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VRIO Framework: Competitive advantage


GEX PRODUCT / DESIGN




                  COSTLY TO   EXPLOITED BY
VALUABLE   RARE                              COMPETITIVE IMPLICATIONS   ECONOMIC IMPLICATIONS
                  IMITATE     ORGANIZATION




  Yes       No       No           Yes        Competitive disadvantage      Below Normal
The Links between Resources, Capabilities and Competitive
                      Advantage


                                                    INDUSTRY KEY
COMPETITIVE               STRATEGY                SUCCESS FACTORS
 ADVANTAGE




                 ORGANIZATIONAL CAPABILITIES



                       RESOURCES
          TANGIBLE     INTANGIBLE    HUMAN
                       •Technology   •Skills/know-how
          •Financial                 •Capacity for
                       •Reputation
          •Physical                  communication &
                       •Culture
          •Know how                  collaboration
                                     •Motivation
Garment export Industry Structure


                           Perfect
                         Competition


Concentration             Many firms

Entry and Exit               Low
  Barriers

    Product             Homogeneous
Differentiation           Product


 Information        Perfect Information flow
Identifying Key Success Factors

                   Pre-requisites for success

               Key Success Factors
  What do customers                           How does the firm
        want?                                survive competition

Analysis of demand                     Analysis of competition
• Fragmented demand                    • Perfect competition in
• (segmented by garment differentiation with cost
    Combine effective                     market place
    efficiency
   type, style, quality, colou         • Differentiation can yield
• r Key differentiation variables are speed premium but rapid
     etc)
• Customers willing to pay
                                          price
                                                 of response
                                          imitation possible
   pricechanging fashion, style, reputation and quality
    to premium for                     • Backward integration
• exclusivity and highlyvalue chain
    Cost efficient
• Value segment
                    quality               for cost efficiency

   price sensitive
The Determinants of Profitability


Key influences

1.   The value of the product to customers



2.   The intensity of competition



3.   Relative bargaining power at different levels
     within the value chain.
THANK YOU !

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Competitive advantage a framework

  • 1.
  • 2. VRIO Framework: Competitive advantage GEX PRODUCT / DESIGN COSTLY TO EXPLOITED BY VALUABLE RARE COMPETITIVE IMPLICATIONS ECONOMIC IMPLICATIONS IMITATE ORGANIZATION Yes No No Yes Competitive disadvantage Below Normal
  • 3. The Links between Resources, Capabilities and Competitive Advantage INDUSTRY KEY COMPETITIVE STRATEGY SUCCESS FACTORS ADVANTAGE ORGANIZATIONAL CAPABILITIES RESOURCES TANGIBLE INTANGIBLE HUMAN •Technology •Skills/know-how •Financial •Capacity for •Reputation •Physical communication & •Culture •Know how collaboration •Motivation
  • 4. Garment export Industry Structure Perfect Competition Concentration Many firms Entry and Exit Low Barriers Product Homogeneous Differentiation Product Information Perfect Information flow
  • 5. Identifying Key Success Factors Pre-requisites for success Key Success Factors What do customers How does the firm want? survive competition Analysis of demand Analysis of competition • Fragmented demand • Perfect competition in • (segmented by garment differentiation with cost Combine effective market place efficiency type, style, quality, colou • Differentiation can yield • r Key differentiation variables are speed premium but rapid etc) • Customers willing to pay price of response imitation possible pricechanging fashion, style, reputation and quality to premium for • Backward integration • exclusivity and highlyvalue chain Cost efficient • Value segment quality for cost efficiency price sensitive
  • 6. The Determinants of Profitability Key influences 1. The value of the product to customers 2. The intensity of competition 3. Relative bargaining power at different levels within the value chain.