Developing Sustainable Competitive Advantage: A VRIO Analysis of NFI

This report provides a comprehensive analysis of New Flyer Industries (NFI) and its sustainable competitive advantage, utilizing the VRIO framework (Value, Rarity, Imitability, and Organization). It begins by defining competitive advantage and sustainable competitive advantage, followed by an explanation of the VRIO analysis method. The report then applies VRIO to NFI, assessing its resources and capabilities, particularly focusing on the Vehicle Innovation Center (VIC). The analysis evaluates whether NFI's resources are valuable, rare, costly to imitate, and well-organized to exploit these resources. The report identifies the VIC as a key resource that meets all VRIO criteria, thus providing NFI with a sustainable competitive advantage. Furthermore, it discusses how NFI can leverage its strengths and opportunities for future business development and expansion, while also addressing potential weaknesses and threats. The document concludes with recommendations for NFI to maintain and enhance its competitive position in the North American bus and coach manufacturing industry.

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Contents
Introduction...........................................................................................................................................3
Task 1- Analysis Method:.......................................................................................................................4
What is Competitive Advantage?......................................................................................................4
What is Sustainable Competitive Advantage?...................................................................................4
What is VRIO?..................................................................................................................................5
VRIO analysis for New Flyer Industries –...............................................................................................5
The Question of Value –................................................................................................................6
The Question of Rarity –................................................................................................................7
The Question of Imitability –.........................................................................................................8
The Question of Organization –.....................................................................................................9
Task 2 – Recommendation as how NFI should develop and expand the business................................9
Conclusion...........................................................................................................................................12
References...........................................................................................................................................14
Appendix A..........................................................................................................................................17
Appendix B..........................................................................................................................................18
Appendix C..........................................................................................................................................19
Appendix D..........................................................................................................................................20

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Introduction
New Flyer Industries INC. (NFI) is North America’s leading bus and coaches manufacturing
company. It is listed on Canada stock exchange, have many delivery offices in USA and
Canada. Its USP is heavy –machinery vehicles, coaches, motor coaches, transit bus and
distribution of aftermarket parts. It is the key player in the automobile industry in North
America which has years of experience in the manufacturing and delivery of trucks, buses
and coaches (basically heavy vehicles). It shares around 49% of the market in the US and
Canada of heavy vehicles.
NFI is known for its innovation and unique designs. It has developed and tested many unique
designs like low floor buses or compressed gas coaches or hydrogen fuel run coaches. It was
first of its kind which of developed by the company.
New Flyer Industries is based out in Winnipeg, Canada. It was formed in 1930. The company
is basically into automobile manufacturing and sale of heavy duty passage coaches in United
States of America and Canada. It practices various unique and different technologies like
propulsion systems which include diesel-electric or gasoline-electric hybrid systems,
compressed natural gas or liquid natural gas system and zero-emission electric trolleys in
heavy-duty transit buses. It delivers after-sale training and field services; it is also into
aftermarket parts and services includes distribution as well. Municipal and Local transit
authorities are their basic buyers. New Flyer Industries is known for its innovative technology
and processes. It was the first company in the world who developed hydrogen run buses and
coaches. Company Annual revenue crosses $2.4 billion and has about 2200 on-roll
employees and in total has around 6000 employees in its different facility all over North
America. Location of its delivery centre is high consumer area like New York, Washington,
California, Ontario, etc.

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Task 1- Analysis Method:
Here in this report, VRIO analysis of New Flyer Industries is studied. But before
understanding the analysis company or organization should understand what a competitive
advantage and sustainable competitive advantage is and how it can be achieved and used
correctly to overcome its weakness and threat.
What is Competitive Advantage?
When an organization has a favourable position where it has a position to be more profitable
than its rival then it is said that it has a competitive advantage. Competitive advantage needs
to be maintained and monitored regularly. Its shows a great difference between its price and
service as compared to its rivals (Huang et al., 2015). This could be studied under Porter's
five forces to understand which resources gives a competitive advantage to the company. In
this method, a company needs to decide as to which strategy they will follow which give
them a competitive advantage over their rivals. In this framework company generally
focusses more on it's internal facto rather than its industries as a whole (Halls and Keynes,
2015).
What is Sustainable Competitive Advantage?
In today’s global environment, it’s necessary for any organisation to have a sustainable
competitive advantage to thrive for business. Investors want to invest in those company only
which has more than one sustainable advantage as the company will not be able to recover
from its bargain and won’t be a good or value-added deal for investors(Halls and Keynes,
2015).

