1

Punjab Tianjin University of

Technology, Lahore.
Auto-mobile Engineering technology

Subject:
Auto service Enterprise
Management

Muhammad Adnan Arif

18FAU032

04 Oct
2021
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Assignment Topic:
Company Analysis of Renault Motors
Group
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Contents
1. SWOT Analysis of Renault......................................................................................................................6
1.1. INTRODUCTION................................................................................................................................6
1.2. Strengths:.........................................................................................................................................6
1.3. Weaknesses:....................................................................................................................................7
1.4. Opportunities:..................................................................................................................................8
1.5. Threats:............................................................................................................................................9
2. PESTLE Analysis of Renault...................................................................................................................10
2.1 Political factors................................................................................................................................10
2.1.3. Bureaucracy and corruption...................................................................................................11
2.1.4. Taxation, trade restrictions and intellectual property protection.........................................11
2.2 Economic factors.............................................................................................................................12
2.2.1. Economic/business cycle stage...............................................................................................12
2.2.3. Inflation/employment/interest/exchange rates....................................................................12
2.2.3. Labor market conditions.........................................................................................................12
2.2.4. Financial markets efficiency....................................................................................................13
2.2.5. Economic structure.................................................................................................................13
2.3 Social factors...................................................................................................................................13
2.3.1. Demographic trends...............................................................................................................13
2.3.2. Equality and power distance..................................................................................................13
2.3.3. Gender Roles...........................................................................................................................13
2.3.4. Societal norms and class distribution.....................................................................................14
2.3.5. Online shopping......................................................................................................................14
2.3.6. Spending patterns and behavior.............................................................................................14
2.4 Technological factors......................................................................................................................15
2.4.1. Social media marketing...........................................................................................................15
2.4.2. Technological innovations and development level................................................................15
2.4.3. Research and development on technology and impact on cost structure/value chain........15
2.4.4. Shortened product life cycles.................................................................................................15
2.5 Environmental factors....................................................................................................................16
2.5.1. Recycling and waste management.........................................................................................16
2.5.2. Renewable technologies.........................................................................................................16
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2.5.3. Weather and climatic conditions............................................................................................16

2.5.4. Attitude towards eco-friendly products.................................................................................16
2.5.5. Environmental regulations to avoid resource depletion........................................................16
2.6 Legal factors....................................................................................................................................17
2.6.1. Employee protection laws (discrimination and health and safety).......................................17
2.6.2. Consumer protection laws......................................................................................................17
2.6.3. Intellectual property laws.......................................................................................................17
Concluding statement..........................................................................................................................17
3. Porter’s Value Chain Analysis of Renault.............................................................................................18
3.1. Primary Activities...........................................................................................................................18
3.1.1 Inbound Logistics.....................................................................................................................18
3.1.2 Operations................................................................................................................................19
3.1.3 Outbound Logistics..................................................................................................................19
3.1.4 Marketing and Sales.................................................................................................................19
3.1.5 Services....................................................................................................................................20
3.2 Secondary Activities........................................................................................................................20
3.2.1 Firm infrastructure...................................................................................................................20
3.2.2 Human resource management................................................................................................20
3.2.3 Technology development........................................................................................................21
3.2.4 Procurement............................................................................................................................21
4. VRIO Analysis of Renault......................................................................................................................22
4.1 Valuable..............................................................................................................................................22
4.2. Rare................................................................................................................................................23
4.3. Imitable..........................................................................................................................................24
4.4. Organization.................................................................................................................................25
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1. SWOT Analysis of Renault

1.1. INTRODUCTION
Renault is a well-known global brand of automobiles. 2017 was a great year for the company in
terms of overall sales and revenue. The brand’s sales grew in all its markets. It sold total 3.76
million vehicles. Its alliance with Nissan and Mitsubishi was also successful in 2017. This
alliance became the world leader in sales of passenger cars and light commercial vehicles with
over 10.6 million units. Renault’s revenue reached 58.8 Billion Euros in 2017. Europe is the
biggest market of Renault. In France alone the brand sold 673,852 vehicles, followed by Russia
and Germany. Its best sellers of 2017 included Clio, Megan, Logan, Capture and Sander.  The
brand has set ambitious plans for future and is planning to enter into new strategic joint ventures
for the development of electric and light weight vehicle segments. Apart from China, Brazil,
India and Iran are also potentially important markets for the brand. Carlos Ghosn is the chairman
and CEO of Renault. Check out more about Renault in this swot analysis.

