Is The VRIO Framework Advantageous for All Businesses?

Organizations make every effort to find a competitive edge in the market to get ahead of the curve. But because of the technological advancements, and new rivals introducing themselves in the market, the fear of losing that advantage will always remain. VRIO is one of the strategic frameworks to help you turn that lead into a sustained competitive advantage. The Netflix VRIO analysis can give you a better understanding of the tool, as it simplifies each aspect and gives a detailed analysis.

It helps in categorizing a company’s resources and allows you to identify which ones can give you a competitive advantage. VRIO stands for valuable, rare, inimitable, and organized. If your company’s resources fit in all these dimensions, it means you have a sustained competitive advantage.

If a resource is valuable it will provide the organization benefits in a limited area. A resource that is rare and valuable gives you a short-lived competitive advantage. If it is also hard to imitate, then you have a competitive advantage that cannot easily be outranked. If the resource is supported by the company and structure, it is sure that it will give you a sustained competitive edge.

How to Use The framework?

To use the framework, you first need to identify the nature of your resource. Two categories in which they fall are tangible (physical assets) and intangible (that do have a physical form). Resources that are related to finance, like money, shares, and bonds are tangible. The ones that are related to human resources or patents, or brand names are considered intangible. All these resources will become part of your VRIO framework to help you determine which traits they hold.

Once you have categorized all the resources, divide them into four groups. Use titles like a minor advantage, temporary competitive advantage, unused competitive advantage, and long-term competitive advantage. This way, you will have the answer to all the questions like, is it valuable? Is it rare? Is it inimitable? And is it organized? The resource that fits all the questions is the one that can give you a sustained competitive advantage.