2. 1
Company Overview
“Anheuser-Busch is a wholly-owned subsidiary of Anheuser-Busch InBev, the leading global
brewer, and continues to operate under the Anheuser-Busch name and logo. Based in St. Louis,
Anheuser-Busch is the leading American brewer, holding a 47.6 percent share of U.S. beer sales
to retailers. In 2010, Anheuser-Busch InBev generated revenues of 36.3 billion USD. The
company brews the world’s largest-selling beers, Budweiser and Bud Light, and distributes these
and many other popular brands through a strong network of more than 600 independent
wholesalers. Anheuser-Busch operates 12 breweries across the United States, is a major
manufacturer of aluminum cans and has been a leading aluminum recycler for more than 30
years. The company holds the No. 1 or No. 2 market position in 19 countries. In addition, the
company owns a 50 percent equity interest in the operating subsidiary of Grupo Modelo,
Mexico’s leading brewer and owner of the global Corona brand.”i Anheuser-Busch’s top
competitors include Heineken, SAB Miller and Molson Coors.ii
VRIOS Internal Analysis
“Internal analysis involves deep examination of an organization’s R&Cs in order to evaluate
which ones provide the organization with a basis for sustainable competitive advantages. It
draws upon and integrates a number of well-known frameworks and analysis approaches in order
to incorporate and evaluate organizational, interorganizational, and even dysfunctional R&Cs
within a single framework. This then supports the systematic analysis of the firm’s R&Cs for
competitive advantage. The approach to internal analysis adopted here is termed VRIOS
analysis. VRIOS analysis involves the combination of several frameworks and approaches
collectively designed to provide a thorough exploration of the focal firm’s R&Cs. Six
frameworks, including functional analysis, value chain analysis, value net analysis, R&C
analysis, balanced scorecard analysis and distinctive competence analysis are adapted to
derive a broad list of R&Cs. RBV analysis is then used to evaluate how each R&C contributes to
the firm’s ability to exploit opportunities, mitigate threats and address challenges and issues, and
the extents to which they each are rare, unlikely to be copied, controllable by the firm, and
sustainable. As a conclusion to internal analysis, a summary internal factors framework is used
to capture the key findings of the analyses – the key R&Cs of the organization.”iii
There are three key steps to completing a VRIOS analysis framework. The first step is to
generate a list of R&Cs. “There are numerous ways to derive a useful set of R&Cs for an
organization. One of the most common ways is to have managers brainstorm to create as long a
list as possible, and then to winnow that list down to a more meaningful number through
common sense. Six approaches that in combination provide a more comprehensive and
systematic means to derive an organization’s R&Cs include adaptations of functional analysis,
value chain analysis, value net analysis, R&C analysis, balanced scorecard analysis and
distinctive competence analysis.”iv The second step in the VRIOS analysis is to assess the
VRIOS of each R&C using RVB analysis. This includes assessing how valuable, rare,
inimitable, organizational and sustainable each R&C is.
3. 2
Valuable: “R&Cs that uniquely or in combination allow a firm to build
competitive advantages are deemed valuable, and merit consideration as being
used as part of a firm’s strategy. In other words, valuable R&Cs should allow an
organization to seize the opportunities, address the trends, mitigate the threats,
confront the challenges and/or tackle the issues the firm is facing in pursuit of
competitive advantage.”v
Rare: “While possession of resources and capabilities (R&Cs) that support
pursuit of competitive advantage is a sine qua non of an effective strategy, having
R&Cs that others do not is also important. How rare an R&C needs to be depends
on the firm’s situation, although in general as long as perfect competition is
avoided as a result of there only being a few firms with the R&C, there can be
said to be a sufficient degree of rareness still present protecting the value added
basis of the R&C.”vi
Inimitable: “In addition to being more valuable when rare, a resource or
capability is also of potentially greater value to a focal company to the extent that
competitors are not easily or cost-effectively able to imitate it. The idea is that, the
fewer the competitors that possess the R&C, the better the chance that an
organization can take advantage of it to obtain a low cost, differentiation or
innovation leadership position. Fortunately for those in possession of valuable
R&Cs, there are a number of forces, such as causal ambiguity, isolating
mechanisms and the R&C accumulation process, which can prevent competing
firms from imitating resource positions.”vii
Organizational: “It is also important to understand who benefits most from an
R&C. Is the firm organized to exploit the full competitive potential of the R&C
(i.e., is the R&C controllable by the firm)?”viii
Sustainable: “The last aspect in the assessment of R&Cs involves analysis of the
forces and factors that can lead to an erosion of the value of an R&C. One of the
chief sources of an erosion of value is the loss of an existing or the lack of a
newly required complementary R&C. A second reason that an R&C might lose its
value is that its value might be based on a fit with market or technological
environments that are changing too rapidly for the firm to maintain a proper fit.”ix
The last and third step in the VRIOS analysis is to synthesize R&C findings using IFF. The
most important existing and missing R&Cs are identified by assignment of importance weights
with respect to the contribution that each makes to the organization’s performance; and the
performance of the firms is assessed with respect to how well it is taking advantage of each
existing R&C and coping with or addressing each missing R&C.”x
List of R&Cs
The following is a list of resources and capabilities relevant to Anheuser-Busch as identified
through functional analysis, value chain analysis, R&C mapping onto value net, R&C analysis,
balanced scorecard analysis, and distinctive competence analysis.
