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

Sundaram Textiles, a Coimbatore firm, has a skilled workforce and a well-known brand, but competitors can easily copy its weaving process and buy identical looms. Using the VRIO framework, a resource that is valuable and rare but easily imitated would be best described as giving the firm:

A resource that is valuable and rare but easily imitated gives only a temporary competitive advantage under VRIO. Rivals can copy it quickly, so the benefit erodes. Sustained advantage requires the resource to be costly to imitate and properly exploited by the organisation.

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

Explanation

In VRIO, a resource that is valuable and rare but not costly to imitate gives only a temporary competitive advantage. Sustained advantage needs the resource to be inimitable and also exploited by the organisation. Parity applies when a resource is valuable but not rare.

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