Theory of Constraints Handbook - James Cox Iii [348]
Representative of these three areas of study combined, the VRIO framework stands for a series of questions that must be answered about a company in order to determine what strengths are at the company’s disposal as well as what weaknesses must be taken into account. VRIO stands for value, rarity, imitability, and organization. Each represents a question with respect to individual resources and groups of resources available to a company, such as whether these resources render a firm capable of responding to threats and opportunities, whether the firm faces cost advantages or disadvantages, and whether policies and procedures are aligned with the firm’s use of its resources.
The questions involved in a resource-based analysis enable the firm’s strategic planners to identify areas of opportunity that may require upgrading or additional resources assigned. These questions encourage strategic planners to revisit the company’s policies and procedures to assess whether, as currently stated and implemented, they support the company’s direction and marketplace positioning. Questions on the rarity of resources help determine the exclusivity of the firm’s resources, while questions of imitability help discover cost advantages that the company can exploit.
Learning/Emergent Strategies
Mintzberg and Waters (1985) conceive of deliberate versus emergent strategies as two extremes on a continuum that represent real-world strategies. A team of managers may sit down for a strategic planning meeting and come up with a strategy using analytic skills and deliberation. But that team may just as easily make some important errors in judgment that, subsequently, redefine the team’s entire strategic plan. In the former case, the planning is largely a priori, structured, and intentional. In the latter case, the resultant strategy may be serendipitous, devised on the spur of the moment under pressure, and as much a surprise to its creators as it was to anyone else. Thus, learning occurs where what was planned does not proceed as envisioned but the outcomes sometimes are better than the planned strategy. Adjustments are made, and the organization moves forward.
According to Mintzberg and Waters, most people tend to treat strategy simply as “an analytic process for establishing long-range goals and action plans for an organization” (1985, 257). However, Mintzberg and his colleagues (viz. Mintzberg, 1978; Mintzberg and Waters, 1982; Mintzberg and McHugh, 1985) conceive of strategy as more fluid than that. Their view is that strategy represents a consistent pattern developed from a stream of organizational decisions and actions followed by corrections. Because of many studies, what has emerged in Mintzberg’s view is the categorization of 10 identifiable schools of thought with respect to strategy. Any of these approaches can lead to success or failure, depending on the situation, although, more realistically, they each represent one piece of the totality of strategic management (Mintzberg et al., 1998, 1–21).
A Summary of Schools of Strategy
Mintzberg and Lampel (1999) distilled the literature on business strategy into various representative schools of thought. They preface their findings with the caveat that each school contributes one perspective or another on the world of strategy, although none offers a comprehensive picture of the reality. The authors identify 10 different schools of thought on strategic management theory, although there is some overlap between schools, especially as cross-fertilization has occurred. The first three are prescriptive, while the latter schools are largely descriptive in