VRIO Analysis - Methodist Healthcare

Is the organization Valuable?  Is it Rare? Is it Costly to Imitate? And this firm Organized to Exploit? Capabilities that meet all four requirements can bring sustained competitive advantage for a company.

In order to recognize the competitive advantage, firms are using many tools to analyze their external (Porter’s 5 Forces) and internal (Value Chain analysis) competitive strength.  One of such tools that analyze internal assets is VRIO analysis. This tool was designed by J.B Barney in 1991. In order to sustain competitive advantage; VRIO is often used across the organizations.

In the Memphis area, Methodist healthcare plays an important role and has been one of the leaders in this region.  In 1924, Methodist healthcare started with the lone hospital in the Memphis downtown.  Currently with 6 hospitals and more than 12,000 employees, Methodist healthcare system treats more than 63,000 patients in the hospital and more than 343,000 outpatients (2013 data). 

Valuable: Having a strong regional presence is an important asset for the company trying to increase their size, patients, and market share. Currently with 6 hospitals and new lines of service, it is a great way to gain more customers and keep the insurance companies in their network.

Rare: Their top of the line organ transplant unit and the pediatric hospital is uncommon in this area but as a hospital system, there are two other major hospital systems besides Methodist healthcare.

Imitable: In the recent time, no competitors of Methodist healthcare have gained such a patient volume but with the opening of the new ER system by Baptist healthcare, healthcare in Greater Memphis is far from non-imitable.

Organized to Exploit: By treating a variety of disease process and continually changing their service lines, Methodist healthcare is taking advantage of this capability. With the new hospice center and collaborations with West Cancer center they are pushing themselves to the new service lines and reaching new patient populations.

The VRIO analysis of Methodist healthcare:

VALUE?	RARE?	IMITABLE?	ORGANIZED TO EXPLOIT?	COMPETITIVE IMPLICATION
YES	YES	NO	YES	Temporary competitive advantage

Disclaimer: Opinions expressed are solely personal and do not express the views or opinions of any other person or entity.

Sources:

http://www.methodisthealth.org/

http://www.strategicmanagementinsight.com/tools/vrio.html

Gaining and Sustaining Competitive Advantage, Fourth Edition