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Company assets, attributes, brand value and abilities constitute sustainable competitive
advantage which is difficult to duplicate or substitute and provides long term advantage over
its competitors. Factors like barriers to entry, strong balance sheet or cash, human resources,
product differentiation and adapting product lines determine the sustainable advantages.
What is VRIO?
VRIO analysis is a management tool which helps to evaluate the company's resources and its
competitive advantage. The VRIO stands for Value, rarity, imitability and organization. J.B
Barney developed this evaluation by evaluation of company resources like – Finance
resources, human Recourse, Material resources and non-material resources like information
and resources (Vargas-Hernández and Contreras Garcia, 2018). With this type of evaluation,
the company can better understand its competitive advantages and weakness. VRIO is based
on four basic questions that ask if the resource is valuable? Rare? Costly to imitate? And
lastly is a resource is captured well by the organization. A resource or capabilities meet all
four dimensions can bring sustained competitive advantage to the company (Rezaee, 2016).
VRIO analysis for New Flyer Industries –
New Flyer Industries is one of the oldest manufactures of bus and coaches in Northern
America. They have various distribution centres across the United States of America and
Canada. It has maximum no of shares of the consumer in both the countries as they are
leading manufacturers of transport buses and coaches and their heavy parts. In recent years
they have acquired many manufacturing and service providing companies which have added
value to their product and services and reduced their cost for consumer benefits. With its
collaboration with a Japanese company, the company is developing new skills to improve its
latest technology and have a better version of products which are better than the competitors.

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New Flyer Industries has highest on-roll employees as compared to its competitors. It has
been awarded as Best Employer of the year for two consecutive years. It is one of the highest
revenue generating company is the Automobile sector. VIC, the resource is costly to imitate.
Their competitors require to do the lot of R&D to set up the innovation hub like this. It is one
of its kind. A lot of time and money is required for such set up (Bresser and Powalla, 2012).
For Sustained Competitive Advantage, the company has to look for other various resources or
capabilities which are rare and full fill all the condition of VRIO (Chatzoglou et al., 2018).
The main resources that are valuable, rare and costly to imitate are its R&D department,
Innovation Skill Lab, Employee retention rate, Brand Value (Ogluzdina, Shulgin and Son,
2016). After evaluating all the valuable resources, NFI has to look for a rare resource which
will further lead to a competitive advantage.
How to Use VRIO in New Flyer Industries?
Step I – Identify valuable, rare and costly to imitate resources
Step II: To Find out if NFI is organized to exploit these resources
Step III: To Protect the resources
Step IV: NFI should constantly review VRIO resources and their capabilities
When resource or capability is identified which has all 4 VRIO attributes, an organization
should protect it by using all possible means. Because this is the source of company for
sustained competitive advantage. After the process, it was determined that the Vehicle
Innovation Centre have all the attributes of VRIO and hence provides Sustainable
Competitive advantage to NFI.