4. 3
Based on the six analyses, twenty-one existing and missing R&Cs were identified, but only ten
were considered important to Anheuser-Busch. The IFF below displays the importance of each
R&C as well as a rating on how well Anheuser-Busch is leveraging or addressing them.
Internal Factors Framework
“A summary internal factors framework is used to capture the key findings of the analyses – the
key R&Cs of the organization. Akin to the external factors framework used to capture external
threats, challenges, opportunities and issues, the internal factors framework is used to summarize
and evaluate key R&Cs available to the firm for its strategy making in pursuit of competitive
advantages.” xi
5. 4
xii
"Completion of an internal factors framework provides an overall measure of the organization’s
performance with respect to how well it is taking advantage of and addressing its R&C
profile.”xiii
Derivation of IFF
The R&Cs identified as most important include marketing and advertising, strong reputation and
raw materials convenience. The most important missing R&C, reliance on wholesalers and
suppliers, will also be analyzed below.
1. Marketing and Advertising
Anheuser-Busch’s marketing and advertising is the strongest asset to the company. “AB provides
national and local media advertising, point-of-sale advertising, and sales promotion programs to
promote its brands, and complements national brand strategies with geographic marketing teams
focused on delivering relevant programming addressing local interests and opportunities.”xiv This
R&C resides on the company’s value chain and its customers and competitors on its value net.
AB is able to use its marketing and advertising strategies to target customers while beating out its
competitors. This R&C benefits the company as a whole due to the increased sales and profits
from its effects.xv
This is the most important R&C with a 23% weighting. AB’s marketing and advertising is
extremely valuable to the firm in that it allows AB to promote its products to a number of
different market segments. Although all of AB’s rivals have marketing and advertising strategies,
it is rare in the industry for AB to have such a successful and effective marketing and advertising
6. 5
strategy. Because of this, AB is able to gain a competitive advantage over its rivals promotional
efforts. It would be extremely expensive for rival firms to copy the same marketing and
advertising strategies that AB creates. AB will have to continue to invest large sums of money
into its marketing and advertising strategies in order for it to be sustainable.xvi
Marketing and advertising received a performance rating of 5 out of 5. AB is currently spending
several billion on marketing and advertising expenses and employs national, regional and local
media outlets in its promotional efforts.xviiAB continues to focus on its marketing and advertising
strategies and hopes to build and even greater awareness of the already dominant brand.xviii
2. Strong Reputation
Anheuser-Busch has created and maintained one of the strongest reputations of all beer brewers.
