VRIN Framework for Sustainable Competitive Advantage

VRIN Tests for Sustainable Competitive Advantage

• The VRIN tests evaluate if a resource or capability is valuable, rare, inimitable, and nonsubstitutable to achieve sustainable competitive advantage.

Social Complexity and Causal Ambiguity

• Social complexity and causal ambiguity hinder rivals from imitating a firm's valuable resources and capabilities.
• Causal ambiguity makes it difficult to understand how a complex resource contributes to competitive advantage.

Resource Bundles

• Companies can develop competitive advantage through resource bundles that enable superior performance of important cross-functional capabilities.
• Resource bundles are valuable even if a standalone resource is not competitively powerful.

Dynamic Capabilities

• Management's role is to strengthen and recalibrate existing capabilities and resources, and benchmark against rivals.
• Benchmarking identifies the most effective techniques and best practices to improve internal activities.

Benchmarking and Best Practices

• Benchmarking compares firms' performance in various value chain activities to identify best practices.
• Best practices are methods that consistently deliver superior results compared to other approaches.

Value Chain Analysis

• The value chain identifies primary activities that create customer value and related support activities.
• Value chain analysis helps control costs and maintain a competitive edge in industries with price competition.

Representative Value Chain for an Entire Industry

• The value chains of forward channel partners affect a firm's customer value proposition.
• Delivering a profitable customer value proposition requires controlling costs of differentiating features.

Value Chain for Boll & Branch

• The value chain for Boll & Branch illustrates the costs and activities involved in creating a king-size set of sheets.
• The total cost of producing and delivering the product is $154.38, with a gross margin of $95.62.