Resource, “productive input or competitive asset, tangible or intangible, that is

owned or controlled by the organization.” (Thompson, et al., 2017). There is a need for a
business to determine its resources in order to run the business efficiently and successfully
as it builds a valuable view to the customer. Therefore, the VRIO framework invented by Jay
B Barney in 1991 plays a significant role to help the company decide which elements that
can give the business a long-term competitive advantage in order to have market
preference compared with other competitors. This essay will analyse the VRIO framework
and use Starbucks as a real-life example to interpret how the VRIO framework operates.

Resources Based View (RBV) helps the company to understand how resources can
help it to achieve continuous competitive advantage (Madhani, 2010). Resources that are
efficient for the business will help the business in developing and maintaining its advantage
in the market. Hence, the VRIO framework is used to help the company to analyse its
resources. The initials VRIO stands for Valuable, Rare, Inimitable and the value able to be
captured by the Organization. This analysis requires companies to take a resource from the
company and analyse it through four different dimensions. For instance, whether the
resources Value to a company, Rare, easy to Imitate and be able to capture by the company.
The company must understand what resources are needed in order to make full use of the
current resources (Koehler, 2019). Hence, the company should be able to analyse its
resources under the VRIO framework to determine whether the current resources can
create strong differentiation and strong value in the market, in order to add more
advantages over the competitors.
 Starbucks, a global brand that is very well known around the world has fully utilized
the VRIO framework to determine its resources. The reason why Starbucks can become a
successful global brand compared to others is that they managed to determine their value,
rare, inimitable and organized resources: brand recognition and customer loyalty
(Geereddy, n.d.). The brand is the most valuable resource as it helps grow the customer
group and marketing, indirectly building up customer loyalty to the brand. Furthermore, this
brand recognition and customer loyalty are rare and hard to be imitated as it takes a long
time to build up recognition and update their experience to customers which other
companies cannot do in the short-term time. Besides, Starbucks has an intelligent
management structure and good company culture, which let Starbucks manage to become
the largest coffee company in the world. In 2020, Starbucks was recognized as the largest
coffee company in the world with a revenue of $26.5 billion, 32000 stores in 80 countries,
and over 75 million customers visiting Starbucks each month in the US (Bobak, n.d.). From
these statistics, it is shown that customer loyalty to Starbucks is very significant and creates
extraordinary brand recognition that another brand cannot easily imitate it.

By looking at the example from Starbucks, the VRIO framework shows its usefulness
in business and to the stakeholders. It will ask the company four questions about its
resources, providing a structured way to analyze the company and indirectly determine its
competitive advantages in the market. According to Barney (2001), “such valuable resources
and capabilities are a firm’s strengths”. By evaluating the resources using the VRIO
framework, the company can identify which resources they can invest in to bring value to
the company and let the company compete efficiently in the market. However, the VRIO
framework has its limitation. For example, the VRIO analysis is used for internal analysis and
short-term capabilities only, it cannot account for long-term time and external factors which
are opportunities and threats. External factors such as the prediction of threats help to
simplify building a strategy which more efficient to achieve goals and operate the business
in good condition (Fisunenko and Lazhe, 2016 cited in Shatilo, 2019). Therefore, the VRIO
framework may not be efficient in certain circumstances as it has not included these
important outer factors.
 In conclusion, resources are the key point to determining a company’s strategies.
The use of the VRIO framework allows a company to analyse its resources and focus on
investing in valuable resources. There are a few advantages and limitations to consider,
however, the VRIO analysis provides a clear explanation and strategy to let the company
manage its resources, in order to understand its potential and position in the market. The
VRIO analysis can be more effective by collecting the shareholders’ perspectives as the
company also need to know what its customers needed.

References
Barney, J. B. & Hesterly, W. S., 2008. Strategic Management and Competitive Advantage.
2nd ed. New Jersey: Pearson.
Bobak, J., n.d.. 10 Biggest Coffee Companies In The World. [Online]
Available at: https://www.homegrounds.co/biggest-coffee-companies/
Geereddy, N., n.d.. Strategic Analysis of Starbucks Corporation, s.l.: s.n.
Koehler, J., 2019. University of Arkanas Grantham. [Online]
Available at: https://www.uagrantham.edu/blog/a-guide-to-organizational-resources-and-
how-to-manage-them/#:~:text=What%20Is%20a%20Resource%3F,space%2C%20equipment
%2C%20or%20capital
Madhani, P. M., 2010. Resource Based View (RBV) of Competitive Advantage: An Overview,
s.l.: s.n.
Shatilo, O., 2019. The Impact of External and Internal Factors. 98(2), pp. 85-96.
Thompson, A. et al., 2017. Crafting and Executing Strategy. 2nd ed. s.l.:McGraw-Hill
Education.