VRIO framework can be used to determine the return potential associated with

the firms resources and capabilities.

Capabilit
ies

Valuabl
e?

Rare?

No

Difficult
to
Imitate
?
No

Supporte
d by
Organizat
ion?
No

Competit
ive
Implicati
ons?
Temporary

DVD
Rental
Physical
Distribut
ion
Online
Streamin
g
Title
Variety
Convenie
nce

Yes
Yes

Yes

Yes

Yes

Temporary

Yes

Yes

Yes

Yes

Sustainabl
e

Yes

Yes

No

Yes

Yes

Yes

Yes

Yes

Sustainabl
e
Sustainabl
e

In case the resource is not valuable, that particular resource might hinder the
firm from exploiting opportunities or neutralize threats. By exploiting a resource
sometimes, the cost may increase and willingness to pay will decrease. Such
resources are weaknesses. Valuable resources that are rare are considered
strengths.
A company should exploit a resource which is valuable and rare but not costly to
imitate at the same time in order to gain a temporary edge. Leading to first
mover advantage. To gain a sustained advantage, company should exploit a
resource which is valuable and rare at the same time costly to imitate. This will
cause a severe disadvantage for its competitors.
When VRIO is applied for Netflix, it can be seen that the firms biggest
opportunity was its ability to stream movies over the internet through various
electronic devices. This capability was valuable, rare and costly to imitate. Netflix
exploited this advantage gaining valuable first mover advantage.