1.2. Strengths:
Brand image and equity:

Renault has got a strong brand image. It has been there for around 120 years. the number one
French brand sells in around 134 countries. Renault has also acquired a leading position in the
European electrical vehicle market. Its focus upon quality and technological innovation have
helped it build the image of a smart brand focused upon future. 
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Strong position in European markets:

Renault’s popularity is very high in the European markets. Europe is its number one market.
France is the largest market where it sold 673.85K vehicles in 2017, followed by Russia,
Germany, Italy and Spain. Now the brand is working on its strategic plan to rise from its number
one position in Europe to become one of the leading brands across the world. Dacia, one of
Renault’s brands is present in 44 countries in Europe. Renault is the leading brand in Europe of
all electrical vehicles. Nearly one out of every four vehicles selling in Europe is of Renault.

Successful Alliance with Nissan and Mitsubishi:

Renault has formed a successful alliance with Nissan and Mitsubishi. This alliance has seen
immense success and this partnership is expected to strengthen further in future and generate
significant cost savings and profits for the brand. In 2017 the alliance became the world leader in
the sales of passenger cars and light commercial vehicles with sales over 10.6 Million units.

Focus upon innovation:

Renault has retained a strong focus upon innovation and invests heavily in this area.
Technologically, it is among the most advanced vehicle brands. It is investing in being a world
leader in electrical vehicles  as well as autonomous driving and smart mobility. The vehicle
industry has become highly competitive and that has resulted in brands being forced to invest
heavily in technological innovation. The research and development expenses of the brand grew
to 2.6 Billion Euros in 2017 from 2.4 Billion Euros in 2016.

Diversified product mix:

Renault has a diversified mix of brands and products that enables it to serve various segments of
the market from premium to family car segment. The Renault group is made up of 5 brands that
include Renault, Renault Samsung Motors, Dacia, Alpine & Lada. Renault is the number one
French car maker whereas Renault Samsung Car motors ranks among the top five car makers in
South Korea. Dacia is present in 44 countries and has acquired more than 5 million customers
since 2004. 

1.3. Weaknesses:
Weak position in Asia pacific:

While Renault has managed a strong position in the European markets, its position in the Asia
Pacific is relatively weaker.  China or India do not figure in its top ten markets yet. While the
brand is working to grow its presence in China, the task is difficult because of the heavy
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competition there. It will require formation of local partnerships as well as heavy focus on
marketing and innovation.

Dependence on key markets:

The brand is dependent on some main markets. Most of these are European markets. Its two
biggest markets are France and Russia. US, China and India are major vehicle markets.
However, Renault depends on the European markets which makes it susceptible to economic
fluctuations.

1.4. Opportunities:
AI and Digital marketing opportunities:

Technology has brought some great opportunities for vehicle brands. Apart from supply and
production, marketing is also a key area for vehicle makers where they must focus to grow their
sales. AI and digital channels can help the brand market itself better and engage its customers.
Renault must focus upon customer engagement to grow its market share and customer base.

Supply chain digitization:

A digitally managed supply chain is agiler, smarter as well as more efficient. Digitally managing
the supply chain leads to more efficient production as well as higher cost savings. The brand can
also use digital channels to manage its supplier relationships better.

Autonomous driving & Mobility solutions:

Renault must focus upon the future of the automobile industry to grow faster and to manage
higher popularity. The future of vehicle industry lies in autonomous driving as well as shared
mobility. These are some of the key areas where the brand must focus to grow faster and to
remain ahead of its competitors.

