The resources and capabilities of a company are its drivers of competitive advantage. Nearly all that a business owns can be classified as a resource or capability. By understanding the resources and capabilities of different enterprises, one can understand why overall performance differs from one business to another. To achieve a competitive advantage, the resource or capability that a company owns needs to be valuable, rare, inimitable, and organized.
The VRIO framework comes to the help of managers when analyzing the company’s resources and capabilities. VRIO is an acronym that stands for Valuable, Rare, Inimitable, and Organized. These four bricks of VRIO represent the four properties of the resources and capabilities that lead to sustainable competitive advantage. When the resource or capability satisfies all the four requirements, the competitive advantage it generates 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.
SONY Corporation VRIO Analysis
| Core competencies | Valuable | Rare | Inimitable | Organized | Advantage |
| Brand Image | Yes | Yes | Yes | Yes | Competitive advantage |
| Innovation | Yes | Yes | Yes | Yes | Competitive advantage |
| Customer experience | Yes | Yes | Yes | Yes | Competitive advantage |
| Product Range | Yes | No | Yes | Yes | Temporary advantage |
| Market Position | Yes | No | No | Yes | Temporary advantage |
| HRM | Yes | No | NO | Yes | Temporary advantage |
Brand Image:
SONY’s brand image is a key capability driving its popularity and success in the global markets. Apart from driving higher popularity and easier brand recall, and superior sales, the company’s image also plays a key role in the brand’s global marketing. SONY’s image is that of an innovative and ethical brand, which is why so many consumers worldwide love SONY.
Its brand image also differentiates it from other brands in the industry. The company has always focused on building a strong image. It is known for its customer centricity, focus on innovation and ethics as well as sustainability. Its brand image is a key source of competitive advantage for the brand.
Technological Innovation:
SONY is a market-leading brand in several industries including consumer electronics, entertainment, gaming consoles, and imaging and sensing solutions. However, the main factor that has aided its growth and success in all these areas is the company’s focus on innovation. The company has released several products and technologies that were the world’s first and many first of their kind in its domestic market.
Technological innovation is a key source of competitive advantage for the brand and has helped it differentiate its brand and products from its rivals. Moreover, the company has been able to diversify its product portfolio through technological innovation. If it were not for its focus on innovation, the company would not have been able to sustain its market share and leadership position in various industries.
Customer experience:
In the 21st century, the focus on customer experience has grown and in nearly all industries, the success of a company depends on how heavily its focuses on customer experience. As a consumer electronics, gaming and entertainment brand SONY has focused on customer experience to grow its market influence and achieve the market leading position it enjoys.
Focusing on customer experience helps companies differentiate their image from rivals in the market. Superior customer experience leads to higher popularity, higher sales and growth in customer loyalty. It has helped the company sustain the competitive edge it enjoys over its rivals.
Product range:
SONY’s highly diversified product range is also a key source of competitive advantage for the brand. The company is not dependent on a single product category for its revenue and profits. Instead, it generates revenue from various products. While it is a leader in gaming consoles, it has also remained a leader in televisions and digital cameras as well as imaging and sensing solutions. Apart from that, the company also enjoys a substantial market share in the entertainment industry.Â
While there are several benefits of having a highly diversified product portfolio, the leading benefit is that it does not need to depend on any single product category to maintain its growth momentum and profitability. It also gives SONY an edge over its rivals making it difficult for them to shake SONY’s market-leading position.
Market position:
The market position of SONY is also a source of competitive edge for the brand which it has retained through its focus on innovation, product quality, sustainability, and marketing. SONY is a leading player in the consumer electronics, gaming, and entertainment industries. Its leadership position drives superior sales and higher profitability in all the leading markets. However, the advantage that comes from the market position is only temporary.
HRM:
People are mostly behind all the sources of competitive advantage that a company has built. It is why they are among the most critical sources of competitive advantage for any brand. Their performance affects the profitability of a brand. In the 21st century especially, the role of human capital in organizational success has grown more highlighted. Companies are competing to attract highly skilled employees.
SONY has also grown its focus in this area to attract and retain highly talented people that can help it improve its offerings and serve its customers better. The company employed around 111,700 employees as of March 2020. It has adopted employee-friendly policies to attract and retain highly skilled employees.
Some of the key focus areas in terms of HR management for SONY include diversity and inclusion, talent development, employee engagement, and occupational health and safety. While the company is performing well in this area, the rivals are also investing heavily in training and retaining their human resources. It is why the advantage is only temporary and the company needs to continuously focus on HR management and improve its HRM practices to win in a highly competitive environment.
A few last words:
SONY is a market-leading brand of electronics. However, the company has continued to lose market share in a few areas including smartphones. It exited the laptop market some years ago. As a result, the company has focused on new business areas for faster growth and expanding its market. One of the key strengths of the company is its focus on research and development. It is also one of its leading sources of competitive advantage. Its strong brand image and focus on customer experience have also helped the brand grow its profitability. Sony is a highly popular and well-known brand and its market-leading position depends on its competitive edge against its rivals. The global market has grown highly competitive and the company requires to maintain its focus on innovation and customer experience to find faster growth.