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

Tarini Foods, a Pune-based snack maker, owns a patented low-oil frying process that rivals cannot copy, and it has used it to cut costs and win loyal customers for many years. In the VRIO framework, which feature of this process shows that the firm can sustain its advantage over competitors?

The patent makes the process costly to imitate, which is what sustains the advantage. Being valuable and rare gives only a temporary edge, since rivals could copy an unprotected process. Legal protection prevents imitation, so the advantage lasts over time under the VRIO framework.

  1. AIt is valuable because it lowers costs
  2. BIt is rare because few firms own it
  3. CIt is costly to imitate because the patent blocks copyingCorrect
  4. DIt is exploited by the organisation through its operations

Explanation

In VRIO, sustained competitive advantage comes from a resource being costly to imitate. The patent stops rivals from copying the process. Value and rarity alone give only a temporary advantage, because competitors could replicate a resource that is not protected.

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