Diversification:

The brand can also try diversification to grow itself faster. Apart from its technological
capabilities and manufacturing facilities the brand can use its existing position to open new
channels of growth and revenue like manufacturing motorcycles.
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1.5. Threats:
Competitive threat:

The competitive threat has grown in the 21st century. In the vehicle industry especially the
competition is quite intense. It is because the number of brands is large and apart from
technological innovation, brands are also spending heavily on marketing. There are several large
and international brands that are competing directly with Renault. This leads to higher pressure
related to innovation, research and development as well as marketing and sales.

Regulatory and legal pressures:

Regulatory and legal pressures in the international market have grown which are driving the
compliance related costs very high. Apart from passenger safety, labor, quality and environment
related laws are also leading to higher pressure on the vehicle brands. Recently, Volkswagen had
to pay billions in fine because of not being able to meet pollution related criteria. Such legal
pressures require brands to have special compliance teams. Any tussle with law proves quite
costly and can lead to hefty fines driving costs high for any brand.

 Rising labor and raw material costs:

Globally, the costs of raw material and labor are rising. As such the operational costs of vehicle
brands are running higher. This is affecting profit margins and is one of the severest threats
before these automobile brands.

Conclusion:

Renault is a famous international brands of automobiles. It is also the largest maker of all
electrical vehicle vehicles in Europe.  The brand is focusing on several areas including
autonomous driving for faster growth. Its alliance with Nissan and Mitsubishi has been highly
successful and is expected to bring higher cost savings and profits for the brand in future.
Renault must focus upon growing its presence in the Asian markets including Indian and China.
Apart from that it must focus upon exploiting the new opportunities of marketing and customer
engagement brought by AI and digital technology.
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2. PESTLE Analysis of Renault

The application of PESTEL analysis can help Renault. Identify the major external environmental
forces that shape the strategy and competitive landscape and support its strategic decision
making process. As Renault. Looks to expand and leverage its competencies and core
capabilities, conducting the PESTEL analysis is imperative for developing effective strategies
and achieving long-term growth objectives.

2.1 Political factors

Following political factors that influence the Renault group
2.1.1. Political stability

Currently, Renault. is present in different countries, each having own political tensions. Growing
tensions and instabilities in the global political environment can affect the Gold industry growth
and limit the growth opportunities available to Renault.

2.1.2. Changing policies

Frequent changes in government policies harm business performance by increasing

environmental uncertainty. It is important for Renault. to study the current trends in the country's
political scenario as changes in government may alter the government's priorities towards the
development of different industries.
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2.1.3. Protests/pressure groups and governance system

Renault. should carefully analyze the protests by pressure groups, social/environment activists
and worker unions as such protests play an important role in the policy making process. Close
collaboration with such groups may enhance the Renault’s ability to collaborate with community
and achieve long-term corporate goals. Moreover, a well-developed governance system with a
democratic political environment makes the business environment more comfortable for
international business organizations like Renault.

2.1.3. Bureaucracy and corruption

Bureaucracy and corruption negatively influence the business environment. Operating in
countries with high corruption level and weak law enforcement makes the business environment
increasingly unpredictable for Renault. Due to jeopardized public trust on business organizations
and overall political and economic structure. The corruption can influence various business
operations, ranging from licensing, contracting, fraudulent deals to frequent lawsuits. If Renault.
Decides to enter in markets with the corrupt economic, political system, it will threaten the
organization's sustainable development by destabilizing the society, harming justice system and
endangering the rule of law.

2.1.4. Taxation, trade restrictions and intellectual property protection

. Renault. can enter in low taxation markets and benefit from high profits that can be invested in
research and development activities. The organization may also study the industry specific
taxation policies to understand the host government's priorities and interest in developing
industries. Similarly, high trade restrictions can make the business environment more complex
by affecting the exports and harming relationships with foreign trade partners. Moreover, if the
government of the country under consideration is not serious about protecting the intellectual
property rights of business organizations, it will deter the entrepreneurs from investing in
organizations due to high risk of ideas being stolen. Hence, Renault. should study how
intellectual property rights are protected in the host country and make the business strategies
accordingly.
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2.2 Economic factors

Economic factors that influence Renault.

