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

Kaveri Textiles has a distinctive, hard-to-copy weaving technique and a unique design culture built over 30 years. Competitors cannot easily imitate or buy it, and it is valuable to customers. Under the VRIO framework, the firm's position is best described as a resource that is:

The resource is valuable, rare and costly to imitate, so under VRIO it can yield sustained competitive advantage provided the firm is organised to exploit it. Temporary advantage would apply only if rivals could imitate it, which the scenario rules out.

  1. AValuable but easily imitated, giving only competitive parity
  2. BValuable, rare and costly to imitate, giving sustained competitive advantage when the firm is organised to exploit itCorrect
  3. CRare but not valuable, giving a competitive disadvantage
  4. DValuable and rare only, giving temporary competitive advantage

Explanation

The resource is valuable to customers, rare, and cannot be easily imitated. If the organisation is also set up to capture its value, VRIO indicates sustained competitive advantage. Option D ignores the inimitability stated in the question.

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