VRIO Analysis

VRIO Analysis is an internal corporate investigation method used to

identify and evaluate resources, with the goal of increasing competitive
advantage. VRIO is an acronym for four criteria that are important for a
company to consider: Value, Rarity, Imitability, and Organization
(manuever).

VRIO analysis adalah alat untuk menginvestigasi, identifikasi dan

mengevaluasi sumber daya (alam dan fisik) - tangibles (sumber daya
terlihat ex; fasilitas, Gedung, alat dll, intangibles, kapabilitas organisasi.

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Tangible Assets - asset yang terlihat
• Land (tanah)
• Vehicles (kendaraan)
• Equipment (perlengkapan kantor/perusahaan)
• Machinery (mesin2)
• Furniture (furniture)
• Inventory (inventaris)
• Securities like stocks, bonds, and cash. (saham berbentuk kertas dan uang cash)
• Intangible assets are long-term assets, meaning you will use them at your company
for more than one year. Examples of intangible assets include goodwill, brand
recognition, copyrights, patents, trademarks, trade names, and customer
lists. -

• Asset jangka Panjang, tidak terlihat secara fisik,

bermakna dapat digunakan perusahaan lebih dari 1
tahun. Example : Hak cipta, hak paten, merek dagang
dll.
Benefits of VRIO Analysis

• Discover unrecognized competitive advantages with a VRIO framework analysis. These

tools focus on the internal resources of a firm that are essential to maintain the competitive
edge in the long run. It also helps the leadership discover resources they already possess that
might give them a huge advantage.
• Setting future plans with a VRIO analysis makes it easier to develop strategies that will
help the company sustain its competitive advantage in the future. VRIO tells the firm about
each element of its business, making it possible to predict the state of the industry in the
future and make plans and prepare for anything.
• Evaluate threats to your business with a VRIO analysis and discover potential
opportunities that you can avail with proper strategies. A VRIO model represents all the
tangible and intangible items of the firm, from valuable to rare resources giving a deeper
insight into the potential threats the firm might face if it keeps moving on the same track. It
helps the leadership solve those threats with planning.

• Analyze your competitors the competitive advantage your company sustains in the
marketplace depends on the performance of your competitors. With a VRIO analysis, you
can not only analyze your firm, but you can also do it for your competitors. It helps you
better understand your competitors, and if you can't beat them, you can make plans that will
help you in the long run.
VRIO Framework

 Barney and Hesterly (2006) designed the VRIO framework to be a suitable instrument for
assessing a firm’s internal environment ( core and distinctive competencies = Strengths)
.
 VRIO is an acronym for Value, Rarity, Imitability, and Organization.

 Each of these keywords stands for a specific set of questions, which must be raised and
answered in order to successfully determine a company’s competitive internal
environment.
 1- The Company Internal Analysis
VRIO Framework
• Value
• Is the resource/capability of value?
• Defined by making a SWOT analysis
• Rarity
• Is the resource rare (jarang)or scarce (langka)?
• Imitability
• How easy is it to imitate? (apakah mudah diimitasi?)
• Organisation
• Procedures, culture, rules, etcetera, within a company
• Steps to Create a VRIO Analysis
• The VRIO framework is an analysis tool for a company's internal resources, used by its
management to decide which resource hold the traits outlined by VRIO. You can do a VRIO
analysis by determining company resources, organizing your firm, protecting your
resources, and analyzing your competitors. Follow these steps to do a VRIO analysis.
• STEP 1: The first step is to identify your internal resources' value, rarity, and imitability.
Conduct detailed analysis to determine your tangible and intangible resources. Tangible
resources are physical, and companies can buy them, but intangible resources are hard to
gain. Start with intangible resources because they are more important.
• STEP 2: The next step is to determine whether your company's organizational structure can
use these resources to avail of potential opportunities. It would help if you had an effective
strategic management plan for this step.
• STEP 3: Protect the resources that help you sustain a competitive advantage for the long
term. Once you determine you have the resources and your company is organized to process
those resources, make sure to protect them from imitability with everything you got.
• STEP 4: After your resources are safe and your firm uses them to sustain its advantage, the
1- The Company Internal Analysis
Practice : VRIO- example Apple

