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Competitive advantage a framework
The VRIO framework is used to assess competitive advantage. It evaluates if a resource is valuable, rare, difficult to imitate, and exploited by the organization. Resources that are valuable, rare, difficult to imitate and exploited result in competitive advantage, while those that lack these characteristics result in competitive disadvantage. The garment export industry is characterized by perfect competition with many firms, low entry/exit barriers, homogeneous products, and perfect information flow. Key success factors include cost efficiency, product differentiation, reputation, quality, and being responsive to changing fashion trends. Profitability is determined by customer value, competition intensity, and bargaining power within the value chain.
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Competitive advantage a framework
- 2. VRIO Framework: Competitiveadvantage 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 betweenResources, 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 IndustryStructure Perfect Competition Concentration Many firms Entry and Exit Low Barriers Product Homogeneous Differentiation Product Information Perfect Information flow
- 5. Identifying Key SuccessFactors 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 ofProfitability 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.
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