VRIO Analysis Example

Sep 23, 2022

What is a VRIO Analysis?

VRIO stands for value, rarity, inimitability, and organization. It is a tool used to help organizations evaluate which of their unique strengths or capabilities meets the criteria to be a sustainable competitive advantage for long-term use.

What is important to know about the VRIO analysis is that it’s best used to evaluate your strengths for competitive advantages. There is conflicting information about how to use this analysis to identify your competitive advantage – other writers will encourage organizations to run every skill set, asset, and strength through this framework.

But, in the spirit of simplicity, we disagree. We think this is a more focused and thoughtful effort if you use strengths from your SWOT to feed this exercise. Anything more than that gets unfocused, confusing, and laborious.

How to use the VRIO Analysis

VRIO Chart

Value

The first piece of the VRIO analysis is Value. It is intended to ask if the strength you have identified provides clear value to your customer. Any strength isn’t an advantage if it’s not valued by your market!

Questions to consider:

  • Does the strength add value to customers?
  • Can you capitalize on it to grow your organization or beat your competitors?

Rarity

The second piece of the VRIO analysis is Rarity–this means that the strength is rare in your marketplace. It must not be shared among your competitors. Otherwise, it isn’t unique and isn’t an advantage!

Questions to consider:

  • Is this strength unique to your organization?
  • Do your competitors also possess this strength?

Inimitability

The third step in the VRIO analysis is to evaluate if a strength can be easily Imitated. A competitive advantage can’t easily be copied, so if the strength can be imitated by a competitor, it’s not a true long-term advantage. It’s just a short-term advantage.

Questions to consider:

  • Can this strength be easily copied by your competition? Would it take a significant effort to replicate this strength?
  • Would you consider this strength one of your competitive moats – meaning it would be hard for your competition to penetrate?

Organized

The final step in the VRIO analysis is to assess if an organization is Organized to capitalize on a strength to gain an edge in the marketplace. An advantage isn’t helpful unless it’s put to work!

Questions to consider:

  • How are you going to leverage this competitive advantage?
  • Are you going to use this to create your growth strategy?
  • Will you use this to start or drive your vision of the future?
  • How will you use this advantage in your organization’s strategic plan and annual objectives?

VRIO Analysis Example

Value

This strength adds value to your customers.

Rarity

The strength is rare, which means your competitors don’t also possess it.

Inimitability

Strength isn’t easily copied by competitors.

Organized

Is your team organized to take advantage of this competitive advantage?

Competitive Advantage?

Strength 1: We have value-added content that ranks on page 1 of organic search with high monthly search volume and good keyword difficulty. Yes Yes Yes Yes Yes
Strength 2: Reputation for high-quality work that exceeds client expectations. Yes No Table Stake
Strength 3: Strong employee training program for new employees creates quality teammates and great retention. No Internal Strength
Strength 4: Strong use of industry-leading production techniques makes it less expensive and faster for us to produce high-quality products for customers. Yes Yes No Short-Term Advantage

VRIO Analysis Example Evaluation

Strength 1: We have value-added content that ranks on page 1 of organic search with high monthly search volume and good keyword difficulty.

  • Value: Yes, this is valuable to the customer because our inbound strategy provides good content to them upfront and helps build a positive brand relationship from the beginning.
  • Rarity: Yes, this is rare in our marketplace. Our competitors do not have the rankings we do, and it is not something they use as a piece of their inbound marketing strategy.
  • Inimitability: This is a competitive search environment, so it would take a substantial effort and investment for our competitors to take this strength on.
  • Organized: We are organized to expand upon this advantage and hold a more significant piece of the market.

This is a competitive advantage!

Strength 2: Reputation for high-quality work that exceeds client expectations.

  • Value: Yes, customers value receiving high-quality work that exceeds their expectations.
  • Rarity: No, this is not rare in the market. Other vendors also produce high-quality work.

This is a market table stake – meaning it’s a required strength to be competitive in your space. Maintain the strength.

Strength 3: Strong employee training program for new employees creates quality teammates and great retention.

  • Value: No, customers don’t inherently value this strength.

This is an internal strength. It might help achieve your long-term vision through employee retention, but it is not core to your growth strategy right now.

Strength 4: Strong use of industry-leading production techniques makes it less expensive and faster for us to produce high-quality products for customers.

