Compare and Contrast Swot Analysis and Vrio Model Essay

860 WordsMar 29, 20084 Pages
Describe the SWOT analysis and the VRIO model and compare them. Highlight their main similarities and differences. (25 points) (A 1½-page response is required.) Student’s Response The SWOT analysis is used to describe the Strength, Weaknesses, Opportunities and Threats that face a corporation. The purpose of this analysis is to identify the particular competencies that the corporation has as well as to identify the opportunities that they are facing but unable to take advantage of due to the lack of the necessary resources. This analysis allows managers to decide if they should invest their resources to better their strengths or on their “weaknesses to at least make them competitive” (Hunger & Wheelen, 2002, p. 109). The two main…show more content…
Before determining the value, however, the corporation needs to identify the opportunities and threats that face them in the external environment. They should also understand that, in the long run, the value of any one resource is dynamic. The assessment of rareness questions the availability of this resource with ease to other competitors. A widely available resource, however valuable may not add any competitive advantage to the firm. Imitability, defined as the “rate at which a firm’s underlying resources and capabilities (core competencies) can be duplicated by others” (Hunger & Wheelen, 2002, p. 82). The question of organization determines if a firm internally has the capabilities and systems that would allow it to maximize the value that resource possesses. The four questions that should be used to assess a resource are as follows. Firstly, does a resource provide the firm with any competitive advantage? Secondly, do other competitors possess or have easy access to this resource? Thirdly, is it costly for other competitors to imitate this resource and lastly, is the firm organized to exploit this resource? The answers to these four questions determine if a “resource is considered strength and a distinctive competence” (Hunger & Wheelen, 2002, p. 82). The VRIO model

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