VRIO framework

VRIO Analysis is a good tool that helps us establish whether a resource is of competitive advantage or not.

V stands for valuable. First question to ask if the resource is valuable. If we own something that nobody wants then probability is that resource is not valuable.

R stands for rare. Rarity provides competitive advantage. Aircraft engine technology is example of rarity.

I stands for immitable. Only variability and rarity does not provide competitive advantage. A resource must be difficult to immitate otherwise competitors can easily immitate our resource and we will loose our competitive advantage. For example, in drug industry patents provide protection for few years but after that anyone can copy the drug formula and provide the same drug to the market.

O stands for organization. Suitable organization is needed to support a valuable, rare and difficult to immitate resource to ensure maximum benefit utilization of such resource.