  • Value: Yes, this is valuable to the customers because they receive a quality product for less money.
  • Rarity: Yes, this is rare in our marketplace. It is not common in the market to use these practices to create these products.
  • Inimitability: No. With investment and research, other organizations could adopt some of these manufacturing techniques and processes to better serve the market.

This is a short-term advantage. Capitalize upon it while you can, but don’t expect this to be part of your organization’s core growth strategy forever.

Amazon VRIO Analysis Example

Value

Rarity

Inimitability

Organized

Competitive Advantage?

Strength 1: Network of supply chains, which includes warehouses, delivery drivers, and personnel that can deliver millions of different products to customers within two days. Yes Yes Yes Yes Yes
Strength 2: International network of affiliates and fulfillment networks that expand international market reach and product availability. Yes Yes Yes Yes Yes
Strength 3: Growing portfolio of private label lines that provide cost-effective products to customers. Yes No Table Stake
Strength 4: Growing library of high-quality programming for Amazon TV and streaming services. Yes No Table Stake

Amazon VRIO Analysis Example – Evaluation

Strength 1: Network of supply chain, which includes warehouses, delivery drivers, and personnel that can deliver millions of different products to customers within two days.

  • Value: Yes. The customer values receiving their products as fast as possible. It’s part of Amazon’s Prime brand promise.
  • Rarity: Yes. The availability of products delivered to doors is rare in this market, even as competitors stand up delivery services.
  • Inimitability: Yes. Competitors face substantial barriers to delivering the selection of products to match the speed and cost of Amazon.
  • Organized: Yes. Amazon is poised to capitalize on this competitive advantage.

This is a competitive advantage.

Strength 2: International network of affiliates and fulfillment networks that expand international market reach and product availability.

  • Value: Yes. Customers value having a wide selection of products available across the globe.
  • Rarity: Yes. Other retailers do not have the affiliate fulfillment capabilities that Amazon has.
  • Inimitability: Yes. It would take substantial investment and time for a competitor to stand up a similar network.
  • Organized: Yes. Amazon is organized to use this competitive advantage to serve customers.

This is a competitive advantage.

Strength 3: A growing portfolio of private label lines that provide cost-effective products to customers.

  • Value: Yes. Customers like having quality private-label products that are more cost-effective.
  • Rarity: No. Many competitors also have private label products.

This is a table stake.

Strength 4: Growing library of high-quality programming for Amazon TV and streaming services.

  • Value: Yes. Consumers value having access to quality programming.
  • Rarity: No. Many competitors also produce high-quality content in this space.

This is a table stake.

Tesla VRIO Analysis Example

Value

Rarity

Inimitability

Organized

Competitive Advantage?

Strength 1: We produce innovative products that lead the market in the EV space. Yes Yes Yes Yes Yes
Strength 2: Telsa’s network of charging stations leads the industry and makes it easy to find reliable charging for Tesla customers. Yes Yes Yes Yes Yes
Strength 3: Direct sales method takes the middleman of the purchase experience and avoids unnecessary product markups for the end consumer. Yes No Table Stake
Strength 4: Leading-edge manufacturing process that uses robotics and automation to build EVs. No Not Valuable to the Consumer

Strength 1: We produce innovative products that lead the market in the EV space.

  • Value: Yes. Consumers value Telsa’s product innovation and it is a key purchasing driver.
  • Rarity: Yes. Tesla is consistently leading the pack in the EV innovation space, including EV range, technology, self-driving automation, design, and performance.
  • Inimitability: Yes. Other organizations attempt to duplicate Tesla’s innovation, but Tesla is still leading the pack.
  • Organized: Yes. Telsa is organized to use this as a core competitive advantage.

This is a competitive advantage.

Strength 2: Telsa’s network of charging stations leads the industry and makes it easy to find reliable charging for Tesla EVs.

  • Value: Yes. Consumers consistently state that Tesla’s network of superchargers is a critical driver in product purchases.
  • Rarity: Yes. Other EV manufacturers are not investing in their charging infrastructure and are instead relying on 3rd party charging networks.
  • Inimitability: Yes. It would take substantial infrastructure investment for another Automaker to invest in a new charging network.
  • Organized: Yes. Telsa is organized to capitalize on this competitive advantage.