2.2.1. Economic/business cycle stage

Renault, understand the important of industry lifecycle stage. Entering in mature industries can
be more challenging due to market saturation than industries at the growth stage. Moreover, the
business performance of Renault. is also influenced by the extent to which the host country
government has spent on core infrastructure development. A well-developed infrastructure
facilitates the business environment and increases the growth potential of the gold industry in the
respective country.

2.2.3. Inflation/employment/interest/exchange rates

The GDP growth rate will determine the Renault’s ability to pursue its long-term growth
strategies. High GDP also signals the consumers’ ability to spend more on offered products.
High unemployment signals the availability of surplus labor at comparatively lower wages.
Operating in such a market can lower the production cost of Renault. The organization should
also carefully consider the interest rate and its influence on borrowing ability and attitude
towards investment. The high interest rate will encourage the attitude towards investment and
increase growth opportunities for Renault. Finally, the exchange rate fluctuation can also
influence the profitability and international trade. The high fluctuation on local currency can be a
cause of serious concern for Renault.

2.2.3. Labor market conditions

The demand and supply of labor determine the wage rates and supply of skilled workforce.
Renault. Must study and predict the labor market conditions to understand how it can attract
talented workers and leverage their skills to improve business performance. When labor markets
are flexible, Renault. Can take advantage of higher labor productivity. Whereas, operating in
rigid labor markets may cause labor wage and other issues raised by powerful labor unions.
Renault. Should also carefully analyze the availability of skilled human capital as a shortage of
skilled labor can affect business efficiency and make talent attraction and retention more
challenging.
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2.2.4. Financial markets efficiency

The global expansion strategies of the Renault. are influenced by the financial market efficiency
as operating in highly efficient financial markets leads towards improved liquidity position and
strengthened ability to enter new markets. The health and efficiency of financial markets will
determine Renault’s ability to raise the capital at fair prices.

2.2.5. Economic structure

The business practices of the Renault. are influenced by the prevailing economic structure. The
economic and regulatory environment in a monopolistic or oligopolistic structure will be
different from the monopolistic competition and perfect competition.

2.3 Social factors

Social factors that influence Renault.

2.3.1. Demographic trends

Changes in demographic patterns like aging population, migration trends and socio-economic
variables have paramount importance for international business organizations like Renault.
Studying the demographic characteristics can help Renault. in choosing the right market
segment/segments with high growth potential. The business and marketing strategies are also
influenced by migration. It is important for Renault. to understand the people’s general attitude
towards migration as it can influence firms’ ability to bring international managers to host
country.

2.3.2. Equality and power distance

The power distance within any society shows the acceptance of hierarchy and income inequality.
Renault. Must adjust its business management practices while entering in markets with high or
low power distance. The growing inequality in many countries is altering the power structure,
which has serious implications for international business organizations like Renault.

2.3.3. Gender Roles

Renault. Need to study the traditionally assigned gender roles to align its marketing and
communication practices accordingly. Marketing and human resource strategies in a traditional,
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patriarchal society with clearly distinguished gender roles will be different from societies with
low gender stereotypes.

2.3.4. Societal norms and class distribution

Culture is considered an important variable by international marketing managers. Each society
has distinctive norms and values that play an important role in shaping consumer behavior.
Renault. should develop local teams and develop local partnerships for understanding the
societal attitudes and norms to tailor marketing strategies according to unique cultural context.
The observation of social class stratification is also important for Renault. Offering luxury
products at premium prices to a market where the high-end market is considerably small in
number will require Renault. to adopt the niche marketing strategies. Similarly, market
segmentation based on social class may be ineffective where social class stratification is low.

2.3.5. Online shopping

The advent of social media and e-commerce has encouraged online shopping behavior among
customers. Renault. needs to understand the online shopping behavior by considering the
generational differences as younger consumers are more inclined to shop online than older
customers.

