Applying the VRIO Framework
“Character. Intelligence. Strength. Style. That makes beauty.”
– Diane Von Furstenberg
Before we get into the nitty gritty, VRIO stands for (V)alues, (R)arity, (I)mitability, and (O)rganization. These four ideas are often brought together and analyzed under a single framework to better understand the return potential associated with exploiting any of a firm’s resources or capabilities. This framework can then be translated into determining whether a firm’s resources or capabilities serve as strengths or weaknesses. Each of these ideas — value, rarity, imitability, and organization — must be analyzed in comparison to one another to determine whether a resource or capability serves the firm as a strength or weakness.
Applying the ideas of the VRIO framework to those resources and capabilities possessed by Nordstrom might look a little something like this…
The Relationship between the VRIO Framework and Organizational Strengths and Weakness at Nordstrom, Inc.
| Is the resource or capability… | Valuable? | Rare? | Costly to Imitate? | Exploited by the Organization? |
| EFFECTIVE PRODUCT INNOVATION | YES | |||
| STRONG CAPABILITY FOR EXPANDED MULTINATIONAL RETAIL OPERATIONS | YES | YES | YES | |
| STRONG CAPABILITY FOR DIVERSIFIED ONLINE AND OFFLINE OPERATIONS | YES | YES | YES | |
| STRONG BRAND VALUE | YES | YES | YES | YES |
Further analysis of the chart above would lead Nordstrom to determine which resources and/or capabilities serve the firm as either a strength or weakness. Capabilities that are valuable but not rare serve the firm as a strength. Therefore, Nordstrom’s ability to effectively innovate their own clothing brands is one of its strengths. On the other hand, Nordstrom has some work to do in the framework area of ‘exploited by the organization’ because that means there are resources and/or capabilities that could serve the firm as a competitive advantage if the firm would exploit them. Here, Nordstrom has a very strong and very diversified presence in the retail industry both online and offline, as well as a strong ability to expand their operations at a multinational level.
Nonetheless, I would say progress is being made because full-line operations have expanded beyond the U.S. into Canada and Puerto Rico. Nordstrom is also exploiting both online and offline operations with the launch of “See You Tomorrow” which is the company’s latest recommence initiative. See You Tomorrow offers customers a resale experience both online and in-store at the company’s flagship location in New York City. Nordstrom is doing well overall by taking initiative, as it did with See You Tomorrow, to exploit its resources and capabilities that provide strength and competitive advantage in the retail industry.
Styled Strategy 