VRIO framework: Definition, Advantages and Limitations

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What is the VRIO framework?

While you are in this chase of providing the best solution out in the market, it is important for you to understand your brand and what potential it has. Organizations use this competitive edge to provide the best possible solutions to the target audience. To make this potential identification easy, VRIO framework is just the catch for you.

VRIO framework stands for value, rarity, imitability, and organization framework. It believes that these four factors build up to identify where our brand is and what are its unique characteristics that can be put to use while serving the target audience.

So, let’s go ahead and breakdown these four factors of VRIO framework and understand them one by one.

Exploratory Research Guide

Conducting exploratory research seems tricky but an effective guide can help.

  • Value 

Value here stands for that one thing your brand stands out for. Although, it can be more than one thing too, and it best represents your brand. This is the factor that you can take advantage of while providing it to the customer. To identify what value does your organization holds, you can ask questions like:

  • What is that specific factor that you look forward to for the customer to take advantage of? 
  • What value are you providing to your customer?

Answers to these two questions should make it clear what product or service value you provide to your customer. Value of your organization is something not only you look up to, but also why your customer should keep choosing you over the other competitors. 

In case where you are still not sure about that value of your organization, it is a good practice to keep a goal or an ideal solution you want to provide the customer, as a potential value of your organization.

  • Rarity 

As it comes with no surprise with its name, rarity defines your resources and how easy they are to access by a competition of yours. To figure out the rarity of your resources, answer the questions below:

  • What resources do you use that are hard to access to others?
  • What uniqueness do you provide to your target customer?
  • Which product/services of yours have a low supply but high demand?

Rarity + value sounds like a good success recipe, right? Well, that’s because rarity when combined with success helps you identify your organization’s value AND make it rare, so that the customers don’t find it anywhere else. 

  • Imitability 

A very close concept to rarity, imitability determines the ability of your competitors to duplicate your resources or solutions. To make this obvious, you can ask some questions like:

  • How much would it cost the competitor if they were to duplicate your products and services?
  • Are your products and services similar to some in the market or vice versa?

Imitability has strong chances of bringing down the value and rarity of your organization. You cannot really stay ahead of your competition if your products are easy to duplicate.

  • Organization 

The organization part of VRIO framework holds the ability to determine how structured your organization is from the success point of view. To make it seem more clear, answers to following questions can help:

  • Are the existing workflows in your organization helping to achieve success?
  • What structures ensure the capitalization of your resources and advantages?

This final step in the process makes you take a look at the working of your organization and ell whether it is efficient enough to take it to the high road of success. This will help you compare your organization to the competitors and determine where you stand.

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VRIO framework against SWOT

SWOT

VRIO

Analyses strengths and weaknesses on the inside and opportunities and threats externally.

Focuses only on the internal capabilities that get to the competitive advantage.

Helps analyze future opportunities depending on the current position of the organization.

Helps you draw out the positive aspects of the organization that can be potential difference makers.

Focuses on both positive and negative sides of your business.

Focuses on values and rarities of your organization.

Simple and approachable analysis.

It is a bit extensive as it looks inside of the strengths and weaknesses of the organization.

Advantages and limitations of VRIO framework

Advantages: 

  • VRIO framework helps you figure out the unique value of your organization.
  • It also identifies internal strengths and advantages.
  • VRIO also boosts the ability of your organization to stay on top of the competition.
  • It allows you to know your organization from the inside. 

Limitations:

  • VRIO cannot predict the future of your values and uniqueness. 
  • Small businesses tend to struggle while figuring out the four main aspects of the VRIO framework.
  • As it focuses more on the internal aspects of the organization, it fails to identify the external side of the business.
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