Competency Assessment & VRIO Analysis

 

core competency is a concept in management theory introduced by, C. K. Prahalad and Gary Hamel (1990). It can be defined as "a harmonized combination of multiple resources and skills that distinguish a firm in the marketplace" (Wikipedia).

VRIO is an initialism for the four question framework asked about a resource or capability to determine its competitive potential: the question of Value, the question of Rarity, the question of Imitability (Ease/Difficulty to Imitate), and the question of Organization (ability to exploit the resource or capability) (Barney, 1991) (Wikipedia).

  • The Question of Value: "Is the firm able to exploit an opportunity or neutralize an external threat with the resource/capability?"
  • The Question of Rarity: "Is control of the resource/capability in the hands of a relative few?"
  • The Question of Imitability: "Is it difficult to imitate, and will there be significant cost disadvantage to a firm trying to obtain, develop, or duplicate the resource/capability?"
  • The Question of Organization: "Is the firm organized, ready, and able to exploit the resource/capability?" "Is the firm organized to capture value?"