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CA Intermediate · Financial Management and Strategic Management · Strategic Analysis: Internal Environment

A Pune-based software firm, 'Nirmaan Tech', assesses its internal environment. It finds that its dedicated data centre, trained workforce and brand name are all available to rivals on the market at comparable cost, though each helps it serve customers. Under VRIO analysis, these resources are best classed as giving:

Competitive parity. The resources are valuable because they help serve customers, but rivals can obtain them at similar cost, so they are not rare. Valuable-but-not-rare resources only let the firm match competitors rather than outperform them.

  1. ASustained competitive advantage
  2. BTemporary competitive advantage
  3. CCompetitive disadvantage
  4. DCompetitive parityCorrect

Explanation

The resources are valuable, but because rivals can obtain them equally, they are not rare. Resources that are valuable but not rare lead to competitive parity. Temporary advantage requires rarity but easy imitation, which does not apply, since the resources are common.

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