Skip to content

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

Oriel Retail's management is assessing its capabilities using Barney's VRIO framework. Its loyalty-data analytics capability is valuable and rare, and rivals cannot easily copy it, but the company has not organised its marketing and store teams to exploit it, so insights are rarely used. What does VRIO imply about this capability?

VRIO implies the advantage is only potential and unrealised. The capability passes the valuable, rare and costly-to-imitate tests, but fails the organisation test because teams are not structured to use the insights. Until Oriel fixes this, it will not capture sustained advantage.

  1. AIt gives a sustained competitive advantage because it is valuable, rare and inimitable
  2. BIt gives only a temporary advantage because it is not rare
  3. CIt is a threshold capability, so it cannot give any advantage
  4. DIts potential advantage is unrealised because the organisation is not set up to exploit itCorrect

Explanation

VRIO asks whether the firm is organised to capture value. The capability is valuable, rare and inimitable, but without the organisation to exploit it, the potential for advantage is not realised. Saying it is sustained advantage ignores the O test, and it is not non-rare.

Did you get it right without looking?

One question tells you little. A timed set on The internal resources, capabilities and competences of an organisation shows your real accuracy, how long you take and where you lose marks.

Practise The internal resources, capabilities and competences of an organisationFree diagnostic mock

More The internal resources, capabilities and competences of an organisation questions