AB is well known for its high quality products, and has strong brand and customer loyalty
because of it. The company report believes that that: “Anheuser-Busch’s success depends on our
ability to maintain and increase the image and reputation of our existing products and to develop
a favorable image and reputation for new products.”xix This R&C resides within the company’s
firm infrastructure and corporate culture on the value chain and its customers and competitors on
the value net. All managers and employees are responsible to maintain a reputation that is
beneficial to the company as a whole. Customers overlook competing firms and are reinforced
by their purchase decision due to AB’s strong reputations.xx
This R&C was given an importance weighting of 19% because a strong reputation is one of the
most valuable aspects to a company. A strong reputation is also extremely rare to achieve,
especially in the alcoholic beverages industry where a variety of different factors could
jeopardize its reputation. AB currently has one of the strongest brand reputations of all its rival
firms. It is almost impossible for other firms to exactly imitate AB’s reputation, therefore giving
AB an even greater competitive advantage in the industry. A strong reputation is extremely hard
to sustain, and anything from product quality to customer satisfaction can easily destroy a strong
brand reputation.xxi
Strong reputation received a performance rating of 5 out of 5. AB is currently maintaining its
strong reputation due to its high quality products, customer satisfaction levels, employee
relations and strong internal leadership. AB has successfully maintained its strong reputation for
many years now and has continued to dominate the market due to its success.xxii
3. Raw Materials Convenience
Busch Agricultural Resources, L.L.C. (“BARL”), owned and operated by Anheuser-Busch,
operates rice milling facilities, grain elevators, barley seed processing plans, barley research
facilities and malt plants in numerous states. “The products manufactured by the Company
require a large volume of various agricultural products, including hops, barley malt, rice, and
corn grits for beer, and rice and barley for the rice milling and malting operations of BARL. The
Company fulfills its commodities requirements through purchases from various sources,
including purchases from its subsidiaries, through contractual arrangements and on the open
7. 6
market.”xxiii As long as these suppliers continue to operate, AB will always have a reliable, cost
effective source for receiving its necessary supplies. This R&C resides within the company’s
procurement and inbound logistics on the value chain and its suppliers on the value net. In
addition to that, this R&C benefits the company as a whole, allowing AB to effectively produce
its products in a convenient manner.xxiv
This R&C was given an importance weighting of 17%. The convenience of purchasing supplies
through its own subsidiary is extremely valuable to AB’s operations. This enables AB to cut
costs and save time receiving its supplies. It is rare in the industry to own supplier subsidiaries,
giving AB a competitive advantage over its rival firms. In terms of copying AB’s supplier
processes, it would be extremely expensive for rival firms to create their own suppliers or partner
with existing independent suppliers. This process is sustainable as long as AB continues to have
relations with its suppliers, and that suppliers are able to produce the raw materials that AB
requires.xxv
Raw materials convenience received a performance rating of 4 out of 5. Owning and operating
its own subsidiary suppliers gives AB a huge competitive advantage over its rival firms that have
more difficulty in obtaining supplies. The convenience of owning suppliers enables AB to cut
costs and have a more efficient system of operations, which AB is taking full advantage of.xxvi
4. Reliance on Suppliers and Wholesalers
Anheuser-Busch relies on its suppliers and wholesalers to provide it with raw materials and
distribution networks. This reliance is a risk for the company and may compromise its financial
results in the future. The company report states that: “For certain packaging supplies, raw
materials and commodities, we rely on a small number of important suppliers. If these suppliers
became unable to continue to meet our requirements, and we could not develop alternative
sources of supply, our operations and financial results could be adversely affected.”xxvii In
addition to this, wholesalers face the same predicament. “In the United States, Anheuser-Busch
sells substantially all of its beer to independent wholesalers for distribution to retailers and
ultimately consumers. Many of the wholesalers of these brands have not traditionally been
wholesalers for Anheuser-Busch. As independent companies, wholesalers make their own
business decisions that may not always align themselves with our interests. If the Anheuser-
Busch wholesalers do not effectively distribute our products, our financial results could be
adversely affected.”xxviii The reliance on suppliers and wholesalers poses a potential threat for
AB’s future success.
These two R&Cs were given an importance weighting of 6%. Since this R&C affects the
procurement and inbound logistics on the value chain and the suppliers and complementors on
the value net, it is crucial for AB to mitigate this threat. Suppliers and wholesalers are valuable
aspects to AB’s production and distribution strategies, and having reliance on these could
threaten the business and its profits. Since there are limited suppliers and few distribution
channels in the industry, it is not rare not rely on such aspects, but it is important for AB to learn
how to combat this threat. In the meantime, AB is able to rely on its limited number of suppliers
and wholesalers, but this will only be sustainable if supplier and distributor agreements and
relations continue to align.xxix
8. 7
Reliance on suppliers and wholesalers received a performance rating of 2 out of 5. Anheuser-
Busch continues to rely on its suppliers and wholesalers, but has made no attempts to find
additional sources of supplies or distributors.xxx
Conclusion
As indicated in the IFF, Anheuser-Busch scored a performance rating of 4.1 out of 5.xxxi
Marketing and advertising, strong reputation and raw materials convenience are all R&Cs that
are important to AB’s success. On the other hand, AB has yet to mitigate the threat of relying on
a limited number of suppliers and wholesalers. Overall, AB is effectively and efficiently using
utilizing its resources and capabilities, but is struggling to mitigate the detrimental effects of the
R&Cs that it does not possess.
