How to use it
Ask whether a capability creates value, is rare, is costly to imitate, and is supported by the organisation. Test each condition against evidence.
Worked example
A component seller’s knowledge of equivalent parts is valuable if it prevents returns. Test whether rivals have similar data and whether sales staff can pass it on.
Common pitfall
A resource may be rare because buyers do not value it. Confirm value first.
- Frame the questionWho can change the terms on which this business earns a margin?
- Apply the frameworkUse VRIO on the worked example above.
- Produce an answerIdentify the mechanism, who benefits from it and the strongest substitute or competitor response.