2.3.6. Spending patterns and behavior

The consumers’ spending patterns are influenced by their purchasing power of money. Studying
and forecasting the consumers’ purchasing power based on relevant economic indicators is
important to analyze the customers’ interests and spending patterns. In some societies,
consuming the offered product is considered a status symbol, while, some people use the same
products for functional aspects. Renault. Should invest time on understanding the consumption
motivations and social trends that define the consumption behavior. Renault. Should also attempt
to understand the degree of consumer ethnocentrism and consider the country of origin effect to
determine local consumers’ evaluation of foreign products. Lastly, Renault. Should study the
consumers’ leisure interests and should focus more on enhancing the customer experience if
customers prefer experiential products over traditional product offerings.
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2.4 Technological factors

Technological factors that influence Renault.

2.4.1. Social media marketing

The development of information and communication technologies has led towards the adoption
of innovative marketing techniques to enhance collaboration with customers. Use of social media
has become common in a modern business environment. Renault. can leverage the opportunities
offered by social media marketing to improve business performance. Technological trends can
be used to start the creative social media campaigns for developing online brand communities.

2.4.2. Technological innovations and development level

Renault. Should carefully consider the on-going technological innovations to stay ahead of the
competition. A close eye should be kept on analyzing the 5G and determining its potential to
deliver positive business outcomes through enhanced user experience, increased speed and
expanded access. Moreover, considering the development and maturity level of technology in the
respective market is also important. Entering in markets where technological advancement has
not reached the maturity means Renault. can increase the market share by focusing on emerging
technological innovations.

2.4.3. Research and development on technology and impact on cost structure/value chain
Renault. Needs to consider the investments made by competitors on a micro and macro level to
understand how new technologies influence the firm’s value chain and prevailing cost structure.
Research and development activities are highly important in an environment characterized by
creative disruption. In such an environment, Renault. Should invest in disruptive technologies to
maximize the profits and re-invest the profits for future disruptive technologies.

2.4.4. Shortened product life cycles

The adoption of new technologies has shortened the lifecycle of new product development.
Today, new products are developed quickly, and supply chain partners have also gained more
power. It pressurizes the Renault. to develop new products quickly, increase product range
diversity, integrate flexibility into the value chain and develop healthy business relationships
with value chain partners.
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2.5 Environmental factors

Environmental factors that influence Renault.

2.5.1. Recycling and waste management

The growing environmental pollution coupled with technological advancement has compelled
business organizations to adopt innovative recycling and waste management practices.
Moreover, adopting efficient waste management practices in organizational units that are located
in or near urban areas is highly crucial for Renault. Many countries have placed strict norms to
protect their urban areas through effective waste management.

2.5.2. Renewable technologies

Some countries offer subsidies for encouraging investment in renewable technologies. Renault.
can benefit from it and invest in renewable technologies to ensure long-term sustainability. This
investment will also increase stakeholder satisfaction and expand the customer base due to
enhanced brand image.

2.5.3. Weather and climatic conditions

Changes in weather and climatic conditions can influence business efficiency. For instance,
extreme weather conditions can increase the cost of operations and compel the Renault. to make
the value chain more flexible. Such changes can also influence the consumers' spending patterns,
causing the organization to revise its product and marketing strategies.

2.5.4. Attitude towards eco-friendly products

There is a growing trend towards the use of green/eco-friendly products. Renault. can take it as
an opportunity and adopt green business practices to win the trust of stakeholders. Regulatory
bodies’ emphasis on ensuring compliance with environmental norms is altering the product
innovation priorities. It requires Renault. to prioritize and focus on marketing the eco-friendly
nature of their products over customary value propositions.

2.5.5. Environmental regulations to avoid resource depletion

Excessive resource depletion by Renault. can draw the negative response from media,
environment protection groups, customers and the general public. Renault. must study the
specific environmental regulations of the country under consideration to understand which
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resources (like water, electricity etc.) are considered rare or which species are endangered whose
excessive consumption can cause trouble for the organization.

2.6 Legal factors

Legal factors that influence Renault.

2.6.1. Employee protection laws (discrimination and health and safety)

Renault. Must follow the employee/labor health and safety laws as some countries have strict
regulations to ensure labor safety. Providing a secure work environment for the workforce is the
ethical and moral obligation of Renault. Similarly, anti-discrimination laws (like equal
employment opportunity) also need to be carefully studied when developing human resource
practices as discriminatory suits against employer harm the organizational image and affect
organizations’ ability to attract and retain the talent.

