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Union Pacific is operating as North America's premier railroad franchise that currently covering 23 states in western two thirds of United states. It is a freight-hauling railroad operates 8300 locomotives over 32200 miles (51, 800 km) (Overtonn2021). Union pacific is the second largest rail road after BNSF with which it shares, a duopoly on transcontinental freight rail lines in western midwestern and southern united states. Union Pacific Railroad is the principal operating company of the Union Pacific Corporation (Reinhart 2021). The combined Union Pacific–Central Pacific line became known as the First transcontinental railroad and later the Overland Route. As boom followed bust, the Union Pacific continued to expand but encountered challenges (McCurdy 2019). The paper aims to discuss vision and mission statements of the company followed by situational analysis.
Vision: The vision of the Union PAC is “Build America for all generations by connecting our nation's businesses and communities to each other and the world” (Building America 2022).
Mission: The mission of the Union PAC is “The people of Union Pacific deliver North America's safest, most reliable and most efficient supply chain solutions”
The values and beliefs are the main driving factors behind Union PAC.
As one of the leading firms in its industry, Union Pacific has numerous strengths that help it to thrive in the market place. UNP’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value (Strong 2022). Union Pacific managed to grow its earnings per share at 14% a year (Craghead 2019). However, focusing on railway operating company’s effort around a core railway business can help to drive operational improvements.
The industry structure is different from other industries. The industry is logistics and transportation because they focused on actual movement of the products and ocean and air. This industry also established its identity in logistics and transportation within the supply chains. For example, UPC operates in the transportation industry as it mainly focused on agricultural products, chemicals, coal, and industrial products (Young and Gaubert 2020). The economic feature is that it is a high-revenue company with an increase of 21.9% in net income. It has a net profit margin is 9.3% with revenue of 21.8B.
i) Business Level Strategies
This company works with logistics and transportation and it is It is a major partner in America’s supply chain and transportation infrastructure. It connects the west and gulf ports to their eastern counterparts. The major business strategy is to target chemical, coal, and food products in the United States as well as the gulf region because this region requires reliable supplies (Tobias, Bostic, and Sibbett 2021).
ii) Corporate Level Strategies
The corporate-level strategies for the company are very limited. For example, they have the largest railroad network in United State which is based on their ability to work on networking and product quality. The company is the first transcontinental railroad and later the overland route because this company used an individualistic business model that to sell products (Most Reliable Freight Rail Products) and develop a brand for the company because other companies are unable to bring such innovation in a short period of time similar to this company. Increasing train size remains one of our main areas of focus and hence, other companies are unable to compete with such high skills. This company also develops a segment for each good in order to improve corporate strategies and bring high revenue.
Union pacific railroads have several competitors such as Amtrak, BNSF Railway, and Kansas City Southern. However, no one of the competitors was able to abolish the market completely due to a lack of a strategic plan as well as poor passenger revenue. Hence, this is a competitive advantage of the company over others (Bryan 2021). Every innovative product and business in the company that is inclined towards innovation and quality contributed to competitive advantage.
This is a recognitional framework that enables clients to identify current competitive advantage along with areas of improvement.
i) Strengths ii) Weaknesses iii) Opportunities iv) Threats
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Strength · They have very high strength because more than 40000 employees and operates more than 8000 locomotivesovern 32000 miles in 23 states of central and western united states (Bryan 2021).. · They have very diversified revenue and robust financial streams (Davis 2018) · They have high operational network in united states and driving down cost and removing waste helps them be more competitive. |
Opportunities · Positive outlook of US agriculture trades · Increasing demand of coal in US reduced their tendency for rails · Expanding markets and expansion abroad (Davis 2018) |
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Weakness · Heavy dependence on few suppliers · Relatively low global tie ups and presence |
Threats: · Slowdown in US economy · Rising oil prices · External changes (government, politics, taxes etc
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Political factors |
The political factors influence the long-term profitability in certain markets as Union Pacific operates in more than dozens of countries and hence, exposed to different types of political environment and political system risks (Kawamura and Allahyari 2020). Hence, Growing tensions and instabilities in the global political environment. |
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Economic factors |
The macro environments such as growing economics offer different growth opportunities to the individuals as the company can grow withthe innovation of infrastructure development. It can improve economic factors through analysing skilled human capital as it lacks the appropriate skilled human capital as a shortage of skilled labour can affect business efficacy (Narisetty et al. 2019). |
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Social factors |
While it has high employee, lack of appropriate business management practices (as it is exposed to many countries) may reduce their revenue. It also has biases while hiring employees because traditionally assigned gender roles are considered in this case (Fleisig, 2018). |
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Technological factors |
The technical innovation is high for this company but unable to consider social media marketing. The company can leverage the opportunities for social media campaign in order to comply with highly competitive standard (Fleisig, 2018).. |
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Legal factors |
The legal framework is robust enough to protect the intellectual property rights of an organisation. Since the company has exposure to many countries, the inconsistent Employment law, health and safety law. |
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Environmental factors |
Sustainability has been a current approach to improvement. In this case, Union Pacific Corporation. can benefit from it and invest in renewable technologies to ensure long-term sustainability. |
The organization revolves around supply chain and logistics as it only focuses on the transportation. Target chemical, coal and food products in United states as these products have limited supplier in United states.
