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

Verdana Foods has a unique supplier network that competitors cannot easily replicate and which delivers high-quality produce. However, Verdana's own staff are not organised to exploit it and many of the supplier relationships lie unused. Applying Barney's VRIO framework, what does this situation indicate?

The network is valuable, rare and hard to imitate, but because Verdana is not organised to exploit it, the advantage remains unrealised potential. Under VRIO, sustained competitive advantage requires the organisation dimension as well.

  1. AThe resource is valuable, rare and costly to imitate but not organised to capture value, so only a potential and unexploited advantage existsCorrect
  2. BThe resource gives a sustained competitive advantage because it is rare and inimitable
  3. CThe resource is a threshold resource because every rival has similar networks
  4. DThe resource has no value because it is not being used

Explanation

VRIO requires the firm to be organised to exploit a valuable, rare and inimitable resource. Without the O, the advantage is unrealised, so only unused competitive potential exists. A sustained advantage would need the organisation to capture the value.

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