclusively on the director or operations manager for direction. Because of this, hierarchical leaders of the organization focus on gaining from the experiences in the past and analysing the overall environment of the industry and the organization. The collective data is then utilize d in order to develop systems of the future and to control the behaviour of the workers in order to make sure that the entire firm is pushing forward . Therefore, powerful strategic administration requires both the external and the internal viewpoint. This report analyses the strategic environment of the automotive industry mainly focusing on the car manufacturing company Jeep (Velikorossov et al. 2020 ). The paper also includes the major drivers of change for the industry as well as a full i nternal and external analysis of the company. Discussion A driver of change is an external or internal stress that shapes change to a firm. This incorporates change to plans, strategies, designs, management and tasks. There are a number of drivers that can change how an organization operates and deals with their business. In the automation industry too there are a substantial number of drivers that can vastly change how a company operates. Different factors add to the enforcement of change inside of a c ompany. 4 STRATEGIC MANAGEMENT OF JEEP For example, change can be enforced through change specialists and can be driven from the top just as from the base (Shaa ban and Magsi 2018) . Mentioned below are three of the major external drivers that can influence an organizational change in the automation industry. Technology Driver of Change For a long while now, it has been realized that organizations need to continually make technical advancements in the event that they want to remain in front of the pack regarding the competitiveness in the industry. Technological innovation can take numerous structures and some of them are dynamically continuous innovations, discontinuous innovations and continuous innovations. Organizations use all these types of innovation in order to cope with the change in the organization. Innovation is changing the auto business quicker than anybody might have anticipated. The lack of drivers, cost of fuel, crisis of capacity and numerous different variables are squeezing organizations to improve and start commercializ ing modern advancements (Rawlinson and Wells 2016 ). A portion of these technological trends patterns are as of now disturbing the car industry. ● Internet of Things: This concept has been available for a number of years now and the world is slowly getting ac customed to the idea. The purpose of this concept is to connect every gadget one owns with the other ones. The automotive industry is also reaping the benefits of this particular technology as it is being used to monitor health of the passengers in a vehic le, as a usage based insurance and also in other ELDs (Electronic Logging Devices). Auto biometric identification frameworks are being created to assist organizations and people in monitoring the health and wellbeing of the drivers (Wortmann and Flüchter 2015 ). ● Vehicle -to-everything: Innovation in order to interface vehicles with one another, the cloud, and some other deterrent out and about is being created. 5 STRATEGIC MANAGEMENT OF JEEP Associating Vehicle -to-Everything (V2X) is the transportation of data between the vehicle and an el ement on the street. This could be a traffic signal, crosswalk, or re -route sign. These innovations are relied upon to improve security in the streets along with the driving safety measures. Driver Assisted Truck Platooning (DATP) is intended to soothe the driver’s stress by letting one driver to "drive" several vehicles in marching formation at the same time (Seo et al. 2016) . Economy as a driver for Change The automation industry is a significantly modern and economic force all over the world. It produces sixty million vehicles in a year, and they are practically responsible for a large portion fuel utilization in the world . The business directly employs almost 4 million employees , and even more indirectly. In spite of the fact that numerous big organizations have problems with overcapacity and low benefits, the automation business a huge significance in the economy (Tanaka 2020) . The business, similarly, gives well -paying positions huge adv antages, has weighty linkages with supplier s and has a substantial political impact. As of late, the automation business has fallen on difficult stretches due to the coronavirus pandemic. In any case, the U.S. market is as yet one of the biggest engine veh icle markets on the planet; thus, numerous automakers sell and assembling in the U.S. Indeed, numerous automakers make a lot of their benefits in North America. Nay, the economy has a huge impact how the automation industry operates and behaves in the mark et. Customers as a driver for change in the automation industry The customers are a huge influence in any industry. The trends associated with any industry are generally driven by the customers. It is important to understand that without the customers no industry will be able to operate and in order to get into the competitive market 6 STRATEGIC MANAGEMENT OF JEEP an organization needs to analyse the needs and the preferences of a particular area and design the products accordingly. For example, if the majority of the people of a particular location has a family and kids, in that case the preferences will be a spacious SUV or a Sedan that can be beneficial for families with kids (Xu et al. 2020) . Similarly, the areas where the youth has the majority automobile companies would want to implement all the latest technologies in their products so that it attracts the youth. Moreover, when purchasing a car, every customer has a specific budget and an organisation should have a range of