Global Strategy and Leadership · Module 3: Understanding the internal environment
Four Resources, One Advantage
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Chapters
- 0:00Hook
- 0:15Four questions
- 0:29Resources
- 1:05The vineyard
- 1:29Recap
In short
Barney's VRIO framework asks whether a resource is valuable, rare, costly to imitate, and supported by an organization that can exploit it. Valuable but common resources give competitive parity, rare but easily copied ones give a temporary advantage, and only resources that pass all four give a sustained competitive advantage.
- Valuable but not rare: competitive parity.
- Rare but soon imitated: temporary advantage.
- All four, organized to use it: sustained competitive advantage.
Transcript
0:00Hook
Any winery can buy good equipment. So what gives one a lasting edge? Jarrah Ridge Wines puts four resources through four questions.
0:15Four questions
V: is it valuable? Does it help meet customer needs? R: is it rare? I: is it costly to imitate? O: is the organization set up to make use of it?
0:29Resources
Resource one: the same ERP system most wineries its size use. Valuable, but not rare. That buys competitive parity, nothing more. Resource two: a fast bottling line, sold to any winery that asks. Also not rare. Parity again. Resource three: a patent on a bottle closure that customers prefer. Rare, for now. But it expires in eight months, and copies are coming. Soon easy to imitate: a temporary advantage.
1:05The vineyard
Pause. Ninety-year-old vines, on soil found nowhere else nearby. A lasting edge? Yes. Valuable, rare, and almost impossible to copy. The team, brand and distribution are built around it. That's the O. Four yeses: a sustained competitive advantage.
1:29Recap
Valuable, rare, hard to copy, organized. Miss one, lose the edge. Next: eight stages at Bilby Telecom. Subscribe so you catch it.
Try a question on this lesson
From the EstatePass Global Strategy and Leadership bank. Answer it, then read the explanation.
Jarrah Ridge Wines Pty Ltd reviews four resources using the VRIO framework. All four help it meet customer needs. - An enterprise resource planning system, the same package used by most wineries of its size. - A high-speed bottling line bought last year from a supplier that sells the same line to any winery. - A patent on a bottle closure that customers prefer; the patent expires in eight months and two competitors have announced copies. - A vineyard of 90-year-old vines on a soil type found nowhere else in the region; the winemaking team, the brand and the distribution network are built around it. Which resource can support a sustained competitive advantage?
Sources
- Barney (1991), Firm resources and sustained competitive advantage
- Barney (1995), Looking inside for competitive advantage
- CPA question bank: cpa-gsl-0217, 0219
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