Ariat Competitive Advantage

What affects sustainable competitive advantage for a firm are external and internal environmental conditions that allows for a high levels of performance and for above- average returns.
The external environment based on Industrial organization (I/0) model assumes that external forces are favouring high level performance of a firm strategies. A firm needs to pay attention to the industries that it chooses to compete. Those affect sustainable competitive advantage: Economies of scale, barriers of maturity entry, diversification, product differentiation and degree of concentration of firms in a particular industry.
The external environment imposes pressures and constrains that determine strategies leading to above- average returns. For example:

Internal capability analysis by applying VRIO Ariat’s R&D Department:

Valuable:
Ariat’s R&D development is valuable because allows the company to provide new products on English and westerns categories with enhanced performance and features with high quality by using their innovative and creativity technical knowledge, skills and abilities.
Ariat has exploited a sustainable competitive advantage that lead them to become the world’s leading manufacturing of English and western boots.
The position of these resources allows Ariat to minimize threats of competition on the footwear industry and increase revenues. Which means that R&D department is a significate value resource.
Rare:
Ariat’s R&D innovation and creative technical knowledge and skills are rare. The scarcities of those particular human skills created by Ariat are rare enough in the footwear industry especially on English and western categories. Ariat has been training and encouraging creativity and innovation since its creation on 1993. Ariat keep investing in training to further develop and improve the knowledge, skills and abilities of the R&D department.
Costly to

Also those employees value teamwork and cooperation. Ariat is structured in a way that information about innovation and development flow through the right employees in a timely manner. There is not much bureaucracy, ideas and technical skills can be easily shared.
Ariat has also a compensation system that rewards the R&D for their innovative and technical products.
Question 2
a)
Porter’s five forces model is an analytical tool for the macro environment to analyze the level of competition and profitability in an industry. It helps to develop the firm’s strategies.
It is used for screening and interpreting external environment data: the treat of new entrances, rivalry among existing firms, the bargaining power of buyers, the bargaining power of suppliers and the threat of substitutes for product and services.
When using the five forces the firms need to:
• Collect the data from external environment for each of the five forces
The firms should collect the information during this process and check it against of the five forces and what influences it. For example: how many competitors there is in this industry.
• Analyze the results and compile it in order to present