Two strategic analysis tools

Every company has weakness, strengths, and their own challenges. However, companies cannot successfully move forward and solve issues if there is no true understanding of the root problem. Additionally, without the proper tools or platform of strategic planning an organization will never be able to identify their problematic areas. While there is no right answer, using such concepts as the VRIO framework or CATWOE analysis will guide companies where adjustments need to be made in order to make improvements and reach goals.     

Valued rarity imitability organization or VRIO analysis is primarily used to assess a firm’s resources and their sustainability applied to competitive advantage (Knott, 2015). Since resources add value to an organization they also need strict evaluation as any value that benefits a company can also benefit stakeholders (Frue, 2017).  Rarity, as it applies to resources, can be of concern for a company as rare resources can add value creating a competitive advantage; however, if limited access to a rare resource exists then this could now become a disadvantage (Frue, 2017). Since its implantation, VIRO Analysis has had its share of criticism, as there is no real support to prove that VIRO helps managers to properly manage resources (Knott, 2015). Studies show that VRIO does help managers to evaluate resources in comparison to their competitors, but poses a disadvantage because it excludes resource disadvantage versus advantage (Knott, 2015). Additionally, it was found that using the VIRO method often-lead managers to referring to other existing analytical models (Knott, 2015). 

The fact that VIRO often leads to other methods is not necessarily a negative factor. It is not uncommon for an organization to utilize more than one method, as there are no “one size fits all” approaches to problem solving. For example, the CATWOE method differs from VRIO as it concentrates more on defining root problems in the solving problems process (Nayab, 2013). CATWOE is a soft system methodology that provides an ethical approach to root definition by including a wide range of stakeholders to who have the ability to implement change (Nayab, 2013).  

Regardless of what adversity an organization may face, the implementation and understanding of strong strategic analysis will help managers and senior leaders to find areas where improvement maybe needed. Concentrating on the areas of Finance and Research & Development VRIO can help to evaluate that resources being utilized are meeting a competitive advantage as both of these categories can be perceived under RBV or resource based view. VRIO framework forces management to give an honest look into resources and ask if they are rare, costly, and allow the company to capture value which all leads to competitive advantage (Knott, 2015). StrongArm highlights the idea of using resources to produce their products to give viable sustainment beyond the shelf life of common sensors. By using VRIO StrongArm can examine their tangible resources to ensure resources are meeting this standard in order to accomplish their objective. This can be accomplished by StrongArm comparing their resources used by competitive markets to determine if the resources are highly used by other companies, if the resources are easily accessible, and its ability to be used by companies in the future (Knott, 2015). Additionally, to determine if the resource adds value VRIO scrutinizes which activities cost production with the perception of decreasing consumer cost and if the resource creates product differentiation (Knott, 2015). Again, all of these concepts help to build a competitive advantage for StrongArm. In regards to marketing and production, CATWOE is an analysis tool that can help StrongArm identify trouble areas. Under CATWOE, customer bases are identified and this is where the company tries to understand their target customers (Nayab, 2013). This effects both marketing and production since products can be now made in order to meet StrongArm’s customer’s needs. Furthermore, it gives direction to the marketing department direction since StrongArm’s customers are now recognized. Marketing can now direct strategies to specific clients and translate how these products will suit them. 

Companies can face challenges in many aspects of business operations. While there may be a multitude of possible solutions the key to success to have a strategy in place. VRIO framework can help a company manage resource issues regardless if they present themselves in tangible or intangible forms. In addition, CATWOE allows a company to concentrate on many concerns ranging from customers to environmental constraints, in order to address problems within a variety of categories. Regardless of what strategic analysis tools a company may choose to use having a strategy will greatly benefit an organization in the journey to achieving their goals.

References

Frank, M. (2016). Systems Thinking : Foundation, Uses and Challenges. Hauppauge, NewYork: Nova Science Publishers, Inc.

Frue, K. (2017). What is VRIO Analysis? Retrieved from http://pestleanalysis.com/vrio-analysis/

Knott, P. J. (2015). Does VRIO help managers evaluate a firm’s resources?. Management Decision, 53(8), 1806.

Nayab, N. (2013). CATWOE Analysis: How & When it is Used. Retrieved from https://www.brighthubpm.com/methods-strategies/105917-catwoe-analysis-how-amp-when-to-use-it/