2.6.2. Consumer protection laws

The data protection has become an important issue due to consumers’ privacy and security
concerns. Renault. need to study data protection regulations to protect the customer data.
Moreover, there are laws to set the maximum price, ensure a certain quality standard and protect
consumers from fraudulent marketing claims. Renault. must consider these factors to ensure
compliance with consumer protection laws.

2.6.3. Intellectual property laws

Intellectual property regulations are designed to protect the companies' patents and valuable
ideas. Inability to protect intellectual property rights can result in losing competitive advantage,
which may weaken the positioning of Renault. against other market players.

Concluding statement

To conclude, the PESTEL model is an important business tool that involves a detailed analysis of
macro-environmental factors that shape the business environment. Ranging from political factors
to environmental factors, each factor comprises various variables that influence the strategic
decision making process of business organizations like Renault.
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3. Porter’s Value Chain Analysis of Renault

Porter's value chain model is highly popular in the business world. However, Renault must not
take it as a rigid, standalone framework by assigning the equal importance to all activities. The
effective Value Chain Analysis requires Renault to realize that all activities or functions do not
require same scrutiny level. Hence, the first step of adapting the Porter Value Chain framework
is to identify the importance of activities according to their role in product/service delivery
process.

3.1. Primary Activities

The primary value chain activities of Renault are directly involved in producing and selling the
product to targeted customers. Analysis of primary value chain activities can improve the
performance of Renault as explained below.

3.1.1 Inbound Logistics

It is important to develop strong relationships with suppliers as their support is necessary to
receive, store and distribute the product. Without analyzing the in-bound logistics, Renault can
face various challenges in product development phases. Analysis of in-bound logistics requires a
company to focus on every aspect of transformation from raw material to finished product. Some
examples of inbound logistics are retrieving raw material, storing the inputs and internally
distributing the raw material and components to start production.
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3.1.2 Operations
The importance of analyzing operational activities raises when raw material arrives, and Renault
is ready to process the raw material into the end product and launch it in the market. Some
examples of operational activities are machining, packing, assembling and testing. Equipment
repair and maintenance also falls into this category.

It includes both- manufacturing and service operations. Analysis of operational activities is

important for improving productivity, maximizing the efficiency and ensuring the competitive
success of Renault. The increased productivity can help Renault to achieve consistent economic
growth, increase profitability and set a powerful basis for competitive advantage.

3.1.3 Outbound Logistics

Outbound logistics include the activities that deliver the product to the customer by passing
through different intermediaries. Some outbound logistics activities are material handling,
warehousing, scheduling, and order processing, transporting and delivering to the destination.
Renault can analyses and optimize the outbound logistics to explore competitive advantage
sources and achieve its business growth objectives.

Because, when outbound activities are timely managed with optimal costs and product delivery
processes put a minimum negative effect on the quality, it maximizes the customer satisfaction
and increases growth opportunities for the firm. Renault should pay specific importance to its
outbound value chain activities when its offered products are perishable and require quick
delivery to the end customer.

3.1.4 Marketing and Sales

At this stage, Renault will highlight the benefits and differentiation points of offered products to
persuade the customers that its offering is better than competitors. Only producing a high quality
product at affordable costs and distinctive features cannot create value until Renault invests on
the marketing and sales activities. The sales agents and marketers play an important role here.
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Some examples of Renault's marketing and sales activities are- sales force, advertising,
promotional activities, pricing, channel selection, quoting and building relations with channel
members. The company can use the marketing funnel approach to structure its marketing and
sales activities. The marketing strategies can either be push or pull in nature, depending on the
Renault’s business objectives, brand image, competitive dynamics and current standing in the
market.

Effective and wisely integrated marketing activities can develop the brand equity of Renault and
help it stand out from the competition. However, Renault must avoid making false commitments
about product features that cannot be fulfilled by the production department. It indicates the need
to ensure coordination between different value chain activities.

