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/
