VRIO Analysis

751 Words2 Pages
bulb-icon

Recommended: What are the benefits of competitive advantage

Barney (1991) defines VRIO analysis as a strategic management tool used to analyze a firm’s internal resources and capabilities, in efforts to determine if they can be used to derive a competitive advantage for the firm. It entails asking and endeavoring to answer questions that ask if a resource is: Valuable; Rare; costly to Imitate; and whether a firm is well Organized to capture the value of the resources? Any resource that meets all four requirements can bring sustained competitive advantage for the company. The pictorial representation of the VRIO analysis tool is as shown below. Rarity of Resources Those resources that are accessible to one or only a limited number of firms are regarded as being rare. When a resource is valuable and rare, a temporary competitive advantage is achieved by the firm, however if the resource is valuable but accessible to more than a few firms, a competitive parity among the firms is achieved (Jurevicius, 2013). Costly to Imitate Resources Jurevicius (2013) explains that a resource is regarded as being costly to imitate when other firms which do not have access to it are incapable of imitating, buying or obtaining a substitute for it, at a price considered to be reasonable to the acquiring firm. Imitation can occur either through duplication or substitution, (Jurevicius, 2013). Barney, (1995) explains why some firms may have access to resources that are too costly to imitate, not disposable to other firms. These may be due to historical factors, causal ambiguity or simply sociological complexities. Resources developed over a long period of time, mostly as a result of intense research and development activities, turn out to be too costly to imitate by other firms. First mover advantages... ... middle of paper ... ...or Competitive Advantage. Academy of Management Executive, 9(4), pp. 49-61. Jurevicius, O. (2013). VRIO analysis, Strategic Management Insight. [online] available at accessed April 8, 2014. Masdar City, (n. d). The Global Centre of Future Energy: Masdar City. [online], available at accessed April 8, 2014. Saxena, R. P. (2011). Dubai Mall: A Multipurpose Destination in the Middle East. Researchgate.net. [online] available at Zerkel, E. (2014). Masdar City: Sustainable City of the Future, The Weather Channel. [online] available at www.weather.com/news/science/earth-day/masdar-united-arab-emirates sustainable-city-20130726 accessed April 7, 2014.

Show More
Related

  • Case Analysis Of BHP Billiton

    2007 Words  | 5 Pages

    ...s capabilities, resources and core competencies that will helpful to make companies better. On the other side, by this assignment, we come to know about the characteristics of the BHP Billiton Company in relation to the major facts, strength and weakness and resources, capabilities and core competencies. Apart from this, the VRIO framework identifies the valuable resources and capabilities that can help to compete with their rivals. While a value chain analysis gives information about the primary and support activities and also explains the marginal value. However, organizational culture and the iceberg analogy depict the pattern of thinking, working and operations of an organization. In the end, we find some strategic issues related to BHP BILLITION that might be the crucial issues for them and by solving that issues BHP will become a stranger in the market place.

    Read More

  • BUSA 4126 Week 1: Business Case Study

    1515 Words  | 4 Pages

    To do so companies have to have access to certain tools, those tools that are called resources and capabilities. Resources are stock or supply of money, materials, staff, and other assets that can be drawn on by a person or organization in order to function effectively. For example, some tangible resources include land, equipment, and technology. Intangible resources include, but are not limited to human capital, intellectual property, and brand image. Capabilities are the abilities of a firm to perform by using a collection of people, processes, and technology gathered for a specific purpose. For example, Nike has the capabilities to technologically innovate their products. Having both resources and capabilities provides a company with a competitive asset or sustainable competitive

    Read More

  • Hrm/531 Quiz 4

    700 Words  | 2 Pages

    A resource is a competitive asset that is owned or controlled by a company. Some examples are plants, patents, and manufacturing

    Read More

  • Analysis of Resources, Capabilities, and Core Competencies of Tesco

    1946 Words  | 4 Pages

    Selecting a business strategy that details valuable resources and distinctive competencies, strategizing all resources and capabilities and ensuring they are all employed and exploited, and building and regenerating valuable resources and distinctive competencies is key. The analysis of resources, capabilities and core competencies describes the external environment which is subject to change quickly. Based off this information a firm has to be prepared and know its internal resources and capabilities and offer a more secure strategy. Furthermore, resources and capabilities are the primary source of profitability. Resources entail intangible, tangible, and human resources. Capabilities describe environment and strategic environment. Core competencies include knowledge and technical capability. In this section we will attempt to describe in detail the three segments which are resources, capabilities, and core competencies.