VRIOS Worksheets
18. 17
i
"Our Company | Anheuser-Busch." Anheuser-Busch. Anheuser-Busch Companies, 2015. Web. 29 Jan.
2015. <http://anheuser-busch.com/index.php/our-company/>.
ii
“Anheuser-Busch Companies, L.L.C.” Company Profile / Hoovers Business Solutions, Web. 26 March
2015.
iii
Cummings, J. L., Creating Value Chapter 15 (New York: Ming Press,2011), p. 1.
iv
Cummings, J. L., Creating Value Chapter 15 (New York: Ming Press,2011), p. 3.
v
Cummings, J. L., Creating Value Chapter 15 (New York: Ming Press,2011), p. 23.
vi
Cummings, J. L., Creating Value Chapter 15 (New York: Ming Press,2011), p. 25-26.
vii
Cummings, J. L., Creating Value Chapter 15 (New York: Ming Press,2011), p. 26.
viii
Cummings, J. L., Creating Value Chapter 15 (New York: Ming Press,2011), p. 28.
ix
Cummings, J. L., Creating Value Chapter 15 (New York: Ming Press,2011), p. 28.
x
Cummings, J. L., Creating Value Chapter 15 (New York: Ming Press,2011), p. 2.
xi
Cummings, J. L., Creating Value Chapter 15 (New York: Ming Press,2011), p. 1.
xii
Bonn, Melissa. “Internal Factors Framework”,MG 402 Business Strategy, Loyola Univ. MD, Spring
2015.
xiii
Cummings, J. L., Creating Value Chapter 15 (New York: Ming Press,2011), p. 31.
xiv
Anheuser-Busch. 2007 10-K Report.Hoovers Business Solutions. Web. 29 March. 2015.
xv
Bonn, Melissa. “VRIOS Worksheets”,MG 402 Business Strategy, Loyola Univ. MD, Spring 2015.
xvi Bonn, Melissa. “VRIOS Worksheets”,MG 402 Business Strategy, Loyola Univ. MD, Spring 2015.
xvii Anheuser-Busch. 2007 10-K Report.Hoovers Business Solutions. Web. 29 March. 2015.
xviii Bonn, Melissa. MG 402 Business Strategy, Loyola Univ. MD, Spring 2015.
xix
Anheuser-Busch. 2007 10-K Report.Hoovers Business Solutions. Web. 29 March. 2015.
xx Bonn, Melissa. “VRIOS Worksheets”,MG 402 Business Strategy, Loyola Univ. MD, Spring 2015.
xxi Bonn, Melissa. “VRIOS Worksheets”,MG 402 Business Strategy, Loyola Univ. MD, Spring 2015.
xxii Bonn, Melissa. MG 402 Business Strategy, Loyola Univ. MD, Spring 2015.
xxiii
Anheuser-Busch. 2007 10-K Report.Hoovers Business Solutions. Web. 29 March. 2015.
xxiv Bonn, Melissa. “VRIOS Worksheets”,MG 402 Business Strategy, Loyola Univ. MD, Spring 2015.
xxv Bonn, Melissa. “VRIOS Worksheets”,MG 402 Business Strategy, Loyola Univ. MD, Spring 2015.
xxvi Bonn, Melissa. MG 402 Business Strategy, Loyola Univ. MD, Spring 2015.
xxvii Anheuser-Busch. 2007 10-K Report.Hoovers Business Solutions. Web. 29 March. 2015.
xxviii Anheuser-Busch. 2007 10-K Report.Hoovers Business Solutions. Web. 29 March. 2015.
xxix Bonn, Melissa. “VRIOS Worksheets”,MG 402 Business Strategy, Loyola Univ. MD, Spring 2015.
xxx Bonn, Melissa. MG 402 Business Strategy, Loyola Univ. MD, Spring 2015.
xxxi Bonn, Melissa. “Internal Factors Framework”, MG 402 Business Strategy, Loyola Univ. MD, Spring
2015.