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The Question of Value –
The most important question about the resource asked is does it add value to its organization
or exploits opportunities or defend against threats. If it’s positive, then the resource is
valuable if not then it leads to a competitive disadvantage. VIC is one of the most valuable
resources it exploits the environmental opportunities and neutralises the threat. With its
advance innovation and technology, it gives an edge to the organization over its competitors.
It should be evaluated from time to time as internal and external factors can make it less
valuable or useless with time. (O'Shannassy, 2008). The VIC is an intangible asset to the
company which adds core value to the product of the company and keeps consumer delighted
with its innovation. But other resources should also be looked out by other means.
Other valuable resources could be determined through Swot or value chain analyses. It should
also be studied as this will give the insights into the strength and weakness of the company.
SWOT (Strength, Weakness, Opportunity and Threat) analysis determines the internal and
external factors of the company whereas Value Chain analysis helps to identify the valuable
resources which are a source of cost or differentiation advantage. With these analyses, the
company identified its core strength to feats its opportunity or to work against its strength.
The valuable resource will help in achieving competitive advantage (Min et al., 2016).
Brand value is created with innovation and technology. It becomes easy for any company to
enter any market if brand and loyalty consumer is created, but it takes less time to destroy it
as well, with ever-changing environment scenario it’s important to keep innovating and have
a large product line (Keynes and Hall, 2015).
The Question of Rarity –
Resources which can be only acquired by one or a few organizations are considered to be
rare. It gives a temporary competitive advantage. When more companies have same resources

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uses the same strategy it leads to competitive parity as they have the same resources and same
procedure to implement them. None of the company achieves superior performance. Based
on parity company should not neglect their valuable resources as they are important for
staying in business (Lin et al., 2012).
Vehicle innovation Centre is a rare resource of the New Flyer Industries. It is currently
having a monopoly in the automobile industry. This centre is one of its kind in the continent.
It showcases not only the new technologies and design but also promotes education and
training of the same. People can walk in through the centre to have an idea of how this
industry has evolved with time. Vehicle Innovation Centre will provide a cutting edge over
its competitors had they have a full team dedicated for continuous improvement of the
technologies presently uses in bus and coaches. It will only work in the direction of the
innovation but also train and educate people in this field. They will look for a sustainable
environment for their company which relays on green fuel (Cardeal, 2012). This resource full
fills all the requirement of VRIO and hence give Sustainable Competitive advantage to New
Flyer Industries over its competitors. This is the process by which a company can evaluate its
resources. It has a mission which meets with company goals like green fuel, less emission,
less noise producing motors, safety. Works in economic benefits of people and its
community.
The Question of Imitability –
Firms which do not have innovation centre faces cost disadvantages in obtaining such
technology or imitating it. When other company or competitor is unable to imitate the
resource or buy or substitute at a reasonable price, then the resource is costly to imitate.
Imitation happens in two ways – a direct imitation of the resource or substituting the resource
(product/service). NFI has invested a lot of money and time to establish such a centre. It is

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one of its kind in North America. This centre attracts an investor to invest their money to get
a better return. The company has shown from time to time that innovation is only key for
success, they believe in technology, and the reasons they have large market share is
innovation and consumer loyalty because of this.
If a company has all three dimensions' value, rare and costly to imitate of its resources, it can
achieve sustained competitive advantage. It is difficult to imitate resources because of the
historical condition, Casual ambiguity and social complexities (Ghamari, 2008). They also
provide unique field training to understand the working of it. This gives them an edge over
their other competitors. These attributes are one of its competitive advantages over its rival.
The Question of Organization –
Last but not least the organisation or the firms need to understand the value of the resources.
New Flyer Industries have proper management systems, process, policies an organisational
structure and culture to understand the potential if its valuable, rare and costly to imitate
resources and capabilities as a resource will not add advantage to company own its own. Only
after this organization can achieve sustained competitive advantage (Ferdinand, 2013).
In the automobile sector, NFI employs the largest number of people and has separate R&D
setup for innovation. They have a total 31 delivery centre where the highest percentage of
consumer loyalty is shown. NFI's Innovation Lab is one of the rare resources of the company.
The organization has a proper set up to implement new ideas and innovation which further
can reduce the price of the goods or services or can increase the customer satisfaction and
share. None of their competitors has such a lab or design where they have such kind of set up.
Even in the near future its difficult as it will require a lot of investment and collaboration with
other brands as well. They have named their innovation centre as Vehicle Innovation Centre
(VIC). It has been set up by NFI and Motor Coach Industries (MCI) to provide sustainable