Over the past 5 years, apple shares rose by 255%

more than doubling the Nasdaq's return.
This growth has been attributed the popularity of
Apple Brand mostly for its star product: iPhone and
iPad
1- The Company Internal Analysis
Practice : VRIO- example Apple
Apple’s VRIO ability on the closed ecosystem and brand appeal
Valuable? (YES)
This means that Apple products are mostly valuable due to their specific software and the high level
of brand loyalty – and awareness

Rare? (YES)

As only Apple can legally use their software (iOS), this software is considered - a rarity. At the same time, the
software is seen as one of Apple’s USPs (Unique Selling Prepositions).

Costly to imitate? (YES)

Apple’s closed ecosystem and brand appeal are seen as its sustainable competitive advantages. In contrast to
many other devices from their main competitors, like Samsung, HTC, LG, whose devices all run on Android
(Google), Apple devices use iOS. Apple’s brand name, hardware and soft- ware are hard to imitate; this is
essentially due to Apple having protected their software (iOS) with several patents.

Organization: Can the company exploit it well?

(YES)
Is Apple organized to capture value from this competence? Very much so: Apple has trained managers
and dedicated high skilled employees, who are proud to be part of one of the most renowned
companies in the world. Therefore, they are more motivated and willing to work continuously on the
innovation of products.
1- The Company Internal Analysis
Practice : VRIO- example Apple
Over the past 5 years, apple shares rose by 255% more than doubling
the Nasdaq's return. This growth has been attributed the popularity of
apple brand mostly for its star product: iPhone and iPad.

Apple’s VRIO ability on the closed Ecosystem and Brand appeal

Valuable? Rare? Costly to imitate? Can the company
exploit it well?

Yes Yes Yes Yes

Result : Sustained competitive

advantage
Contoh analisis VRIO
• Strong Global Presence

• Valuable: Having a strong global presence is an important asset for a company trying
to increase their size, sales, and market share. It is a great way to gain more revenues
from new and existing consumers.

• Rare: Starbucks is the biggest coffee corporation globally. Although there are other
global coffee chains, Starbucks is the most recognizable.

• Inimitable and Non-substitutable: In the short term, no competitors of Starbucks

could gain such a large global presence. It would take significant time and resources to
accomplish this.

• Organized to Exploit: Starbucks is successfully taking advantage of this capability. As

quoted on their website: "With more than 5,500 coffeehouses in over 50 countries, it's
clear that our passion for great coffee, genuine service and community
connection transcends language and culture."
• Impact on Competitive Advantage: Realized Sustainable Competitive Advantage
• Specialty Coffees
•
• Valuable: Starbucks offers many unique and satisfying coffee beverages that other competitors do not offer on
a regular basis. Starbucks also includes calorie information for these specialty coffees on their menus in order to
appeal to a variety of customers.

• Rare: While Dunkin' Donuts only offers specialty coffee drinks around the holidays, many local coffee shops
offer these types of specialty drinks year round. This mean specialty drinks are not limited to Starbucks.

• Inimitable and Non-Substitutable: Considering other coffee shops are already utilizing this capability, it
therefore can be imitated.

• Organized to Exploit: By offering a variety of options and continually changing their menu, Starbucks is taking
advantage of this capability. With a lot of options, most people can find something they like and people who like to
try new drinks frequently can easily do so at Starbucks.

• Impact on Competitive Advantage: Realized Competitive Parity

•
Upscale and Cozy Atmosphere

• Valuable: The atmosphere at many Starbucks locations allows customers to drink a cup of coffee and feel relaxed with
or without company. As stated on the Starbucks website, "We believe a coffeehouse should be a welcoming, inviting and
familiar place for people to connect, so we design our stores to reflect the unique character of the neighborhoods they
serve."
• Rare: Starbucks is the only large coffee shop with an upscale, sophisticated ambiance. Most other coffee shops do not
have the atmosphere to encourage customers to bring their computer and relax for a while.

