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CMA Intermediate · Operations Management and Strategic Management · Strategic Analysis and Strategic Planning

Rohan Engineering has a resource that is valuable, rare, costly to imitate and exploited by the organisation through its systems. Under the resource-based view (VRIO framework), what is the expected competitive outcome from this resource?

The outcome is sustained competitive advantage. A resource that is valuable, rare, costly to imitate and supported by the organisation satisfies all four VRIO tests, so rivals cannot easily copy the benefit. Fewer conditions would give only parity or a temporary advantage.

  1. ACompetitive parity only
  2. BTemporary competitive advantage
  3. CSustained competitive advantageCorrect
  4. DCompetitive disadvantage

Explanation

VRIO asks if a resource is Valuable, Rare, costly to Imitate and Organised to capture value. When all four are met, the resource gives sustained competitive advantage. Parity arises if it is only valuable; temporary advantage if valuable and rare but easily imitated.

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