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VIRO

The VIRO framework is a strategic analysis tool used to assess a firm's competitive advantage based on its resources and capabilities. It stands for

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Model

Viro Framework

Year

1991

Category

Banking and Finance

Type of Work

Research

Branding
Web Design

VRIO is a business analysis framework that forms part of a firm's larger strategic scheme, proposed by Jay Barney in 1991. The basic strategic process of any firm begins with a vision statement, and continues on through objectives, internal & external analysis, strategic choices (both business-level and corporate-level), and strategic implementation.

 

 

 

​VRIO falls into the internal analysis step of these procedures but is used as a framework in evaluating just about all resources and capabilities of a firm, regardless of what phase of the strategic model it falls under.

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  1. Value: This element evaluates whether a firm's resources and capabilities add value to the company. In other words, do they help the company create products or services that customers are willing to pay for?

  2. Imitability: Imitability assesses how easy it is for competitors to replicate or imitate the resources and capabilities of the firm. If these resources and capabilities are rare and not easily duplicated, they provide a sustainable competitive advantage.

  3. Rarity: Rarity examines whether the resources and capabilities a firm possesses are unique in the industry. If they are common and readily available, they may not contribute significantly to a competitive advantage.

  4. Organization: This aspect focuses on whether the firm is effectively organized to exploit its resources and capabilities. Even if a firm has valuable, rare, and non-imitable resources, it must have the organization and processes in place to leverage them effectively.

VRIO is an initialism for the four question framework asked about a resource or capability to determine its competitive potential: the question of Value, the question of Rarity, the question of Imitability (Ease/Difficulty to Imitate), and the question of Organization (ability to exploit the resource or capability).

  • The question of value: "Is the firm able to exploit an opportunity or neutralize an external threat with the resource/capability?"

  • The question of rarity: "Is control of the resource/capability in the hands of a relative few?"

  • The question of imitability: "Is it difficult to imitate, and will there be significant cost disadvantage to a firm trying to obtain, develop, or duplicate the resource/capability?"

  • The question of organization: "Is the firm organized, ready, and able to exploit the resource/capability?" "Is the firm organized to capture value?"

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