Facebook, founded in 2004, is one of the largest social networking platforms in the world. With over 2.7 billion monthly active users, Facebook has a strong user base and an extensive network effect, making it a valuable and rare resource. The platform also has a vast amount of user data, which it leverages for targeted advertising, further contributing to its profitability. Additionally, Facebook has a strong brand recognition, a well-organized company structure, and patented technology, all of which support its competitiveness.
VRIO Analysis of Facebook
VRIO model is an analytical tool which is used for assessing the company’s resources and capabilities. VRIO analysis enables the company to achieve sustained competitive advantage, which helps it in increasing the effectiveness and efficiency. VRIO stands for value, rarity, imitability and organization. Here is the detailed VRIO analysis of Facebook.
Value
The first and foremost component of the VRIO model is Value, which focuses on the valuable resources of the company. The resource will be consider valuable when it is able to implement the strategies which brings efficiency and effectiveness in the company. Facebook has successfully attracted around 1 billion users across the globe which who signed up on the website through social media platform. It is socially trending and became the leader for decades. Facebook continuously improve its website to provide best experience to users through acquisitions like Instagram. The company is facing the competition from other social media platforms like Google+, Tumblr, Twitter etc, but maintained its leading position in the industry (Google site, 2020).
Rarity
Secondly, it is necessary for the company to acquire rare resources. Capabilities and Resources which are acquired by few or one companies are considered as rare. Or else, every company or competitor will be using and exploiting the resources in their own benefits. Facebook has developed the open source of platform which allows the users or developers to create applications which are compatible with Facebook page. There are many gaming companies like Farmville or Jetman has come out and attracts people to visit their Facebook site. This is a rare resource which helps the Facebook staying on the peak of innovation. In addition to this, Facebook’s users are consider as highly valuable and rare resource. Gaining billions of users and other business opportunities in short span of time is actually very rare to achieve (Pratap, 2020).
Imitability
Thirdly, the resources and capabilities of the company should be difficult to imitate. It is necessary for the company to acquire resources which are costly to imitate or difficult to find the substitute for. Together with valuable, rare and hard to imitate resources, company will be able to achieve competitive advantage. Facebook is involved in continuous innovation and technological advancement, which are difficult to replicate by the new entrants or rivals. Facebook has secured its operations and strategies in a manner that it will be difficult for the rivals to take advantage of it. Moreover, working and creating the operations and model like Facebook, is a difficult task for the new entrant and very costly (Taylor, 2013).
Organization
This is the last and fourth component of the VRIO framework. This component pays immense importance on organizing the resources and capabilities of the company to achieve sustained competitive advantage. The resources will not be much beneficial for the firm if they are not organized and managed properly. Facebook is working on such a high level with global presence, that it cannot afford any mismanagement in the operations and strategies. The company has organized structure and culture in workplace. It has motivated, talented and skilled employees who work for the benefits of the company (Taylor, 2013).
Conclusion
VRIO framework analyse the resources and capabilities of the company to assess the sustained competitive advantage. Facebook is one of the successful company in the industry that has achieved sustainable competitive advantage through its valuable, rare, organized and imitable resources.
| Resource/Capability | V | R | I | O | |
| Loyal user base | ✓ | ✓ | ✓ | Competitive Parity | |
| Open source of Platform | ✓ | ✓ | ✓ | ✓ | Sustainable Competitive Advantage |
| Technological innovation | ✓ | ✓ | ✓ | ✓ | Sustainable Competitive advantage |
| Brand awareness | ✓ | ✓ | ✓ | ✓ | Sustainable competitive advantage |
| Organized culture | ✓ | ✓ | ✓ | ✓ | Sustainable competitive advantage |
| Talented HR | ✓ | ✓ | ✓ | Competitive parity |
References
Google site, 2020. VRIO analysis-Facebook. [Online], Available at: https://sites.google.com/site/admn703fbgoog/vrio, [Accessed on: 12th May, 2020].
Pratap, A. 2020. Facebook VRIO analysis. [Online], Available at: https://notesmatic.com/2020/04/facebook-vrio-analysis/, [Accessed on: 12th May, 2020].
Taylor, F. 2013. Facebook internal and external analysis. [Online], Available at: https://www.caseprofessors.com/facebook-in-2013-will-wall-street-hit-the-like-button-689.html, [Accessed on: 12th May, 2020].