https://managementmania.

com/en/vrio-analysis

VRIO Analysis is an analytical technique briliant for the evaluation of company’s resources and thus

the competitive advantage. VRIO is an acronym from the initials of the names of the evaluation
dimensions: Value, Rareness, Imitability, Organization.
The VRIO Analysis was developed by Jay B. Barney as a way of evaluating the resources of an
organization (company’s micro-environment) which are as follows:

 Financial resources
 Human resources
 Material resources
 Non-material resources (information, knowledge)

What is the VRIO good for?

Is perfect for evaluation of the company’s resources. One you know your resources you can better
understand your competitive advantages or weaknesses. The VRIO considers for each type of
the resource the following questions (called evaluation dimension) both for your company and for
your competitors. The dimensions of VRIO are:

 Value - How expensive is the resource and how easy is it to obtain on the market (purchase,
lease, rent..)?
 Rareness - How rare or limited is the resource?
 Imitability - How difficult is it to imitate the resource?
 Organization, respectively arrangement - Is the resource supported by any existing
arrangements and can the organisation use it properly?

How to make the VRIO Analysis?

VRIO analysis is a complement to a PESTLE analysis (which assesses macro-environment). VRIO is
used to assess the situation inside the organization (enterprise) - its resources, their competitive
implication and possible potential for improvement in the given area or for a given resource. Such an
assessment is then used for example in the strategic management of development in various areas
or for decision making about the advantage of an external or internal process and the securing
service (e.g. outsourcing decision).

 If the resource is not valuable it should be outsourced because it brings no value to us

 If the resource is valuable but not rare the company is in competitive conformity. It means we
are not worse than our competition,
 If the resource is valuable and rare but it is not expensive to imitate it, we have a temporary
competitive advantage. Other companies will try to imitate it in the near future, then we lost
our competitiev advantage.
 If the resource is valuable, rare and is expensive to imitate it but we are not able
to organizate our company, the resource become expensive for us (unused incurred costs)
 if we can manage the advantacea and we are able to organize our company and temporary
competitive advantage, it becomes as permanent competitive advantage
In practice, the VRIO analysis is also used in combination with other analytical techniques to help
organizational management evaluate business resources in a more detailed view. For financial
resources, there are many detailed financial indicators that evaluate the financial condition or
performance of the business from different perspectives. Likewise, human resources, property or
information are other detailed indicators of their performance, efficiency or quality. The advantage of
a VRIO analysis is its simplicity and clarity.

Example of VRIO analysis from Starbucks

https://managementmania.com/en/swot-analysis

SWOT Analysis
What is SWOT Analysis

SWOT Analysis is an universal analytical technique focused on the

evaluation of internal and external factors affecting the success of the
organization or any other evaluated system. Naturally and most
commonly, the SWOT analysis is used in the strategic management of
the organization in evaluating a strategic intention.
READ MORE

VRIO Analysis
SPACE Analysis

Strategic Management

SWOT Analysis is an universal analytical technique focusing on the evaluation of internal and external

factors affecting the success of a organization or any other evaluated system. Most often, SWOT
analysis is used in the strategic management of an organization in the evaluation of a strategic
intention. The author of SWOT analysis is Albert Humphrey, who designed it in the sixties of the 20th
century.
Internal and external factors within the SWOT analysis are evaluated. Internal factors include the
Strengths and Weaknesses of the organization/system. External factors include Opportunities
and Threats which are related to the surroundings of the organization/system. SWOT is an acronym
formed by the first letters of the designations of the individual factors.

The essence of the analysis is to identify key strengths and weaknesses of the organization

and key opportunities and threats stemming from the external environment. To analyze the external
environment of the organization (OT), the PESTLE Analysis can be used. For the assessment of the
resources as internal factors (SW), a VRIO Analysis can be used. Subsequently, ways are sought as to
determine how to use the identified strengths and opportunities and how to eliminate the identified
weaknesses and threats.

Use of SWOT analysis in practice

Given that the SWOT analysis is a very universal and one of the most widely used analytical technique,
its application in practice is very wide. It can be used for an organization/ an business as a whole or
for individual areas, projects or other purposes. Since it contains both external and internal factors, it
is also part of the broader risk management of an organization. As it affects key risk sources, it helps
to realize them and the possibilities for countermeasures. It is necessary to clearly define in advance
the external factors which apply to the analyzed problem or entity. These may be the surroundings of
an organization or organizational unit.
In practice, there are lots of different methodologies, interpretations and ways of creating SWOT
analyses.

Related terms and methods:

https://managementmania.com/en/pestle-analysis

PESTLE Analysis
What is PESTLE Analysis

PESTLE Analysis is an analytical technique used for the strategic

analysis of organizational surroundings. PESTLE is an acronym and
each letter represents a different type of external factors: political,
economical, social, technological, legal, ecological.
READ MORE

Strategic Management

SWOT Analysis
Five Forces Analysis 5F (Five Forces Model)

PESTLE Analysis is an analytical technique used for the strategic analysis of

organizational surroundings. PESTLE (sometimes also PESTEL) is an acronym and each letter
represents a different type of external factors:

 P - Political - existing and potential effect of political influences

 E - Economical - effect and influence of local, national and global economy
 S - Social - projection of social changes inside the organization, cultural influences are also
part of it (local, national, regional, global)
 T - Technological - effects of existing, new and advanced technologies
 L - Legal - effects of national, European and international legislation
 E - Ecological - local, national and global environmental issues and questions of its solution

The essence of the analysis is to identify for each of the factos the most important phenomena,
events, risks and influecnes that affect or will affect the organization. PESTLE method is part of the
methods used in impact analysis. Sometimes is used for analysis of external factors in SWOT
analysis.

Sometimes, it is used similar simplified version called PEST analysis:

 P - Political - existing and potential effect of political influences

 E - Economical - effect and influence of local, national and global economy
 S - Social - projection of social changes inside the organization
 T - Technological - effects of existing, new and advanced technologies

Sometimes it is used the term/acronym STEEPLED analysis, where the factors are identical to
the PESTLE, but there are added ethical and demographic factors.
Alternatively, it is used the name of STEER analysis, when the identical factors are arranged as
follows:

S - Socio-cultural factors T - Technological factors E - Economic factors E - Ecological factors R -

Regulatory factors (legislation as the regulation)
Other variation are known as SLEPT or STEP methods.