Fitbit VRIO Analysis Paper Example

Fitbit Company Background

Fitbit Company was founded in 2007. However, despite being a relatively young company, it is already well established and a powerful brand in the fitness trucking industry. It has found a place in the market and established itself as the preferred fitness tracking company. It has also identified an opportunity to revolutionize the fitness trucking concept by creating a product that is interactive, social and trendy. Fitbit capitalizes on the consumer fitness and health trends to appeal to a wide range of customers including the workout novices and fitness enthusiasts (Nuno & Antonio, 2012). However, even though it is a leader in the industry, the company still faces a number of challenges that interfere with the implementation of its core strategic objectives. Its current strategy is to go for the high-end, premium and positioning through differentiation particularly in the United States market. It implements a differentiation strategy through the provision of high-quality products that maximizes the consumer's willingness to pay.

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Fitbit additionally dominates a significant market share in the industry even while facing stiff competition. There is a very high number of competitors entering the industry due to the low barriers to entry which increases flooding in the market. The highly attractive market characterized by non-proprietary technology attracts the competition more. Moreover, the products are growing, and the consumers have a wide choice of fitness tracker products having advanced features and varying prices, indicating high buying power for the consumer. The threat of substitutes is another major issue facing Fitbit. For instances, the smartwatches fitted with tracking features are becoming popular daily, and the alternative devices which also offer a number of features may eliminate the need to purchase fitness tracker devices.

Fitbit VRIO Analysis

Fitbit VRIO analysis identified 4 primary attributes that are essential for the company to gain a competitive advantage. The VRIO theory suggests that for a firm to be successful in gaining a competitive advantage over its competition, it has to be rare, imitable imperfectly, and perfectly not sustainable. This implies that there has to be some resources and capabilities for an organization to have a competitive advantage successfully. The components of VRIO are:

Valuable

A company must have some strategies and resources that make it defend itself from major threats and exploit opportunities. If the company have some value, then it is given a yes. The company resources are also considered valuable if they provide the customer real value and satisfaction. The value can be further increased through reduction of prices and product differentiation. However, if these conditions are not met on a continual basis, the company loses the value of its resources.

Rare

The Fitbit company resources that are unique and are not in the hands of the competition are referred to as rare resources. The valuable and rare resources give a lot of competitive advantage to an organization. However, when there are more than one competitor companies having the same resources and providing the same consumer value, then the resource is not rare.

Costly to imitate

A resource is considered costly to imitate when the competitor cannot imitate them. A resource can, however, be imitated directly or indirectly (Nuno & Antonio, 2012). An organization that has costly to imitate product has very rare resources have attained their competitive advantage.

Organized to Capture Value

Resources alone are not enough to provide a competitive advantage for the company until it is properly organized and exploited (Nuno & Antonio, 2012). A company must put in place an effective management system, policies, processes and strategies to utilize its resources to obtain the desired value, make the resources rare and make it costly to imitate.

Resources and Capabilities

Fitbit has over the years accumulated a number of competencies and resources that it can successfully leverage on to attain a sustainable competitive advantage. The following is the analysis of the Fitbit main resources;

Hardware & Software Technology

Fitbit designs and makes its own software and hardware technologies for its products. The software assists in tracking the customer data and them to use it in a meaningful manner (Nuno & Antonio, 2012). Fitbit software like PurePulse, low energy Bluetooth, the heart rate tracking and the Fitbit algorithm brought about innovative and new technologies to the market. The Fitbit wireless syncing and sleek designs appeal to the consumers. This technology has been especially valuable to Fitbit since it allowed the company to differentiate itself in the market. However, the competition has grabbed it, and it is no longer rare. There are several products in the market that are similar to Fitbit's products, in terms of quality, indicating that the products are not difficult to imitate. Additionally, there are several substitutes in the market including the products that are wearables but non-fitness, and smartphone applications.

Platform Openness/Open API

Fitbit has an unrivaled commitment to open an API, and the competitors cannot match it in this area. Open API gives the third-party developers the opportunity to access the Fitbit platform to create innovative health and fitness applications to interact with the company platform (Nuno & Antonio, 2012). There are already a good number of integrations of the Fitbit platform with other applications like MapMyRun, Weight Watchers, and MyFitnessPal. This way, the company is in a position to create value over its platform, getting the opportunity to neutralize potential threats of competition since the product is directly linked to the Fitbit platform. Fitbit also uses open API to promote innovation which opens up more opportunities. Even though the competition has open API platforms, Fitbit has created an environment which constitutes thousands of other third-party apps and a large user base, making the platform rare. Furthermore, the competitors may find it expensive imitating what Fitbit has done over the years with its platform. A potential substitute for the Fitbit platform could be a private API platform, where the development is a secret. However, this would still limit the ability of platform integration.

The Fitbit Brand

Fitbit has dominated the industry for some time. Fitness and tracking are today associated with the brand name Fitbit. The name is, therefore, a special resource for the company in reaching deep in the market (Nuno & Antonio, 2012). The brand name helps the company neutralize the greater threat of new entrants. Fitbit brand is known to be a high-quality product, and it gives the users the pride to be associated to and to use the product. Even after Apple rolled out its famous brand, the Apple Watches, Fitbit still maintains a 25% share of the global market and is the primary player in the fitness trucking industry. The brand name has generally grown, and it is definitely not very possible imitating the product. However, the Fitbit products can be replaced with the other substitutes like ate Spade and Apple Watches.

References

Nuno C. and Antonio N. (2012). Valuable, rare, inimitable resources and organization (VRIO) resources or valuable, rare, inimitable resources (VRI) capabilities: What leads to competitive advantage? African Journal of Business Management Vol. 6(37), pp. 10159-10170, 19 September 2012 Available online at https://www.researchgate.net/profile/Nuno_Cardeal/publication/236221830_Valuable_rare_inimitable_resources_and_organization_VRIO_resources_or_valuable_rare_inimitable_resources_VRI_capabilities_What_leads_to_competitive_advantage/links/02e7e51da9d17b2d6a000000/Valuable-rare-inimitable-resources-and-organization-VRIO-resources-or-valuable-rare-inimitable-resources-VRI-capabilities-What-leads-to-competitive-advantage.pdf [20th July 2018]