3.1.5 Services
The pre-sale and post-sale services offered by the Renault will play an important role in
developing customer loyalty. The modern customers consider post-sale services as important as
marketing and promotional activities. The power of negative e-WOM due to poor support service
cannot be undermined in the current technologically advanced era. The company must analyse its
support activities to avoid damaging brand reputation, and instead use it as a tool to spread
positive word of mouth due to quick, timely and efficient support services.

3.2 Secondary Activities

The support activities play an important role in coordinating and facilitating the primary value
chain activities. Renault can also benefit from analysis of its support activities as explained
below.

3.2.1 Firm infrastructure

The firm infrastructure denotes a range of activities, such as- quality management, legal matters
handling, accounting, financing, planning and strategic management. Effective infrastructure
management can allow Renault to optimize the value of the whole value chain. Renault can
control the infrastructure activities (or commonly called overhead costs) to strengthen the
competitive positioning in the market.
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3.2.2 Human resource management

Renault can analyze human resource management by evaluating different HR aspects, including-
recruiting, selecting, training, rewarding, performance management and other personnel
management activities. The effective HR management can allow Renault to reduce competitive
pressure based on motivation, commitment and skills of its workforce. The company can also
achieve its cost minimization objectives by analyzing hiring and training costs with their relative
return. The heavy dependence of Renault on employees' talent will increase the importance of
this value chain support activity.

3.2.3 Technology development

In a modern, technological advanced era, almost all value chain activities depend on
technological support. The technological integration in production, distribution, marketing and
human resource activities requires Renault to realize the importance of technology development.
It can be divided into product and process technological development activities. Some examples
are- automation software, technology-supported customer service, and product design research
and data analytics. The research and development department of Renault is classified in this
category.

3.2.4 Procurement
The procurement in value chain denotes the processes involved in purchasing the inputs that may
range from equipment, machinery, raw material, supplies, raw material and other items necessary
for producing the finished product. Due to its linkage with multiple value chain activities,
Renault should carefully consider its procurement activities to optimize the inbound, operational
and outbound value chain.

As mentioned above, the application of Porter Value Chain model depends on understanding the
importance of all activities. After understanding the relative importance of identified value chain
activities, Renault should highlight areas where value can be added, cost efficiency can be
achieved, differentiation basis can be set, or processes can be optimized.
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4. VRIO Analysis of Renault

The VRIO Analysis of Renault will look at each of its internal resources one by one to assess
whether these provide sustained competitive advantage. The Renault VRIO Analysis also
mentions at each stage whether these resources could be improved to provide a greater
competitive advantage. Lastly, the resources analyzed are summarized as to whether they offer
sustained competitive advantage, has an unused competitive advantage, temporary competitive
advantage, competitive parity or competitive disadvantage.

4.1 Valuable

 The Renault VRIO Analysis shows that the financial resources of Renault are highly
valuable as these help in investing into external opportunities that arise. These also help
Renault in combating external threats.
 According to the VRIO Analysis of Renault, its local food products are a valuable
resource as these are highly differentiated. This makes the perceived value for these by
customers high. These are also valued more than the competition by customers due to the
differentiation in these products.
 The Renault VRIO Analysis shows that Renault's employees are a valuable resource to
the firm. A significant portion of the workforce is highly trained, and this leads to more
productive output for the organization. The employees are also loyal, and retention levels
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for the organization are high. All of this translates into greater value for the end
consumers of Renault's products.
 According to the VRIO Analysis of Renault, its patents are a valuable resource as these
allow the firm to sell its products without competitive interference. This results in greater
revenue for Renault. These patents also provide Renault with licensing revenue when it
licenses these patents out to other manufacturers.
 The Renault VRIO Analysis shows that Renault’s distribution network is a valuable
resource. This helps it in reaching out to more and more customers. This ensures greater
revenues for Renault. It also ensures that promotion activities translate into sales as the
products are easily available.
 According to the VRIO Analysis of Renault, its cost structure is not a valuable resource.
This is because the methods of production lead to greater costs than that of competition,
which affects the overall profits of the firm. Therefore, its cost structure is a competitive
disadvantage that needs to be worked on.
 The Renault VRIO Analysis shows that the research and development at Renault is not a
valuable resource. This is because research and development are costing more than the
benefits it provides in the form of innovation. There have been very few innovative
features and breakthrough products in the past few years. Therefore, research and
development are a competitive disadvantage for Renault. It is recommended that the
research and development teams are improved, and costs are cut for these.