    Read More

  • Business Analysis of Virgin Group

    1170 Words  | 3 Pages

    Resources are being classified into tangible and intangibles assets as the followings: *Resources of *Virgin Group Tangible Resources Intangible Resources Capabilities of Virgin Group are established by the integrated resources that assisted it to stay competitive and to outdo its competitors. Valuable capabilities will aid Virgin Group to effectively tap and explore spotted opportunities as well as to minimize threats in the external environment. Should capabilities are consistently and effectively utilized, they will turn significant and be difficult to be imitated or substituted. With the resources discussed above, 3 capabilities of Virgin Group are identified as follows: - *Capabilities 1: Unique C*ulture of *"Making difference and creating uniqueness"* (*Contributed Resources: *Financial, Organizational, Human, Innovation*, Technological*) Creativity, Innovation are the foundations to Virgin and Richard Branson’s success! Technology push is the spine for innovation and likely to simulate process innovation in how service is provided when looking into Virgin. Technology is more likely to simulate process innovation. Every turn and businesses Branson venture has been with some kind of innovation or creativity element if not something unique, something that has not been seen or heard of before in the relevant market. Virgin Group has achieved a competitive advantage among its competitors by uniformly followed its culture in all business in serving good value and service to the customers in different ways. The basic and the core competence of all Virgin Group's business ventures are to do things just a little bit differently from the rest. And also they always tried to add value by adding a little fun to the business. By differentiating in strategy itself to fit of the activities and the ways of doing business have also differentiated itself from the rivals and make it difficult to imitate Virgin’s strategy. Hence, they have established their business to an untouchable position. How would you characterize the corporate strategy of Branson's Virgin Group? The answer to that question will not be so different from the ones above. However to better understanding we can characterize the corporate strategy of Virgin Group as "Making difference and creating uniqueness" in any kind of customers' service. They are not stuck to any business field so that makes them flexible of thinking and creating new ideas for their customers and the whole consumers around the world who need (or will need) Virgin's service.

    Read More

  • Healthcare Organizations: Financial Analysis

    222 Words  | 1 Pages

    When a new strategic plan is developing in a healthcare organization and during the process of implementation of the organization after the financial analysis (supported-value adding resources) find out they do not have capital to support the strategy, but the strategy promise to be a successful or mark a benefit in the process of delivery of care of patients, the healthcare organization has the option to search in its external resources. The external resources can be considered as joint ventures. The joint ventures are horizontal and vertical depending on the level of care. Horizontal venture with organizations that belong to the same level of care and are direct competitors such as two laboratory centers with different specialty entering

    Read More

  • Healthcare Value Chain Analysis

    850 Words  | 2 Pages

    Value Chain Analysis is used to describe the activities that take place within the organization and relates them to an analysis of the competitive strength of the organization. Michael E. Porter (1991) stated that the activities of an organization could be divided into two groups: Primary Activities- Those that are directly concerned with creating and delivering a product and Support Activities- this group consist of those not directly involved in production, this group also add values to the organization because they help to increase effectiveness or efficiency (e.g. human resource management). Porter also stated that is not common for an organization to undertake all primary and support activities (Porter, 1991).

    Read More

  • SWOT Analysis: Strategic Competition

    1088 Words  | 3 Pages

    This tool strategically identifies the strengths, weaknesses, opportunities, or threats to the firm existing or new business ventures (Lee, 2015). The use of SWOT may compel management to engage further in developing a proper strategy and business plan based on their findings. Although, sustaining the strategic management process may prove to be very difficult. This is why for existing or new business ventures SWOT analysis is useful in evaluating the internal and external environments to assess possible competitors to decide whether or not a business venture is worth the time or money, and if the market will be profitable (Lee,

    Read More

  • The Argument For Nuclear Energy

    1430 Words  | 3 Pages

    Clark, W. W & Cook, G (2012). Global Energy Innovation. Santa Barbara, California: Praeger, an Imprint of ABC-CLIO, LLC.