This is a competitive advantage.

Strength 3: Direct sales method takes the middleman out of the purchase experience and avoids unnecessary product markups for the end consumer.

  • Value: Yes. Consumers value not having to use the standard car dealership experience to purchase EVs.
  • Rarity: No. This is still rare in the automotive world.

This is a table stake.

Strength 4: Leading-edge manufacturing process that uses robotics and automation to build EVs.

  • Value: No. Consumers to not value automation in the manufacturing process.

This is not a competitive advantage because consumers do not value it.

Netflix VRIO Analysis Example

Value

Rarity

Inimitability

Organized

Competitive Advantage?

Strength 1: We produce high-value, award-winning content that is loved by consumers. Yes No Table Stake
Strength 2: We have a market presence and platform availability that is unmatched in the streaming services space. Yes Yes Yes Yes Yes
Strength 3: Our data structure, technology infrastructure, and streaming algorithm deliver faster connection times and uninterrupted streaming with lower speed requirements on the consumer. Yes Yes No Short-Term Advantage
Strength 4: We have one of the best corporate cultures that helps us attract and retain the best talent. No Not Valuable to the Consumer

Strength 1: We produce high-value, award-winning content that consumers love.

  • Value: Yes. Consumers value Netflix for its award-winning content.
  • Rarity: No. Other streaming services also produce high-value content.

This is a table stake.

Strength 2: We have a market presence and platform availability that is unmatched in the streaming services space.

  • Value: Yes. Consumers value having a platform that is widely and easily available.
  • Rarity: Yes. Other streaming services do not have as much access and integration into other devices as Netflix.
  • Inimitability: Yes. It will take significant investment for other streaming services to have the network of access Netflix processes.
  • Organized: Yes. Netflix is organized to use this advantage.

This is a competitive advantage.

Strength 3: Our data structure, technology infrastructure, and streaming algorithm deliver faster connection times and uninterrupted streaming with lower speed requirements for the consumer.

  • Value: Yes. Consumers value a consistent platform that uses less data to load.
  • Rarity: Yes. It is rare for a streaming platform to use as little data for streaming as Netflix uses.
  • Inimitability: No. This will be imitated by other platforms.

This is a short-term advantage.

Strength 4: We have one of the best corporate cultures that help us attract and retain the best talent.

  • Value: No. Consumers do not value Netflix’s company culture.

This cannot be an advantage because consumers to not value it.

Starbucks VRIO Analysis Example

Value

Rarity

Inimitability

Organized

Competitive Advantage?

Strength 1: We have a globally recognized brand that is known for producing high-quality products consistently in nearly every geography. Yes Yes Yes Yes Yes
Strength 2: We have a consistent global supply chain that is resistant to changes in market dynamics. Yes Yes Yes Yes Yes
Strength 3: We have extremely brand loyal customers who are champions for our brand. Yes No Table Stake
Strength 4: We have great employee retention in our space. No Not Valuable to the Consumer

Strength 1: We have a globally recognized brand that is known for producing high-quality products consistently in every local.

  • Value: Yes. Customers value Starbucks’ brand recognition and know they can access their favorite products with consistency worldwide.
  • Rarity: Yes. Other coffee brands do not have this type of brand recognition worldwide.
  • Inimitability: Yes. It will take significant investment for a competitor to achieve Starbucks’ brand recognition.
  • Organized: Yes. Starbucks is organized to use this advantage.

This is a competitive advantage.

Strength 2: We have a consistent global supply chain that is resistant to changes in market dynamics.

  • Value: Yes. Customers value being able to purchase products from store-to-store and geography-to-geography consistently and without interruption.
  • Rarity: Yes. Other coffee brands do not have this type of supply chain.
  • Inimitability: Yes. Other retailers will have a difficult time replicating Starbucks’ supply chain and relationships.
  • Organized: Yes. Starbucks is organized to use this advantage.

This is a competitive advantage.

Strength 3: have extremely brand loyal customers who are champions of our brand.

  • Value: Yes. Having brand loyal customers in the marketplace is valued to consumers because it helps instill brand confidence and recognition in the space – an important trait in any global brand.
  • Rarity: No. There are other coffee retailers that have brand loyal customers.

Not a competitive advantage.

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