Rice Dazzle Inc. has been making the same breakfast cereal for 50 years. Recently, sales have plummeted. To counteract this, the
company created a new package that included an endorsement by a celebrity. As a result, sales increased close to previous highs. However, the cereal itself remained the same. According to the VRIO framework, is the new packaging a valuable resource for Rice Dazzle?
The new packaging did not improve the product itself.
According to the VRIO framework, in order for the packaging to be a valuable resource it has to enable the company to exploit opportunities or defend against threats, it also needs to help organizations to increase the perceived customer value by increasing differentiation or/and decreasing the cost of the product. If the resources do not meet this condition, it can lead to competitive disadvantage.
Break-even point in dollars equals fixed cost divided by contribution margin ratio. Contribution margin ratio is equal to contribution per unit divided by selling price. Contribution per unit is selling price minus variable cost per unit.
