How do you integrate the VRIO framework with other strategic tools and frameworks?

1 Step 1: Identify your resources and capabilities

The first step is to list all the resources and capabilities that your business has or can access. Resources are tangible or intangible assets that you own or control, such as physical assets, human capital, financial resources, brand reputation, patents, etc. Capabilities are the skills and abilities that you use to combine and deploy your resources, such as innovation, customer service, marketing, operations, etc. You can use a resource audit or a SWOT analysis to help you identify your resources and capabilities.

2 Step 2: Evaluate each resource and capability using the VRIO criteria

The second step is to evaluate each resource and capability using the four VRIO criteria: value, rarity, imitability, and organization. Value refers to whether the resource or capability helps you create value for your customers and differentiate yourself from your competitors. Rarity refers to whether the resource or capability is scarce or unique in your industry or market. Imitability refers to how easy or difficult it is for your competitors to copy or substitute your resource or capability. Organization refers to whether your business is organized to exploit the full potential of your resource or capability. You can use a VRIO matrix or a VRIO table to help you evaluate each resource and capability.

3 Step 3: Determine your competitive advantage and sustainability

The third step is to determine your competitive advantage and sustainability based on the VRIO evaluation. Depending on how many criteria your resource or capability meets, you can classify it accordingly. If it does not create value or differentiation, it may be a competitive disadvantage and should be eliminated or improved. If it creates value but is not rare or hard to imitate, you may have a competitive parity or a temporary advantage, and should enhance or protect it. If it creates value and is scarce or unique in your industry or market, it could give you a sustained competitive advantage, so you should consider leveraging or expanding it. If it additionally is hard or expensive to copy or substitute, it may give you a long-term competitive advantage, so investing or developing it would be beneficial. Lastly, if this resource is fully exploited by your business structure, culture, and processes, you may have an unbeatable competitive advantage that should be maintained or reinforced.