CA Intermediate · Financial Management and Strategic Management · Strategic Analysis: Internal Environment
Vihaan Pharma lists the following about its drug-delivery know-how: rivals can buy similar equipment easily; several competitors already hold equivalent skills; the firm is well organised to use it. Using VRIO, which conclusion best fits if the resource is valuable but NOT rare?
The conclusion is competitive parity. A resource that is valuable but not rare is available to several rivals, so it helps the firm survive and match competitors but cannot create an advantage. Rarity is the second VRIO test, and failing it stops the analysis there.
- ASustained competitive advantage because it is organised
- BTemporary competitive advantage because it is valuable
- CCompetitive parity because it is valuable but not rareCorrect
- DCompetitive disadvantage because it is not inimitable
Explanation
A resource that is valuable but not rare lets the firm only match rivals, giving competitive parity. Being organised does not create advantage if the resource fails the rarity test. Competitive disadvantage arises only when the resource is not even valuable. Temporary advantage requires rarity but not inimitability.
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