VRIO Framework

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Corporations that are planning strategies for competitive advantage will analyze their internal competencies compared to the past performance, the advantages of the competition and the where the industry is at the time of the analysis.(Wheelen, Hunger, Hoffman, Bamford, 2015,p.128) Decision makers will evaluate the core competencies of their business such as trade secrets, copyrights or strong brands and will ask the following questions sullied by Barney n his “VRIO Framework for analysis” (2015). 

“Value- Doest the competency provide customer value and competitive advantage?

Rareness- Does the competition process the same competency?

Imitability- Is it costly for the competition to imitate the competency?

Organization- Is the business positioned to exploit the resource? ” (p.128)

When decision makers are able to answer yes to these questions they the core competency becomes a distinct competency which defines the company and what is does best.  It is vital to decision makers to understand that distinct competencies loose value over time and once established they must be nurtured, and utilized well. As the distinct competencies are utilized, shared and copied by others it has the potential to loose value.  Such was the case with blockbuster their distinct competency was movie rental and they lost the competetive advantage to Netflix and redbox however they still exist and are still known for movie rental they have expanded to on line/demand in collaboration with cable and satellite provider however they are still a movie rental and this is their distinct competency it just does not have the uniqueness that it once had in the industry. 

Distinct competencies must be nurtured, and reinvested in to remain a strength and to beet out the competition. 

Kathleen Wagner

Reference

Wheelen, T. L., Hunger, J. D., & Hoffman, A. N., & Bamford, C. E.,(2015). Concepts in Strategic Management and Business Policy (14th ed.). Retrieved from The University of Phoenix eBook Collection database.

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