The VRIO framework is a set of four questions of: Value, Rarity, Imitability, andOrganization (Barney and Hesterly, 2006). It is a tool to analyze company’s resourcesand capabilities to discover their potential competitive advantages or to identifycompany’s internal weaknesses (Barney and Hesterly, 2006). The following competenceswere chosen from Nokia: quality, price, services/functions, and brand image.
The high quality of Nokia’s products and services enables the company to takeadvantage of environmental opportunities or neutralize environmental threats. Theseresources add value to Nokia’s customers and leads to customer satisfaction and loyalty.This strength is developed by Nokia’s well controlled value chain. Even though quality isa valuable resource for Nokia, it is not uncommon in the industry. All of Nokia’s major competitors are investing in quality which is a crucial feature in the commodity product business. Quality in management and value-based leadership are important issues at Nokia. Nokia has created a framework called the “Self-Regulating Management System”to run their business in a more consistent, effective and fact-based manner (Nokia,Quality, 2007). Quality is an organizational strength for Nokia and generates acompetitive parity.
A wide portfolio of different price products has created a competitive advantagefor Nokia. With the low-cost phones Nokia has been able to take the advantage from thedemand of inexpensive phones at the developing markets. Offering the consumers highquality products for low-cost is an efficient way to create customer satisfaction and brandloyalty. For example in India Nokia has a 70% market share with one billion potentialusers (Lakshman, 2007). The price of a mobile phone in India can be as low as $19(Lakshman, 2007). The low-price strategy is a rarity and controlled by Nokia in themobile phone industry. This feature is a source of competitive advantage...