RESOURCE VRIS

In many ways, the purpose of resource strategy is to achieve competitive advantage via the proper use of resources. As a result, the most important goal of resource analysis is not to value the assets of company. It is used for achieving sustainable competitive advantage. There are some characteristics used to evaluate whether resources fulfill or not. These are valuable, rare, Imperfect-Imitability, and Substitutability, referred to as VRIS.

- Value (V): A resource must enable a firm to employ a value-creating strategy. It makes a valuable contribution to firm.

- Rareness (R): How rare or limited is the resource?

- Imperfect Imitability (I): How difficult is it to imitate the resource - Substitutability (S): Is it not able to be substituted.

4.1 Tangible resource 4.1.1 Financial resource

 Cash

Cash can be used to support acquisitions activities and repurchase the stock or even enhance shareholder value. That is the reason why cash is important and value to L’Oréal.

The kind of this asset is rare and not easy to imitate or substitute.

 Debt

Debt is value because debt brings more money from outside to L’Oréal, it also helps tax

deduction. Due to cosmetic industry characteristic, all competitors are intense and power.

They do have high credit and qualification, connected many sources like bank or institution to borrow money. Therefore, debt is not rare, not difficult to imitate or substitute.

 Equity

Equity finance is about to be more valuable than other sources of finance. Because the funding will be flowing to L’Oréal by investors if business is doing well. In addition, with equity finance, L’Oréal doesn’t need to keep up with some costs like interest rate of bank loans or debt finance for example. Potential investors always seek comprehensive information on company and their business before investing, they look at carefully about the past results and forecast for future. Investors will invest as they can make sure the profitable and potential of company. Besides that, it is costly and time consuming to raise equity finance It may take more time to manage and provide regular information for investors. Those are the reasons why equity is finance is rare, difficult to imitate or substitute.

4.1.2 Physical resources

Physical resources are another important component of resources of L’Oréal. The location and size of headquarters, hubs and R&D centers are really important to L’Oréal. In order to achieve mission to listening to customers, L'Oréal's Research and Innovation has been placed closed to its major markets. The headquarters of L’Oréal are being designed as a connected workplace to create an enhanced collaborative environment that reflects a culture focused on innovation, learning, and growth. Specific attention is being paid to our environmental footprint, which aligns with the company's sustainability goals. Hubs are designed in international network place for easy distribution. It took L’Oréal so much time and money to find out the right location.

Therefore, the location is valuable, rare, imperfect imitability and substitutability.

4.2 Intangible resource 4.2.1 Reputation

 Brands

L’Oréal has the most well-known brands in together with image of brands with prosperity of unique and international portfolio of 32 complementary brands on 140 countries from luxury to consumer products. It is certain to take much effort to create a successful and reliable brand which customers believe and trust in. A business wouldn't be successful if it does not obtain the values of brand recognition by customers. Furthermore, brands are unique, so it is hard to imitate or substitute.

 Customer loyalty

Customers are at the heart of a business, keeping existing customers is just as important as getting new customers. Loyal customers lead to repeat business, they tend to make more single transaction, that mean they will buy product from company again and again, spend more money on brand. In addition, loyal customers are likely to explore and try out different product or services. Hence, loyal Customers are extremely valuable. Customers loyalty is unique as well, when customer become truly loyal, company is the only brand prioritized consideration in their mind, other brands seem to be disappeared. Loyalty customer cannot be imitable yet it can be substituted. Customer loyalty is quite difficult to retain. The reason is that cosmetic industry is too sensitive. It changes days by days along with weather, beauty trends or human biology. If the company product is not state of the art, customers may switch into another brand to meet their demand.

 History

History is a valuable contribution to company in cosmetic industry. One reliable cosmetic product ought to have more time to research, innovate and create. After creating, it

still need more time to test for irritation, breakout issues. The more tests they do, the deeper knowledge and experience company can gain. They will know well all kind of situations which occur on customers’ skin. By doing this, company is believed to create a product with the least irritated percentage.

4.2.2 Technology

 Patent right

Patent right is value to company, because it helps company to achieve a monopoly market for such a long time (20 years). That means the precious investments is definitely paid-off. However, patent right is unique within registered country only. When exporting abroad, the power of patent right seems to be decreased due to patent regime of that country. If exporting countries are piracy, they just change some part of product and apply for new patent protection.

4.3 Human resources

 Skilled and qualified staffs

A skilled staffs is a person who has special skill, knowledge, and ability in their work.

Sometimes a skilled and qualified staffs who may have attended a famous college, university or technical, vocational institutions, or may have gained some special skills on the job. A skill and qualified staffs are valuable because as employing them, they seem to bring new innovation, new perception to company. Everyone has his/her own unique skills. Hence skills and qualification could not be imitable or substituted.

 Innovation skills

Innovation skills are important and valuable to all industry in general and cosmetic industry in specific. Innovation ability not only in products and services, but also operation, management which have a significant effect on productivity then growth.

 Experienced staffs

Obviously, employees are the heart and soul of the business. They are the mechanism that

help business run smoothly and fast. Experienced staffs are not valuable but essential to business. This is because experienced staffs have a solid knowledge base on their major. They can predict and master all circumstances which occur in work. They also have some skills which are likely to make a precious contribution to work, such as technique skills, time management skills and some interpersonal skills. Experience staffs are about to be valuable, rare, and non-substitute, yet it could be imitable by using systematization.

A briefly resource VRIS analysis was described as following table Table 2: Resource VRIS

advantage

Innovation is the key to L’Oréal’s new strategy. L’Oréal’s commitment to innovation has always been to introduce the formula to enhance the consumer product experience. Not only to continue to develop their knowledge of the physiology of skin and hair types from around the world to meet