products in different pricing segments so that every customers' requirements are met. This is how the customer h as a huge influence on how an organisation develops their marketing strategy. Porter's 5 forces Analysis of Jeep Porter’s Five Forces is a tool for strategic management that helps in deter mining the competitiveness of a particular industry. All the five fa ctors mentioned in the framework helps the strategic planners to understand the competitive environment and make plans accordingly. The five forces in the framework are Rivalry among existing companies, Threat of New Entrants, Bargaining power of the Suppl iers, Bargaining power of the customers and the threat of substitute products (Eskandari et al. 2015) . The strengths of the forces vary from one organization to another and makes every industry unique in terms of attractiveness and profitability. The follo wing is the Porter's five forces analysis of Jeep: Rivalry among the existing organizations ● The amount of competitors in the automobile industry are not too many. The vast majority of these competitors are huge in scale and size . This shows that the companies in the industry will not be able to take actions with out being undetected. This shows that the rivalry among existing firms a weaker power within the industry (Marrone 2020) . 7 STRATEGIC MANAGEMENT OF JEEP ● The exit obstructions within the industry are especially high due to the amount of investment needed in capita and resources for operations . The exit boundaries are likewise more because of unofficial limitations and laws . This makes companies inside the industry hesitant to pause the business operations , an d they keep on pro ducing even at low er benefits. This makes the rivalry among the existing companies a more strong force within the industry (Doner 2020) . Threat of Substitute products ● There are just a few substitutes in the market for the products that are manufactured in the industry in which Jeep works. Among the ones that are available, they are delivered by businesses that procure lower benefits . This indicates that there is no limit on the greatest benefit s that companies can procure in the industry where Jeep work s. These variables show the entrance of substitute products a weak power within the industry (Rosenzweig 2017) . ● Some of the substitutes in the market are of a higher quality are far more costly. Similarly, companies manufacturing inside the industry where Jeep motors operates sell at lower cost s than the substitutes, with satisfactory quality. This shows that buyers are less influenced to switch to substitute products. This indicates that the threat of substitute products is weaker inside the industry. Barg aining power of the suppliers 8 STRATEGIC MANAGEMENT OF JEEP ● The products that the suppliers give are vastly normalized, less diff erent and have a lower cost of switching. This makes easier for buyers like Jeep to change providers. This shows that the bargaining force of the suppliers is a weaker one . ● The providers do not compete with various items inside the industry. This indicates that t here can be no other substitutes for those products apart from the ones that providers give. This ensures the bargaining force of providers a strong power within the industry (Luescher and Sherry 2018 ). ● The industry wherein Jeep operates is a substantial client for their providers. This implies that the benefits of the business are attached to the suppliers. The providers, subsequently, need to provid e sensible valuing. This shows the bargaining force of the suppliers a weaker power within the industry. Bargaining power of the customers ● The number of supply providers in the industry in which Jeep works is significantly more in number than the firms providing the products . This indicates that the buyers have a few firms to choose from, and consequently, lack authority over prices . This makes the Bargaining force of purchasers a weaker power inside the industry. ● The differentiation of products within the industries is high that indicated that the buyers are not able to discover other firms delivering a particular item. This problem in switching makes the bartering force of buyers a weaker force inside the industry (Mann 2018) . ● The nature of the items is critical to the purchasers. This indicates that the buyers in the industry are a little less value conscious . This shows the bargaining force of buyers a fragile force within the business. 9 STRATEGIC MANAGEMENT OF JEEP Threat of New entrants in the market ● The economies of such scale i s difficult to accomplish within the automotive industry, which makes it easier for those delivering in huge capacities to have a pricing advantage. It makes the manufacturing costly for the new entrants . This shows the entrance of new contestants a weaker power. ● The differentiation of products is strong within the industry , where companies in the industry sell separated products rather a product that is more standardized. Moreover, the clients search for items that are differentiated. There is huge acce ntuation on promoting and the clients gain benefits too. These factors convey that the entrance of new participants is a weak force within the industry (Thun 2018 ). Resources audit of the company A resource audit is a tool for strategic management for the internal analysis of an organisation used to comprehend the present status of a company's assets and resources. It assists with identifying what the firm right now has that they can expand on and what are the zones th at it needs to enhance. Comprehensively these assets are classified into two gatherings - basic and distinctive resources (Godden 2019) . The basic resources involve operation, monetary and human resources, while the distinctive resources incorporate the intellectual price and brand value. The resource