Internal Analysis of Rolls Royce

Barney, J., 1991. Firm Resources and Sustainable Competitive Advantage. Journal of Management, 17 (1), 99-120.

Acquisition and organisation of resources can be critical success factor in an organization. While on the other hand, change requires a firm to gain expand and utilise resource such as human, financial, knowledge as a crucial asset. Resource based approach supports this view and as Tywoniak (2007) claimed by that resource based view is the most dominant theory in history of management. This is achieved by targeting state of sustained competitive advantage by controlling resources and capabilities. This view emphasis on the need for a ‘fit’ among capabilities and external market, and since each firm has unique capabilities and resources, this result in achieving strategic

The VRIO framework evaluates resources and capabilities of a firm. Below is the evaluation of Targets VRIO framework.

Barney, J. (2004). Firm resources and Sustained Competitive Advantage. Strategy: Process Content Context: an international perspective, de Wit & Meyer , 285-292.

Considering that larger planes earned bigger margins, the operating margin may be higher than 15% to 20% Boeing 747 earned.

For a business to be successful and have a competitive advantage, it is important to evaluate the company’s resources and capabilities (Pitt & Koufopoulos, 2012). Resources in a company are the productive assets owned (tangible or intangible) whereas capabilities are what the company can do with this (Grant, 2010). “Establishing competitive

Standard Motors Products is a leading manufacturer and distributor of replacement parts for motor vehicles in the automotive industry. They focus on heavy duty, industrial equipment and the original equipment service market. As a curious investor, it is important to look at the company as a whole before deciding if an investment is a good choice. First, we must analyze the balance sheet and income statement by addressing trends through vertical and horizontal analysis. Another great way to analyze the data given in the financial statements is to calculate ratios that express activity, liquidity, financial leverage and profitability. Further, after addressing all the analysis, looking at the stock trends give an investor a full picture of the company’s standing. In this paper, I will address the analysis stated above and determine if investing in Standard Motor Products is a good idea at this point.

VRIN framework is the four criteria of sustainable competitive advantage. To identify a company’s competitive advantage, they must consider if their capabilities are valuable, rare, costly to imitate and nonsubstitutable.

Since its 1906 creation, Rolls Royce has been dedicated to innovation and trend-setting. To this day, the company remains a leader in the car industry by consistently producing carefully designed, elegant automobiles. With the introduction of their new car series, the Phantom, Rolls Royce insists on keeping its place as the leading innovator of the car industry.

VRIO stands for value, rarity, imitability and organization. It represents a strategic tool to assist with evaluating a company’s internal resources and capabilities as a way to provide a competitive advantage (Jurevicius, 2013). This tool can provide insight into the critical nature an organization assumes with identifying, sourcing and attracting new leadership. Leaders drive organizations, set the tone, establish culture and are ultimately accountable for organizational performance. People lead the way to successful operations. Without the right people a business is just walls and capital equipment incapable of generating value. People are the brains of an operation, ensuring the rest of the body understands the response required to function.

There is a growing body of literature that recognises the importance of Resource Based View (RBV) in strategic management. This paper attempts to identify Wal-Mart’s core competencies, applying RBV literature such as VRIO framework with supporting evidence from “Wal-Mart Stores in 2003” case study. RBV suggests that each firm acquires a collection of capabilities, which can be mobilised by strategists to gain competitive advantage (McGee et al., 2005). In other words, a firm can be viewed as a bundle of resources, which are the drivers of strategy and growth in a firm. When creating a unique product, a firm also develops a unique competence (Mintzberg et al., 2009).

VRIO stands for value, rarity, imitability and organization. It represents a strategic tool to assist with evaluating a company’s internal resources and capabilities as a way to provide a competitive advantage (Jurevicius, 2013). This tool can provide insight into the critical nature an organization assumes with identifying, sourcing and attracting new leadership. Leaders drive organizations, set the tone, establish culture and are ultimately accountable for organizational performance. People lead the way to successful operations. Without the right people a business is just walls and capital equipment incapable of generating value. People are the brains of an operation, ensuring the rest of the body understands the response required to function.

To begin with, heterogeneity of capabilities and resources of firms, which is explained as “enduring and systematic performance differences among relatively close rivals”, provides a foundation of the resource-based view (Song, et al.,2006). The implication of this assumption is that core competence conveys the valuable and unique feature of products to customers. The RBV disagrees with the opinion that the resources are homogeneous; if homogeneity is assumed to be essential to develop a proper strategy, the strategy can be easily copied by competitors, which will ultimately result in the dissipation of above-normal rents. Conversely, the unique and fixed resources on hand will lead to outstanding performance and ultimately turn to be a competitive advantage, under the circumstances that sustainable competitive advantage is achieved in an environment where competition does not exist.

VRIO framework is the tool used to analyze firm’s internal resources and capabilities to find out if they can be a source of sustained competitive advantage. It was developed by Barney, J.B (1991). VRIO is an acronym for the four questions- the question of Value, the question of Rarity, the question of Imitability, and question of Organization. According to VRIO framework the firm’s resources must possess the following attributes to be a source of sustained competitive advantage –

Rolls-Royce Limited is a British car and aero-engine manufacturing company established by Charles Stewart Rolls and Sir Frederick Henry Royce on 15th March, 1906. Rolls-Royce was founded in Manchester, England and its headquarters is based in Derby, England, United Kingdom. The company has been in existence for over 43 years. Rolls-Royce is known for their superior engine quality and also, known for manufacturing high-powered “R” engines responsible for land and air. On top of their outstanding reputation, Rolls-Royce is well branded for successful performances in automobile racing, their speed records are remarkable. One year later, in 1907, Charles Rolls interests detoured into flying. His interests lead him to persuade Royce