Chapter 5

For this week, I am going to explain how Rite Aid fits in the VRIO framework, where VRIO stands for Value, Rarity, Imitability, and Organization.

1. The Question of Value: Do a firm’s resources and capabilities enable the firm to respond to environmental threats or opportunities?

In my opinion, Rite Aid does not have the capabilities in some certain area, such as flu season, to respond to environmental threats because of their suppliers. Suppliers are limited in influenza vaccinations, and required consumers or organizations to pre-order the influenza vaccinations beforehand approximately 8 months before they shipped it to the retailers. Once Rite Aid have purchase the supplies they need, they will not have another opportunity to purchase more unless Rite Aid wants to buy at a higher price, giving them little or margins at a loss. In addition, they would also not want to purchase more than they should because that would also caused them to lose money based on the unused vaccines that have an expiration date of 1 year. Therefore, in some situation, Rite Aid can seize opportunity and some they cannot.

2. The Question of Rarity: Is a resource currently controlled by only a small number of competing firms?

Resources is currently controlled by various distributors, wholesalers, and manufacturers. Depending on how Rite Aid deals with daily day-to-day inventory, they might required all three to meet demands. However, currently, most of their supplies comes from McKesson Corporation to meet all of their needs to supply their customers with prescription medications. Therefore, unless, there is a shortage or an immediate need for certain medications, it is fairly easy to obtain them from not only one source, but plenty. In addition, if there is a shortage, healthcare providers can simply switch the brand name or generic, or change the medication to an alternative.

3. The Question of Imitability: Do firms without a resource face a cost disadvantage in obtaining or developing it?

If Rite Aid does not have the resources (prescription medications), then their competitors can just compete with them and take away their customers because dispensing medications can be done at other pharmacies. In addition, as indicated above, if Rite Aid ran out of resources and want to compete with other pharmacies, they might need to purchase their resources at a higher price, causing Rite Aid to have a cost disadvantage.

4. The Question of Organization: Are a firm’s other policies and procedures organized to support the exploitation of its valuable, rare, and costly-to-imitate resources?

Rite Aid have established procedures in purchasing their medications or resources based on the demand of the market or based on the need of the medications. For example, for Lisinopril, a hypertensive medication is bought in bulk because it is popular among physicians dispensing the medication. Another medication that is rarely dispense such as cancer medications is probably stock approximately 1 to 3 package just to have it in case they might need to dispense it to their customer.