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research and development, innovation, progressive manufacturing and bold thinking (Gürlek
and Tuna, 2017).
Task 2 – Recommendation as how NFI should develop and
expand the business
In this case study, it is seen that New Flyer Industries has Sustainable Competitive Advantage
with its rare resource. The company should not relent on the same resources all the time but
should look for different resources as well. From time to time evaluation should be done of
all the rare and costly to imitate resources as with time it becomes less valuable or worthless.
NFI should not forget that their competitors are constantly working to achieve their
competitive advantage over each other. They are also innovating, improving or imitating or
substituting the ongoing process or technologies or resources (Ms.P.Kavitha, 2013).
 NFI should monitor its market change and also try to penetrate a new market. It
should also try to enter new markets of South America, Europe and Asia. This way
they will mark their presence globally. NFI was the first company to manufactures
low floor coaches and Hydrogen Gas run automobiles. They have proved in time, and
again they believe in innovation and technology.
 NFI has wonderful system and process in place, but the size of the market is
decreasing because there is constant change and many new companies have entered in
the business which has some common suppliers with NFI which make easy for them
to imitate the resources in less time and money. They have achieved competitive
advantage by providing lower costs than its competitors and also by providing the
best services and hence meeting the core competencies of the organization.

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 NFI innovation centre provides a sustainable competitive advantage as it is rare to
imitate or to substitute by NFI’s rivals. NFI needs to focus more on this process as its
one of the sustainable competitive advantages resource. This brings maximum laurels
to the company as it believes in constant innovation which helps the environment as
well (Finster and Hernke, 2014).
 With increasing pollution, NFI should look for alternative biofuels which have less
emission and sound. Electric motor generated coaches and buses are now new
generation technology, but this has been adapted or replicated by other company as
well. This show that NFI has to constantly work and invest in its R&D to maintain
their sustainable competitive advantage.
 They should constantly look for other resources within the company which could be
rare and valuable to the company and can provide a competitive advantage to the
company like employee award, customer services, etc. The VRIO analysis should be
done from time to time to evaluate all the resources and to see how they have added
value in the company. Many resources with time become less valuable as rivals also
working in the direction of attaining competitive advantage. With the help of the
analysis, the company will have a new list of valuable resources which will add
values to its product and services and will keep ahead of their competitors (Forsman,
2013).
 The foremost thing is to do to make the topmost management aware of this rare
resource and suggestion to be made as for how it can lower the costs or differentiate
the products and services. It should also be recommended as how this resource can be
made costlier to imitate for competitors so that it becomes difficult for them to copy
or replicate or substitute and it will be rare for a long time.

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 With changing dynamics in markets and competitors, resources value changes with it
and also with time. This should be reviewed constantly to know if they are still
valuable in the present scenario. Threats or Competitors are also keen and are working
to achieve a competitive advantage. To do so, they either try to replicate the rare
resources or to substitute it, which means NFI rare resource will no longer be rare
(Knott, 2015).
 Resources are of two types Tangible and intangible. Tangible resources are physical
things like land, building and machinery and they are rarely the source of competitive
advantage. Whereas intangible assets like brand reputation, R&D, innovation, unique
way of performing task, unique way of training. Think tank, work culture, etc. is
developed with time and correct resources, and they offer the perks of sustained
competitive advantage. To understand and to find valuable, rare and costly to imitate
resources of NFI we need to understand its intangible assets (Xin et al., 2013).
Apart from this above-given recommendation if the company also work towards in investing
in service and consumer satisfaction and taking their feedback from time to time, it will
provide them with additional information as what they can change or develop consumer
satisfaction. Secondly, it should train and motivate its employee from time to time. This will
help them in skilful resources which are determined to achieve their targets and company
aims and goals (Chen and Kodono, 2014).
Conclusion
New Flyer Industries leads the world in innovation and technology of heavy vehicles like bus
or transit coaches. They cover about 60 per cent of North America's Municipal Transport.
They are one of the best automobile manufacturers of Canada in terms of innovation, awards,