The company developed inclusive business and marketing strategies as the market is frequently influenced by migration. Hence, it is fundamental for Union Pacific Corporation. to understand the people’s general attitude toward migration
iii) Psychological Characteristics of the Market
The shift from retail stores to e-commerce has increased the levels of complexity for those in logistics. Many retailers are outsourcing their logistics operations to external service providers such as Third-Party Logistics companies which take charge of all aspects of the supply chain from fulfillment to delivery. In this current context, consumers are looking for a transparent supplying chain and getting supply with limited cost (Reinhart 2021). Hence, this organisation continues to improve its network and transparency along with Intensive capital investment in order to ensure high consumer behavior. Brand value is also considered as the major driver of consumer buying behaviour.
Brand awareness is the major behavior of the company. For example, since this company is offering luxury products at premium prices to a market where the high-end market is considerably small in the number will require, the consumers currently buying the products developed by this organisation (Wang et al. 2014). However, since current market shifted to online market, Union Pacific Corporation. needs to understand online shopping behaviour.
The company has a range of strategies that is currently appealing to the market. The list of strategies is following:
The main goal of company is to move cars faster and reduce the number of times each is touched. Hence, all of these strategies comply with the goals and create a strong product base as well as consumer base in logistic company (Wang et al. 2014). .
The product strategies of the company as follows:
ii) Pricing Strategy
Union Pacific offers B2B services that develop pricing based on following factors such as transportation sectors. In this case, the company focused on cheap transportation cost along with improved network performance in order to comply with low cost in the product market (Kienzler and Kowalkowski 2017). Since velocity per hour is increased recently, the company increased its pricing.
iii) Promotional/ Advertising Plan
The company used multiple ways to promote the products such as TV commercials, print advertisements in newspaper in order to reach the target consumers. It also used museum to promote products because museum contains one of the oldest corporate collections.
4Ps’ comparisons with competitors
i) Product: The competitor in terms of products are CSX Corporation and Norfolk Southern Corporation
ii) Price: In terms of pricing, they have competitive advantage because they reduced transportation cost (Kienzler and Kowalkowski 2017).
iii) Place:It provides coast-to-coast refrigerated services, offers services in key population centres in eastern part.
iv) Promotion: They have innovative promotional strategies such as using museums for this purpose.
v) Strengths’ comparisons with competitors:
Use innovative promotional strategies (Kienzler and Kowalkowski 2017)
extensive door-to-door and ramp-to-ramp services in order to gain a competitive advantage
vi) Weaknesses’ Comparison with Competitors
Currently this organisation sells its products at a higher price than competitors. While the products have high features and quality, many consumers are currently looking for cheap products. Hence, it is one of the major limitations of the company that can be improved through appropriate pricing strategy (Kienzler and Kowalkowski 2017).
vii) Organization’s Competitive Advantage
The competitive advantage of the company are product, breakwaters and networks. For example, the products are manufactured with high quality which reflected in the pricing and has a network of over 500 suppliers that provide it with the raw materials needed for production. The brand awareness of the consumer is competitive advantage since this has been well recognised institution which revolve around high-quality products.
The company has the following success factors that contributed to continuously high revenue:
One of the major challenges encountered by the company is supply chain challenges as logistic revolves around supply chain and transportation issues are preventing this supply chain segments of the company. Automotive function of the company is recently down because of lack of chips, and simply fewer cars being shippers (Kienzler and Kowalkowski 2017). However, similar to many transportation companies, Union Pacific is coping with supply chain challenges, including in the automotive and intermodal segments, or cargo that goes directly from ships to trains.
Its cost structures are highly agile. However, current 2022 financial analysis provides a deep insight into area of improvements. For example, their pricing is comparatively high compared to other companies. Business volumes, as measured by total revenue carloads, were up 3% and Operating revenue of $6.6 billion was up 18%. However, they encountered a 2% decline in the revenue based on their supply chain challenges. The company will maintain strong price discipline while improving efficiency and service to capitalize on the available demand.
On a concluding note, it can be said that Union Pacific is the second largest rail road after BNSF with which it shares, a duopoly on transcontinental freight rail lines in western midwestern and southern United States. Having diverse and inclusive approach to business and having as strong cash flow as well as effective labour market are the major successful factors of the company. The company will maintain strong price discipline and improve the strategy to maintain average price margin.
