MBA-VRIO/PESTLE

VRIO: Value, Rarity, Imitability, Organization

VRIO is a method for analyzing a company’s internal resources and abilities. It asks four questions, and the answers form a larger picture of the company or organization’s competitive position.

Use the VRIO method to write an analysis of the company you chose and its resources/abilities.

VRIO Diagram

As you can see in the diagram, a top row of circles shows the four questions. (Is the resource, capability, or competency Valuable, Rare, Costly to Imitate; and is the firm Organized to capture value?) An arrow from Valuable that says Yes leads to Rare, and an arrow from Rare that says Yes leads to Costly to Imitate, and so on. Arrows that say No lead from all four questions to outcomes. If the answers to all four questions are yes, that leads to a box that says Sustainable Competitive Advantage. But each “No” answer leads to a problem: Competitive Disadvantage, Competitive Parity, or only Temporary Competitive Advantage.

V: The Question of Value

Is your company able to exploit an opportunity or neutralize a threat with the resource/ability?

R: The Question of Rarity

Is control of the ability or resource in the hands of few?

I: The Question of Imitability

Is the resource or ability difficult to imitate? Would a company that was trying to imitate it face a cost disadvantage?

O: The Question of Organization

Is the firm organized and ready to be able to take advantage of the resource or ability?