Understanding VRIO as the Most Effective Sales Strategy

VRIO analysis, developed by Jay B. Barney, is a competitive tool

essential to identify and evaluate the resources of an organization.

Whether financial, human, material, non-material, or organizational

capabilities, all resources are put to thorough analysis in the process

 of strategic planning and management. This in turn helps to take

impactful business decisions while boosting sales and expansion.

 To put in simpler words, the VRIO analysis is a tool that displays a

 transformation of company’s competitive advantage to sustained

competitive advantage.

Understanding VIRO as the Most Effective Sales Strategy

                                                                                                                      

Dimensions of VRIO Analysis

There are 4 parameters of evaluation in the VRIO analysis:

·         ‘V’ for Value

·         ‘R’ for ‘Rarity’

·         ‘I’ for ‘Imitability’

·         ‘O’ for ‘Organization’

‘V’ for ‘Value’ is the first parameter to analyze and evaluate

 the value of the resources to judge how beneficial the resources

are to the company. For example, if a firm makes use of human

capital management data to recruit skilled, knowledgeable, and

 innovative employees who come up with new inventions everyday

add an extra dimension to the company’s competitive advantage.

However, if these employees do not add any value to the company,

the firm goes in the mist of competitive disadvantage. In this scenario,

 the firm needs to reassess the acquisition and management of its human

resources.

 ‘R’ for ‘Rarity’ is the second parameter to analyze and evaluate the

rareness of the resources to ensure a strong and sustained competition

in the market while competitors try to find a substitute to overpower you.

If a firm puts forth its valuable resource to function without letting anyone

exploit the resources ensures then the firm enjoys rarity of its resources.

‘I’ for ‘Imitability’ is the third parameter to analyze the Imitability of the

resources to ensure sustained competitive advantage of the resources. This

 means that the resources are either too expensive or tricky to imitate or

duplicate by competitors. The resources that are time-consuming like software

and technologies that need investment of time for training and funds for

implementing are also not easily obtainable.  

‘O’ for ‘Organization’ is the fourth and last parameter to analyze the value

of an organization. It is important for any firm to have an organized structure

 and follow a streamlined approach to strategic planning and management

with an assurance of long-terms profits and high-end competition in the market.

Benefits of VRIO Analysis

Here are some of the key benefits of VRIO analysis:

• ·         Helps business take thoughtful decisions
• ·         Helps improve sales after thorough analysis of business situations
• ·         Makes it easy to formulate and execute sales strategy
• ·         Helps assess the potential for business improvements
• ·         Helps evaluate the competitive implications of business resources