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ACCA Strategic Professional · Strategic Business Leader · The internal resources, capabilities and competences of an organisation

Corvane Pharma has a patented drug formulation process, a skilled research team and strong brand recognition. A consultant says that, to be a source of sustainable competitive advantage, a resource must be valuable, rare, costly to imitate and exploited by the organisation. Which model is the consultant applying?

The consultant is applying Barney's VRIO framework, which tests whether a resource is valuable, rare, costly to imitate and exploited by the organisation. Resources passing all tests can support sustainable competitive advantage. The value chain and BCG matrix serve different purposes.

  1. APorter's value chain
  2. BBarney's VRIO frameworkCorrect
  3. CJohnson, Scholes and Whittington's strategic capabilities threshold model only
  4. DThe BCG growth-share matrix

Explanation

VRIO assesses whether resources are Valuable, Rare, costly to Imitate and supported by the Organisation to exploit them. The value chain analyses activities, the threshold model distinguishes basic from distinctive capabilities without these four tests, and the BCG matrix analyses a product portfolio.

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