VRIO ANALYSIS

 VRIO is an internal analysis technique, used as a framework in evaluating all resources and capabilities of a firm, regardless of what phase of the strategic model it falls under. VRIO is an acronym for the four question framework you ask about a resource or capability to determine its competitive potential: the question of Value, the question of Rarity, the question of Imitability (Ease/Difficulty to Imitate), and the question of Organization (ability to exploit the resource or capability).

·         The Question of  Value: "Is the firm able to exploit an opportunity or neutralize an external threat with the resource/capability?"

·         The Question of Rarity: "Is control of the resource/capability in the hands of a relative few?"

·         The Question of Imitability: "Is it difficult to imitate, and will there be significant cost disadvantage to a firm trying to obtain, develop, or duplicate the resource/capability?"

·         The Question of Organization: "Is the firm organized, ready, and able to exploit the resource/capability?

VRIO analysis of HDFC Bank

VALUE

·         High quality Retail Assets.

(Product Leadership)

->HDFC’s retail asset market share in India is very large.

As in the case of the corporate book, the bank is sensitive to compromising on quality of assets   through disciplined credit risk management.

·         Vast branch network

-> HDFC has more than 3251 branches and 11,000 ATMs

·         Customer profitability system and advanced technology

-> The bank has an excellent customer profitability system which helps it judge the potential for cross selling.

->The bank has won 7 awards till now for innovative use of technology.   

·         Selective lending

-> HDFC bank has built its consistent growth through selective lending, diversified exposure and focus on low- cost savings deposits. Unlike other banks, HDFC has also shunned risky, exotic products and is very picky about its borrowers

·          Wholesale Banking

-> The Bank's target market is primarily large; blue-chip manufacturing companies in the Indian corporate sector, top rated corporate and small & mid-sized enterprises.

-> HDFC Bank provides loans to SMEs at a high rate of return. Lending procedure includes careful monitoring and appraisal as SME segment is quite risky.

RARE

·         Innovative use of Technology

-> HDFC bank uses information technology in innovative ways to deliver business value, create competitive advantage, optimize business processes, enable growth or improve relationships with customers.

-> In 2011, it won 7 awards in the IBA Banking Technology Awards

·         Mobile banking in Hindi

->It is the only bank in India till now to have introduced mobile banking in Hindi.

IMITABILITY

·         Vast branch network

-> The vast branch network, though prone to imitation, creates competitive advantage due to high cost involved in setting up of branches and ATMs.

ORGANIZATION

·         Strong culture

-> Designed to deliver increasing value to Stakeholders. The firm is extremely organized to exploit the capabilities of its resources

In good times and bad, HDFC Bank sticks to its 30 per cent profit growth. Delivering such growth, quarter after quarter, is a carefully crafted strategy. The Bank’s performance is consistent for 10 years now. The bank’s market share in key retail assets is very high. The bank is in the top three in most of the products Bank does not believe in being the market leader in all its products, instead it believes in attaining sufficient volumes to sustain its targeted growth in earnings.

Contributed by:-

Srishti Soin

Section A

Strategic Management

Class of 2013-15