A FRAMEWORK FOR ANALYSIS : VRIO
? Resource-based analysis of the firm determines which resources and capabilities result in which strengths or weaknesses
? Strategies are to be implemented which exploit (or build) strengths and avoid (or eliminate) weaknesses
? What constitutes a strength or weakness is partially a function of the external environment
? Framework for analysis: VRIO - resources and capabilities should be
o Valuable
o Rare
o Inimitable
o Organization can effectively exploit them
VALUE of resources and capabilities
? A VALUABLE resource or capability (or a combination thereof) must
o Contribute to fulfillment of customer's needs
o At a price the consumer is willing to pay, which is determined by
? Customer preferences
? Available alternatives (including substitute products)
? Supply of related or supplementary goods
? Thus, value is partially a function of external environment (product market, demand forces)
? Changes in consumer tastes, industry structure, technology, etc. can result in changed value
? Resources of different firms can be valuable in different ways (e.g., Timex versus Rolex)
? Value = Lowered costs or increased revenues or both
SCARCITY of resources and capabilities
? Resources and capabilities must be in short supply to create competitive advantage (and go beyond competitive parity)
? What would happen if this were not the case?
? An analysis of the firm's ...