Abhijeet Pratap

Oct 8, 2020

8 min read

VRIO Analysis of Google

The resources and capabilities of a company are its drivers of competitive advantage. Nearly everything a business owns can be classified as a resource or capability. By understanding the resources and capabilities of different enterprises, one can understand why operational performance varies from one business to another. A firm's resource or capability must be valuable, rare, inimitable, and organized to achieve sustainable competitive advantage.

The VRIO framework comes to the help of managers when analyzing a company’s resources and capabilities. VRIO is an acronym for Valuable, Rare, Inimitable, and Organized. These four bricks of VRIO represent the four properties of the resources and capabilities that help generate a sustainable competitive advantage. When the resource or capability satisfies all these requirements, the competitive advantage thus achieved will be sustainable, whereas, when it meets fewer standards, the competitive advantage will be temporary.

Moreover, a sustainable competitive advantage comes from core competencies that arise from resources and capabilities.

VRIO Analysis of Google:

Brand Image:

R&D:

Customer Experience:

In terms of advertising too, the company offers better ROI for its customers than its rivals. The overall result is that Google's user experience is a lot better than its rivals in the core business areas. This has led to a sustainable competitive advantage for the brand and most of the segments where Google operates, it is a lot ahead of its competitors in terms of service quality and market share. Chrome browser is unbeatable in terms of speed, and so is Google’s search engine in terms of efficiency and Gmail in terms of usability. Overall, there is a vast difference between the service quality of user products and those offered by rivals.

Product range & Market Position:

Otherwise, Google dominates the web on both desktop and mobile devices. Google is further growing its range by introducing cloud-based services like Google Meet. These products will further strengthen its core value proposition, and as is frequently cited, Google operates as a monopoly. Breaking this monopoly has proved difficult even for the law and the governments in various regions, including the US and Europe. Google’s market position and market share in the internet industry remain unchallenged, where it is the undisputed leader. Despite the antitrust challenges against the company, shaking its position has remained impossible. Overall, Google’s dominance of the web world continues to grow. Thus, its large product range and its market position are both critical sources of sustainable competitive advantage for the brand. Comparing the market share of its search, browser, and email, as well as more products and services with those made by the competitors of Google, shows that none of its rivals is as strong to bring a line of products and services that could match the efficiency, scalability, and usability of Google products. As Google exercises its dominance on the web, neither the larger tech brands like Apple, Microsoft, or Amazon nor any of the smaller ones, including Facebook, have been able to break a chunk of its market share in the internet industry.

Customer loyalty:

Gmail is available for free use by individual users, and corporate users can avail of its services at affordable prices. Google's pricing strategy is also customer friendly, which means its corporate customers get the twin benefit of higher affordability and efficiency. The result is that the company has successfully gained high-level customer loyalty. However, to retain its loyal users, the company has to stay focused on innovation. For that, it needs to invest a large sum each year in research and development. User loyalty also depends on user experience. The company invests in product innovation so that its products continue to deliver a seamless customer experience. These factors have led to faster market growth. However, like Google, its competitors have also gained highly loyal customers, including Facebook, Microsoft, and Amazon, as well as Apple, which to an extent, diminishes the strength of competitive advantage generated from this core competency. As a result, user loyalty is a source of temporary advantage for the brand.

HRM:

Moreover, being a software company, Google’s competitive advantage depends greatly on its people and talent. How talented Google’s employees are, decides the quality of its products and services and the company's pace of innovation. Its rivals are also equally aggressive in attracting and retaining talent that includes programmers, managers, and engineers. Microsoft, Apple, Amazon, and Facebook all pay large salary packages and offer competing benefits. The competitive advantage that Google generates through HR is temporary.

Originally published at https://notesmatic.com on October 8, 2020.