    Read More

  • 'It Doesn't Matter' Summary

    924 Words  | 2 Pages

    Carr distinguishes between proprietary technologies and what he calls infrastructural technologies. Proprietary technologies can provide a strategic advantage as long as they remain restricted through "physical limitations, intellectual property rights, high costs or a lack of standards," but once those restrictions are lifted, the strategic advantage is lost. In contrast, infrastructural technologies provide far greater value when shared. Although an infrastructural technology might appear proprietary in the early stages of buildout, eventually the characteristics and economics of infrastructural technology necessitate that they will be broadly shared and will become a part of the broader business infrastructure. To illustrate his point, Carr uses the example of a proprietary railroad. It is possible that a company might gain a competitive advantage by building lines only to their suppliers, but eventually this benefit would be trivial compared to the broader good realized by building a railway network. The same is true for IT - no company today would gain a cost-effective competitive advantage by narrowing its focus and implementing an Internet only between their suppliers to the exclusion of the rest of the world.

    Read More

  • Business Strategy Evaluation

    547 Words  | 2 Pages

    It is no exaggeration that to say that competitive strategy is the art of creating or exploiting those advantages that are most telling, enduring, most difficult to duplicate. Competitive strategy, in contrast with generic strategy, focuses on the differences among firms rather than their common missions. Competitive advantages can normally be traced to one of the three roots: (1) superior skills, (2) superior resources, and (3) superior position. Positional advantage is of two types, first mover advantages and reinforcers. First movers may also gain advantages in building distribution channels, in trying up specialized suppliers, or in gaining the attention of customers. Reinforcers are policies and practices acting to strengthen or preserve a strong market position and which are easier to carry because of the position. Other position-based advantages include the ownership of special raw material sources or advantageous long-term supply contracts; being geographically located near key customers in a business involving significant fixed investment and high transportation costs; being a leader in a service field that permits or requires the building of a unique experience base while serving clients; being a full-line producer in a market with heavy trade-up phenomena; having a wide reputation for providing a needed for providing a needed product or service trait reliably and dependably.

    Read More

  • Resources and Capabilities Report: McDonald´s

    1805 Words  | 4 Pages

    Hendersern and Stern 2000, ‘Untangling the origins of competitive advantage’,Strategic Management Journal, Vol. 21, pp. 1123-1145.

    Read More

  • SWOT Analysis: The Venture's Objectiveness

    962 Words  | 2 Pages

    To assess the attractiveness of a new venture, Gretzky (2010) recommends the use of strengths, weaknesses, opportunities and threat (SWOT) analysis. The SWOT, identified in Table 4 presents conclusions on both the internal and external environment by matching strategy with strengths and opportunities (Thompson et al. 2016).

    Read More

  • competitive advantage

    1018 Words  | 3 Pages

    Firms are mixed bundles of resources and capabilities. To make the firm stand unique than the competitors firm’s set their core competences that are combination of resources and capabilities.

    Read More

  • The Six Steps Of Acquisition And Supply Chain Management

    1046 Words  | 3 Pages

    Strategic management is the “identification of one or more sustainable competitive advantages a firm has in the markets it serves (or intends to serve), and allocation of resources to exploit them” (Business Dictionary, 2016). In order for industries and organizations to thrive, they must have strategies in place and strategic management processes to stay competitive, profitable, attractive to stakeholders, and to sustain advantages that set them apart from other competitors (Barney & Hesterly, 2015). The strategic management process involves a set of procedures that lead to choosing a strategy that will eventually lead to competitive advantage (Barney & Hesterly, 2015). The six steps of the strategic management process involves defining

    Read More

More about VRIO Analysis

Open Document