Union Pacific Case Study for Strategic Alternatives Essay example

6861 WordsJun 21, 201428 Pages
Union Pacific: A Case Study for Strategic Alternatives PART 1: INTRODUCTION Union Pacific Railroad Company (UNP) is one of the four major railroad companies that transports a variety of goods across North America and is an American staple of industriousness and endurance. Union Pacific with its workforce of 43,000 highly trained people has been in operation since 1862, and its span of operation stretches from Western to Southern United States and internationally into Western Canada and Northern Mexico. The American Association of Railroads has classified Union Pacific as part of the Class I Railroad Group, which consists of seven other railroad companies but Union Pacific is by far the standout…show more content…
One reason is the high capital investment for the development of railroad infrastructures and technologies. Consider this, “between 1980 and 2009 Class I railroads spent $460 billion on infrastructure, equipment maintenance, and upgrades” (Hitt et al. 2011, p. 387). In addition, new rails and routes must be coordinated and integrated into a complex and congested system that is owned and operated by well-established companies. Although there is a clear and formidable barrier into the industry, railroads are not without competition. In addition to the fierce rivalry with the railroad companies within its strategic group, UNP must also compete with the trucking industry. Union Pacific and the rail industry saw a surge in business in 2007 compared to other modes of transportation due to the rising cost of fuel (diesel, jet, and gasoline) and an increase in environmental awareness. This rise and fall of fuel prices have presented both opportunities and challenges for UNP. The trucking industry poses a legitimate threat to the rail industry in terms of freight transportation because of accessibility and logistical versatility. The free-wheeling trucking industry is not subjected to the heavy regulations that the rail industry must face. Trucks are not restricted by complicated rail networks and benefit from the use of roads and highways that are federally and state funded. Whereas UNP and other rail companies must subsidize

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