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MGT451_VideoTranscript_Mod03_P2 Jay Barney's VRIN model to test competitive advantage

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Alright hi it's Richard Moore here from 7 Step Startup. I'm just responding to about five emails that have come in over the last week or so wanting more information on the VRIN model that I've mentioned a couple of times. This is because part of the 7 Step Startup program talks about selecting your product but also making sure you're going to have a unique selling point and some competitive advantage. So, just to explain, there's a very eminent chap who works for the University of Utah called Jay Barney. He originally got his PhD at Yale many, many years ago. I think he's now Chair of Entrepreneurship and Strategic Development within Utah. And of course he at Utah University he does a lot of teaching there. But in 1991 he brought forward this model of VRIN testing, if you like, which was basically to ensure that there was real competitive advantage for either the company or it's product more to the point. So just to get to the detail, the V for VRIN - VRIN is V-R-I-N - the V stands for valuable. So this is from a customer's or company's point of - from a company's point of view. Is the product offering valuable in that it can exploit a position or a niche in the market and offer some commercial success. And will it provide value, really that's going to be developing and selling the product? The second step, is it rare? Okay so it needs to be a rare product because then, with scarcity, it boosts its value in terms of perception in the eyes of the public. So, that's why diamonds are worth a lot because they're very, very rare. That's why pencils are not worth much because they're two a penny, you can find them anywhere. So, if there's a rarity to it, if it's something that's scarce, then people are going to be much more excited by, and potentially gives you much more competitive advantage over any potential competitors. The I for the VRIN model stands for inimitable - which means can it be imitated? If it can't (I didn't say it very well - inimitable), if it can't be imitated, then it means it creates a very unique feel to the product it's something that's almost a signature of that particular company. Now in our world there's two ways to achieve that: one is that it's just simply so unique that you can't imitate it because it can only be delivered by that company. And often you find this in it's being leveraged to the market for a personality. So the Virgin Group is quite hard to imitate. Their brand in their field because Richard Branson is their, you know, he's their major ambassador of course, and he is, he is the company. He is the guy with the, that kind of oozes and elicits their brand really. So, that's why they're not so easy to imitate, and if people do try to imitate them, well do you know what, people will always think 'well they're just trying to be like Virgin' and actually jogs their memory and makes people think of the Virgin Group anyway. And finally - the N stands for non-replaceable, non-replaceable or non-substitutional. So it can't be replaced by maybe another product on the market that might be have a similar outcome, or give a similar result or product. So, yeah, if your product is the only thing that gives the result it gives, and there's nothing else out there that could replace it or substitute it, then you're going to have, again, real competitive advantage. 7 Step Startup is a great example because each of the lessons in the teachings are based on mostly interviews that I've had with professors and Deans and Business schools and universities around the world, best selling authors, and heads of the most recognized businesses worldwide. So that's fairly unique; it gives me competitive advantage simply because other people aren't doing that. They just speak common sense or what they've made thought of, as opposed to you accumulatively hundreds of years of very high end experience and success being put into the course. So, thing about this - is it valuable, is it rare, is it inimitable, and is it non substitutional? VRIN - that's Jay Barney's model for competitive advantage. So I hope that helps, keep the comments coming in, and hope that makes that clear. Speak to you soon.

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Duration: 4 minutes and 40 seconds
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Language: English
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Posted by: christineward on Apr 5, 2016

Jay Barney's VRIN model to test competitive advantage

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