audit can be used as a list of the soft and hard aspects within the resources in the organisation. The following is a resource audit of Jeep. ● Physical: Jeep is a brand under the parent organization Fiat -Chrysl er which is increasing in popularity and are currently operating in the farthest corners of the world (Bertoldi et al. 2015) . Apart from Korea and a couple of countries in Africa and 10 STRATEGIC MANAGEMENT OF JEEP the middle East Jeep is available everywhere. The stock and equipment is mostly take from the United States and Asia. This Basic resource is a strength of Jeep . ● Financial: Jeep has a good cash flow as it has been expanding the business and the benefits are showing. Jeep has tie -ups with different companies in different countrie s and the credit flow is always present. This makes the basic monetary resource an area of strength for Jeep. ● Human Resources: The expansion of business requires the expand of human resources. This is another basic resource necessary for any business. When expanding to another country Jeep merges with the other companies which provides them with experience and strength in the area of human resources. However, they can try and improve upon that area as well. ● Know -how: Jeep is not really hands on when it come s to diving in a new market as they choose to merge. It is a distinct resource and jeep has a weakness in that area, however, maintenance of the patents and copyrights will help them improve. ● Reputation: With the brand using the social media apps in order to connect with the customers Jeep is making huge strides in the area of brand awareness and reputation. The brand is the official sponsor of Juventus Football Club which is a huge club in Italy and Europe. Millions of potential customers are being accusto med to the brand name. This is a distinct resource and Jeep has strength in this particular area. Organizational Culture The culture of an organisation addresses the specific pre -characterized arrangements that give adequate direction to the employees and give a sense of guidance. The core principles of Jeep are not easily perceptible. The fundamental beliefs of the company are the basic objectives, norms and standards . These basic beliefs are variety, responsibility, coordinated effort, quality, energy, tr ustworthiness and administration. The artefacts structure 11 STRATEGIC MANAGEMENT OF JEEP the peripheral layer of the authoritative culture circle. A few instances of the antiquities are - open -door strategy, office schedules and official clothing standard for the representatives. The soc ial artefacts of the Jeep are effectively discernible by the rest of the world, but they are difficult to decipher. Jeep has a balance between the means and the goals of the organisation as it encourages the employees to take challenges and focuses on acco mplishing the goals of the company. The organization culture of Jeep is more inside than externally driven (Ch atman and O’Reilly 2016 ). The organization shares a solid obligation to inserting morals and ethics into their business activities. The investigat ion of the Jeep's organization culture shows that the company is firmly connected with the trained culture of work with a vertical chain of command and tall structure . It shows that the management retains the dynamic position, and directly controls the wor k conduct of the employees . At Jeep, the diversity is advanced and competition are valued. Moreover, there are open correspondence and the authoritative culture is very broad and adaptable . The competitive advantage of Jeep additionally lies in their capac ity to manage an exceptionally diverse labour force. Analysis of capabilities Analysis of the business capabilities is in connection with the assessment of the capabilities of an organisation – a Capability is the factor which a business can do or has done in operational and vital settings. Distinctive capabilities are the ones that make the brand a unique one. In the case of Jeep, design and technology are distinctive capabilities. Threshold capabilities are the ones that are necessary for the company to i ndulge in business. In the case of Jeep, the threshold capabilities are customer service and quality of the product. 12 STRATEGIC MANAGEMENT OF JEEP VRIO analysis of distinctive resources and capabilities. ● As per the VRIO Analysis of Jeep, its licences and patents are a hugely significan t resource as these lets the company to sell their products without any serious impedance. This results in more visible income for Jeep. This is a distinctive recourse which is valuable for Jeep (Chatzoglou et al. 2018 ). ● The design of the products is a rar e resource for the company as it is difficult to imitate and would cost a lot of money to do so. This is a distinctive capability which is a rare asset for the company. ● The technology of the company is an imitable resource as the advancements in technology has benefited the organization as well as the industry. This is a distinctive capability which is an imitable resource. ● The brand image of the company is organised. It is a distinctive resource which is an asset for the company. Conclusion The above discu ssion shows a strategic analysis of Jeep. The brand woks under the parent company Fiat -Chrysler and has made a huge impact in the automotive industry. The paper shows the dynamic growth and expansion of the brand analysing the internal and external factors of the company and provides reasons for their rapid growth in the market. The brand image of Jeep has been a huge factor for the company's meteoric rise in recent times and will continue to cause a huge influence in the automotive industry for years to co me. Moreover, its unique design is what makes it so different from the other substitutes in the market. 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