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Vrio Analysis is an analytical and a brilliant technique to evaluate the company’s resources and capabilities that result in the competitive advantage.

History
This tool was originally developed by Barney, J B. (1991) in his work ‘Firm Resources and Sustained Competitive Advantage’, where the author identified four attributes that firm’s resources must possess in order to become a source of sustained competitive advantage
We have discussed about competitive advantage in earlier blogs, so have a look.

According to Wikipedia 
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?

Different levels of Competitive Advantage
Resources can be a source of competitive advantage, competitive parity and competitive disadvantage depending on whether it follows the VRIO criteria .The criteria are explained below

If the resource is not valuable it should be outsourced because it brings no value to us

If the resource is valuable but not rare the company is in competitive conformity. It means we are not worse than our competition,

If the resource is valuable and rare but it is not expensive to imitate it, we have a temporary competitive advantage. Other companies will try to imitate it in the near future, then we lost our competitiev advantage.

If the resource is valuable, rare and is expensive to imitate it but we are not able to organizate our company, the resource become expensive for us (unused incurred costs)


So to gain the maximum output of this business model your all four bases should be strong 
We are going to see case studies on various companies and institution which are working on this framework later 
So try to make your product as compitable to follow this framework and the success is yours

Learn and grow

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