• Inimitable and Non-Substitutable: It would be relatively easy for other coffee shops to renovate their stores and copy
the business model of Starbucks. Therefore, the upscale and cozy atmosphere at Starbucks could be imitated.

• Organized to Exploit: Starbucks is efficiently utilizing this capability and creating the atmosphere that many customers
thoroughly enjoy. The company is taking advantage of the trendy lifestyle that is currently present in many American cities.

• Impact on Competitive Advantage: Realized Temporary Competitive Advantage

Dunkin Donut
• Coffee for the "Average American"

• Valuable: Dunkin' Donuts focuses on products and prices that are appealing to the
"Average American". By selling common coffee and breakfast items that are priced
affordably, Dunkin' Donuts is able to attract a large market share.

• Rare: Many coffee companies focus on top-quality products, but this also results in
higher prices. Dunkin' Donuts' niche in the market is rare because they are trying to appeal
to a lower income demographic that is sometimes ignored in the coffee industry.

• Inimitable and Non-Substitutable: Any coffee shop could choose to start selling
cheaper, more basic products and this transition could also be done relatively quickly.
Therefore, this capability could be imitated.

• Organized to Exploit: Dunkin' Donuts is successfully taking advantage of this capability

by offering low prices and a large variety of products.
• Convenient Drive-thru Services

•
Valuable: Many Americans are very busy and appreciate anything that improves the efficiency and
convenience in their daily lives. Offering a drive-thru service is very valuable for Dunkin' Donuts because it
helps them appeal to customers who prefer to stay in their cars and get their items as quickly as possible.

• Rare: Many coffee shops are located in cities or other locations where they could not have a drive-thru.
Also, most high-end coffee shops do not offer drive-thrus because it would take away from the upscale
ambiance they are trying to achieve. By offering drive-thru services, Dunkin' Donuts is provided a rare
service to customers.

• Inimitable and Non-Substitutable: In order for other coffee shops to start providing drive-thrus, they
would need to more many of their locations and rebuild aspects of others. This would not be realistic on a
short-term basis, meaning that this capability is inimitable.

• Organized to Exploit: Dunkin' Donuts offers drive-thru services at the majority of their locations.
Therefore, the company is successfully exploiting this capability and gaining the share of the market that
prefers convenience.
Impact on Competitive Advantage: Realized Sustainable Competitive Advantage
• Very Strong Presence in the Eastern U.S.

• Valuable: Having a very strong presence in one area allows customers to become very familiar with the
company and the products it offers. When there are many locations around, they have more opportunities to
go there. In the eastern U.S. there are Dunkin' Donuts everywhere, which is very valuable as it helps the
company to gain market share.

• Rare: Dunkin' Donuts' strong presence in the eastern U.S. is also rare because many smaller coffee
chains do not have such an established presence. Most coffee chains have far fewer locations and do not
compare to the share size and abundance of Dunkin' Donuts in the eastern U.S.

• Inimitable and Non-Substitutable: Other coffee chains could expand their companies or move locations
to build a stronger presence in the eastern U.S. Therefore, this capability could be imitated.

• Organized to Exploit: Since Dunkin' Donuts has a very strong presence in the eastern U.S. and they
continue to expand, they are successfully exploiting this capability.
Impact on Competitive Advantage: Realized Temporary Competitive Advantage
 VRIO Analysis Template

Organization
Value Rarity Imitability
Features / Resources (are we organized around RECOMMENDATIONS
(is it valuable?) (is it rare?) (is it hard to imitate?)
it?)

• Yes • • • •
Merek KFC yang ada
di dlm dan luar negeri

• • • • •
Teknologi pesan
online by aplikasi

• • • • •
Drive thru service

• • • • •
Feature 4

• • • • •
Feature 5

• • • • •
Feature 6

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