VRIO Analysis of Bancolombia: Talent, Culture and Value

Creation Management in Mergers

VRIO analysis of Bancolombia Merger is a resource oriented analysis using the details
provided in the Bancolombia: Talent, Culture and Value Creation Management in
Mergers case study. Resource-based strategic analysis is based on the assumption
that strategic resources can provide Bancolombia Merger an opportunity to build a
sustainable competitive advantage over its rivals in the industry. This sustainable
competitive advantage can help Bancolombia Merger to enjoy above average profits
in the industry and thwart competitive pressures.

***It is a broad analysis and not all factors are relevant to the company specific. For
greater details connect with us.

Competitive
Resources Value Rare Imitation Organization Advantage
Intellectual Yes, they are Yes, IPR and Risk of So far the Providing
Property extremely other rights imitation is firm has not Strong
Rights, valuable are rare and low but utilized the Competitive
Copyrights, especially to competition given the full extent of Advantage
and thwart can't copy margins in its IPR &
Trademarks competition the industry other
disruption properties
chances are
high
Customer Yes, as Yes, the firm It is very Going by the Providing
Community customers are has able to difficult to data, there is Strong
co-creating build a imitate the still a lot of Competitive
products special culture and upside Advantage
relationship community
with its dedication
customers
Opportunities Can be No Can be All the Has potential
in the valuable as imitated by capabilities of
Adjacent they will create competitors the
Industries & new revenue organization
New streams are not fully
Resources utilized yet
 Competitive
Resources Value Rare Imitation Organization Advantage
Required to
Enter those
Industries
Brand Yes Yes, No Bancolombia Sustainable
awareness Bancolombia Merger has Competitive
Merger has utilized its Advantage
one of the leading brand
leading position in
brand in the various
industry segments
Vision of the Yes No Can't be Not based on Can Lead to
Leadership for imitated by information Strong
Next Set of competitors provided in Competitive
Challenges the case Advantage
Customer Yes, 23% of Yes, firm has Has been Company is Provide
Network and the customers invested to tried by leveraging medium
Loyalty contribute to build a competitors the customer term
more than strong but none of loyalty to competitive
84% of the customer them are as good effect advantage
sales revenue loyalty successful
Marketing Yes, firms are No, as most Pricing Yes, firm is Temporary
Expertise competing of the strategies leveraging its Competitive
within the based on competitors are often inhouse Advantage
Bancolombia differentiation also have matched by expertise
Merger in the industry decent competitors
marketing
know how
Global and Yes, as it Yes Can be Yes, it is one Providing
Local Presence diversify the imitated by of the most Strong
revenue competitors diversified Competitive
streams and companies in Advantage
isolate its industry
company's
balance sheet
from economic
cycles
Sales Force Yes No Can be Still there is Can provide
and Channel imitated by lot of sustainable
Management competitors potential to competitive
utilize the advantage.
 Competitive
Resources Value Rare Imitation Organization Advantage
excellent Potential is
sales force certainly
there.
Supply Chain Yes Yes Near Fully utilized Keeps the
Network competitors business
Flexibility also have running
flexible
supply chain
and share
some of the
suppliers

Explainer

What is a Resource in VRIO? Classification of Resources

for VRIO Analysis.

Resources of an organization can be categorized into two categories - Tangible

resources and Intangible Resources. Tangible resources of Bancolombia Merger
include - physical entities, such as land, buildings, plant, equipment, inventory, and
money. Intangible resources of Bancolombia Merger are –skill and administrative
level of managers, brand names and goodwill of the company, intellectual property
rights, copyrights, trademarks, and special relationship with supply chain partners.
The four components of VRIO used in Bancolombia:
Talent, Culture and Value Creation Management in
Mergers analysis are –

Valuable – Is the resource valuable to Bancolombia Merger. According to Juanita

Cajiao of the case study following are the critical resources that are valuable to the
firm - financial resources, human resources, marketing expertise, and operations
management.

Rare – "Bancolombia Merger" needs to ask is whether the resources that are valuable
to the Bancolombia Merger are rare or costly to attain. If they are not rare than both
present competitors and new entrants will easily able to get access to them and
enter the competitive landscape.

Costly to Imitate – At present most industries are facing increasing threats of

disruption. According to the data provided in Bancolombia: Talent, Culture and Value
Creation Management in Mergers – it seems that the core differentiation of the
Bancolombia Merger is difficult to imitate. On a broader scale – imitation of products
of Bancolombia Merger can happen in two ways – Duplication of the products of the
company, and competitors coming up with substitute products that disrupt the
present industry structure.

Organizational Competence & Capabilities to Make Most of the Resources – It

measures how much the company has able to harness the valuable, rare and difficult
to imitate resource in the market place. The exploitation level analysis for
Bancolombia Merger products can be done from two perspectives. Is the firm able to
fully exploit the potential of the resource, or it still has lots of upside.
Often the exploitation level is highly dependent upon execution team and execution
strategy of the firm. So exploitation level is a good barometer to assess the quality of
human resources in the organization. Capabilities tend to arise or expand over time
as a firm takes actions that build on its strategic resources.
VRIO and VRIN of Bancolombia: Talent, Culture and
Value Creation Management in Mergers

Another extension of VRIO analysis is VRIN where “N” stands non substitutable. A
resource is non substitutable if the competitors can’t find alternative ways to gain the
advantages that a resource provides. In the VRIO analysis we can include the
disruption risk under imitation risk.

Define the four characteristics of resources that lead to sustained competitive advantage as articulated
by the resource-based theory of the firm.

The characteristics of resources that can lead to sustained competitive advantage as

per the resource based theory of the firm are –

Value of the Resources

Rareness of the Resources

Imitation and Substitution Risks associated with the resources.

Organizational Competence to exploit the maximum out of those resources.