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Apple Inc. VRIO Analysis –
Core Competencies &
Competitive Advantages
UPDATED ON FEBRUARY 10, 2021 BY VERONICA NEWTON
Apple Inc. succeeds in the
computer technology and
consumer electronics market,
despite bouts of challenges in
the changing global business
environment. The company uses
its core competencies, which
A Magic Mouse from Apple. Major
are identi=ed in this VRIO core competencies are identi6able
analysis. The VRIO analysis through a VRIO analysis of Apple
model evaluates the value, rarity, Inc. Such competencies are clear
competitive advantages for the
imitability, and organization of
company’s long-term pro6tability in
the business. This internal the computer, consumer
analysis determines the core electronics, and online digital
competencies and competitive products industries and beyond.
(Public Domain Image)
advantages of the company,
based on the VRIO variables.
In this case, Apple Inc. exploits its core competencies to
achieve long-term competitive advantages against aggressive
competitors. The =rm’s strategic plans and objectives focus on
business development in areas where competitors are weak.
Using a VRIO analysis of Apple, managers can arrive at the best
courses of action to strengthen the business based on its core
competencies or long-term competitive advantages, which
satisfy all of the four VRIO variables. Related information may
be obtained through a Four Corners Analysis of Apple Inc.
(based on Michael Porter’s framework). In addition, a McKinsey
7S analysis of Apple Inc. can pinpoint factors that the business
can use to harness its core competencies shown in this VRIO
analysis.
A VRIO Analysis of Apple Inc.
The following table presents the resources and capabilities of
Apple Inc. Each of the factors is evaluated based on the VRIO
variables. The company’s long-term competitive advantages or
core competencies are the resources and capabilities that have
checkmarks for all of the four variables:
Apple’s Organizational Resources & V R I O
Capabilities
NON-CORE COMPETENCIES:
Business process automation
Competitive employee compensation
packages
Human resource capabilities for innovation
Product mix diversity
CORE COMPETENCIES OR SUSTAINED
(LONG-TERM) COMPETITIVE
ADVANTAGES:
Globally popular premium brand
Systems set up for rapid innovation
Ecosystem of complementary products
Access to user information
Arti=cial intelligence capabilities
Global distribution and sales network
(This VRIO table is best viewed using HTML5-compatible browsers.)
Apple’s Core Competencies (Long-term Competitive
Advantages). The VRIO table above identi=es six resources or
capabilities that are categorized as Apple’s core competencies
or long-term/sustainable competitive advantages. For instance,
the company’s globally popular brand is a core competency
because it is valuable, rare, and dif=cult (if not impossible) to
imitate, and the business is organized around the use of this
brand as a major competitive strength.
Apple also has its systems set up for rapid innovation, which is a
critical success factor of the business. This resource/capability
enables the corporation to maintain a high rate of innovation
that is especially notable in hardware products like the iPhone.
The VRIO table also identi=es the ecosystem of
complementary products as another one of Apple’s core
competencies. This competency involves products that
mutually promote each other. For example, because of cross-
device compatibility and accessibility, customers are more likely
to purchase an iPhone when they already have a MacBook, and
are more likely to purchase apps and digital products via iTunes
when they already have a MacBook or an iPhone. This
ecosystem of complementary products makes it dif=cult for
competitors to acquire customers who already own Apple
products.
Apple Inc. also has the sustained/long-term competitive
advantage of access to user information, which includes device
type and model, geographic location, app usage, and so on,
depending on individual users’ privacy settings. Despite privacy
regulations, the company’s large global user base helps in
gaining valuable information to support innovation and new
product development, as well as marketing strategies and
business management and strategic planning.
Furthermore, Apple’s arti=cial intelligence capabilities provide
competitive advantage in terms of convenient and ef=cient
services. For example, the company develops arti=cial
intelligence for services like Siri and related functions.
Among the VRIO factors, the company’s international
distribution network is also identi=ed as a core competency.
Apple Inc. maintains long-term competitive advantage partially
through its global network of strategically located authorized
distributors and sellers. This network streamlines the
company’s strategic plans and efforts in reaching target
customers worldwide.
Other Competencies of Apple Inc. In the VRIO internal analysis
model, each resource and capability that does not satisfy all of
the VRIO questions is considered a non-core competency or
non-core competitive advantage. For example, in the table
above, Apple’s non-core competencies include business
process automation, which is valuable but common throughout
the industry and even in other industries and markets.
Also, competitive employee compensation packages are a
capability that helps the company maintain a highly skilled
workforce that supports rapid innovation. However, this
capability is a non-core competency in Apple’s case because
other technology companies, such as Amazon, Google,
Microsoft, and Intel also offer competitive employee
compensation packages. In relation, Apple’s human resource
capabilities to support innovation are common in other =rms in
the computing technology, consumer electronics, and
digital/online services industries.
The increasing diversity of the company’s product mix is a sign
of strategic efforts to reduce the per-market risk exposure of
the business. These resources and capabilities are important
but not the top priorities determined in this VRIO analysis of
Apple Inc.
Key Points and Recommendations
The core competencies shown in the VRIO table provide a
picture of how Apple’s business maintains its competitiveness
despite challenges in the industry and internal issues in the
organization. These sustainable competencies offer long-term
competitive advantages that the company uses to ensure a
pro=table future while addressing current problems. For
example, Apple uses its brand and capacity for rapid innovation
to maintain competitiveness despite the aggressiveness of
Samsung, Huawei, and LG, among other consumer electronics
manufacturers. This VRIO analysis of Apple Inc. also shifts
attention to business diversi=cation, as well as possible
strategic changes for long-term competitiveness based on
technological innovation.
Apple Inc.’s operations are currently focused on consumer
electronics and online/digital products, which are the main
revenue sources. However, the company’s strategic plans
already include major opportunities to develop the business in
other industries or markets. For example, the arti=cial
intelligence and robotics markets are gaining ground, along
with the autonomous and self-driving automobile markets.
These opportunities require that Apple use its core competitive
advantages identi=ed in this VRIO analysis to strategically
position the business to offer technologically advanced
products that make the corporation a major player early on as
these other industries and markets develop.
References
Apple Inc. Annual Report to the U.S. Securities and
Exchange Commission.
Apple Inc. Retail Store List.
Chatzoglou, P., Chatzoudes, D., Sarigiannidis, L., & Theriou,
G. (2018). The role of =rm-speci=c factors in the strategy-
performance relationship: Revisiting the resource-based
view of the =rm and the VRIO framework. Management
Research Review, 41(1), 46-73.
Knott, P. J. (2015). Does VRIO help managers evaluate a
=rm’s resources? Management Decision, 53(8), 1806-1822.
Lin, C., Tsai, H. L., Wu, Y. J., & Kiang, M. (2012). A fuzzy
quantitative VRIO-based framework for evaluating
organizational activities. Management Decision, 50(8),
1396-1411.
Rockman, S. (2018). How Apple Killed Innovation. Forbes.
Su-ying, G., Min, Z., Yan-li, Z., Jin, Z., & Hong-feng, Z. (2013,
July). The VRIO characteristics of corporate strategic
human capital at business level. In Management Science
and Engineering (ICMSE), 2013 International Conference
on (pp. 827-832). IEEE.
TA G S : A P P L E I N C . , C O M P U T E R & I N F O R M AT I O N T E C H N O L O G Y
INDUSTRY, CONSUMER ELECTRONICS INDUSTRY, INTERNAL
A N A LY S I S , S T R AT E G I C M A N A G E M E N T , S T R AT E G I C P L A N N I N G ,
V R I O A N A LY S I S
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