Strategic Management

Professor PD Jose
Professor Rejie George Pallathitta
Professor Sai Yayavaram
Illustration – Walmart (contd.)

However, for Walmart, sustainability of competitive advantage, though, is hardly permanent. In

more recent times, the location-based advantages are under strain, owing to the resource possibly
been threatened through substitution-related challenges. The rise in increasing prominence of e-
commerce retailers such as Amazon, is likely to erode the erstwhile locational advantage which
Walmart enjoyed. This could result in the locational advantage not fulfilling a key requirement of the
VRIO framework, namely the non-substitutability of the resource, providing the competitive
advantage. Consequently, the resource may not be a source of sustained competitive advantage in
the future for Walmart.

These concerns seem to be increasingly reflected in the views of analysts and also in Walmart stock
market valuation in recent times. It should be noted here that this analysis of Walmart focused only
on its small town location as a resource, a complete assessment of Walmart’s competitive advantage
and its sustainability should include all its other key tangible as well as intangible resources as well,
which we had discussed earlier in this module. These would include the supply chain logistics,
organizational culture, technological and financial resources among others.

An examination of many of these other resources may reveal that as per the VRIO framework, unlike
location, many other resources do not fulfil the VRIO conditions in its entirety as the resources are
not valuable, or rare, inimitable, or non-substitutable, or not fully exploited by the organization.
These resources, therefore, are inadequate as a basis for sustained competitive advantage.

The quest, therefore, for every organization should be to develop or acquire resources which have
the potential to satisfy the VRIO conditions. The more the underlying resources are able to satisfy
the VRIO conditions, the greater the probability of the sustainability of the competitive advantage as
far as the firm is concerned.

Finally, it is important that the evaluation of individual resources of the firm not be a feel-good
exercise. Rather it should be a rigorous and ideally a conservative assessment of the potential of
these resources to fulfil the VRIO conditions.

© All Rights Reserved. This document has been authored by Prof. PD Jose and is permitted for use only within the course Introduction to
Strategy Management, delivered in the online course format by IIM Bangalore. No part of this document, including any logo, data,
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