4.2. Rare

 The financial resources of Renault are found to be rare according to the VRIO Analysis
of Renault. Strong financial resources are only possessed by a few companies in the
industry.
 The local food products are found to be not rare as identified by Renault VRIO Analysis.
These are easily provided in the market by other competitors. This means that
competitors can use these resources in the same way as Renault and inhibit competitive
advantage. This means that the local food products result in competitive parity for
Renault. As this resource is valuable, Renault can still make use of this resource.
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 The employees of Renault are a rare resource as identified by the VRIO Analysis of
Renault. These employees are highly trained and skilled, which is not the case with
employees in other firms. The better compensation and work environment ensure that
these employees do not leave for other firms.
 The patents of Renault are a rare resource as identified by the Renault VRIO Analysis.
These patents are not easily available and are not possessed by competitors. This allows
Renault to use them without interference from the competition.
 The distribution network of Renault is a rare resource as identified by the VRIO Analysis
of Renault. This is because competitors would require a lot of investment and time to
come up with a better distribution network than that of Renault. These are also possessed
by very few firms in the industry.

4.3. Imitable

 The financial resources of Renault are costly to imitate as identified by the Renault VRIO
Analysis. These resources have been acquired by the company through prolonged profits
over the years. New entrants and competitors would require similar profits for a long
period of time to accumulate these amounts of financial resources.
 The local food products are not that costly to imitate as identified by the VRIO Analysis
of Renault. These can be acquired by competitors as well if they invest a significant
amount in research and development. These also do not require year’s long experience.
Therefore, the local food products by Renault provide it with a temporary competitive
advantage that competitors can too acquire in the long run.
 The employees of Renault are also not costly to imitate as identified by the Renault
VRIO Analysis. This is because other firms can also train their employees to improve
their skills. These companies can also hire employees from Renault by offering better
compensation packages, work environment, benefits, growth opportunities etc. This
makes the employees of Renault a resource that provides a temporary competitive
advantage. Competition can acquire these in the future.
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 The patents of Renault are very difficult to imitate as identified by the VRIO Analysis of
Renault. This is because it is not legally allowed to imitate a patented product. Similar
resources to be developed and getting a patent for them is also a costly process.
 The distribution network of Renault is also very costly to imitate by competition as
identified by the Renault VRIO Analysis. This has been developed over the years
gradually by Renault. Competitors would have to invest a significant amount if they are
to imitate a similar distribution system.

4.4. Organization

 The financial resources of Renault are organized to capture value as identified by the
VRIO Analysis of Renault. These resources are used strategically to invest in the right
places; making use of opportunities and combatting threats. Therefore, these resources
prove to be a source of sustained competitive advantage for Renault.
 The Patents of Renault are not well organized as identified by the Renault VRIO
Analysis. This means that the organization is not using these patents to their full
potential. An unused competitive advantage exists that can be changed into a sustainable
competitive advantage if Renault starts selling patented products before the patents
expire.
 The distribution network of Renault is organized as identified by the VRIO Analysis of
Renault. Renault uses this network to reach out to its customers by ensuring that products
are available on all of its outlets. Therefore, these resources prove to be a source of
sustained competitive advantage for Renault.

From the VRIO Analysis of Renault, it was identified that the financial resources and
distribution network provide a sustained competitive advantage. The patents are a source of
unused competitive advantage. There exists a temporary competitive advantage for employees.
There exists a competitive parity for local food products. Lastly, the cost structure of Renault is a
competitive disadvantage. Research and Development is also a competitive disadvantage.
26

References
Therhttps://www.essay48.com/13748-Renault-VRIN-VRIO-Analysis are no sources in the current
document

https://www.essay48.com/value-chain-analysis/13748-Renault-Value-Chain-Analysis

https://www.essay48.com/term-paper/13748-Renault-Pestel-Analysis

https://notesmatic.com/renault-swot-analysis/