Managing External Influences - Essay Example

Managing External Influences Introduction In today’s uncertain and competitive environment, businesses need to concentrate not only on internal issues, but also external issues and influences. Businesses need to consider the political, economic, social, technological, environmental, and legal factors to carry out their operations. Union Pacific Railroad Company is doing a great job till now to survive in the American railroad industry. Taking First plc as an example, we would look at the efforts of Union Pacific Railroad Company to maintain sustainability and their position as market leaders. Let’s carry out a PESTEL Analysis of the Union Pacific Railroad Company. Union Pacific Railroad Company Profile Union Pacific Railroad Company is the largest railroad network operating in the United States of America (Union Pacific Official Site). It covers 23 states across the western two-thirds the United States. The railroad network is based out of Omaha, Nebraska and employs 45,000 people. Union Pacific’s primary service is freight transportation, however, it also operates passenger rail in Chicago in the form of Metra. Union Pacific’s innovative presence in the railroad industry is recognized by Fortune. On March 9, 2009, Fortune has named Union Pacific the railroad industry’s ‘Most Admired Company’. Union Pacific ranked #1 among all key attributes of the railroad industry. Political Factors Political factors are those factors over which the company has no control. These factors are totally in control of the government and decisions can conflict with company priorities and objectives. However, the company needs to adjust itself to the existing conditions to remain in the market. For instance, The Federal Railroad Administration is the controlling authority of railroad policies and it has developed a bridge inspection program whereby officials will perform safety inspections to ensure safety of pedestrians and freight (Department of Transportation). This is not a problem for the Union Pacific Railroad Company as they are already doing a pretty good job to ensure safety. The company itself conducts training seminars to reduce pedestrian casualties and inspects its operations to assure on track safety. Therefore, inspections from the FRA do not trouble the company. Economic Factors Every company works for profit. In other words, it works to get the maximum possible reward in exchange of providing services. More than ever before, companies have to exert efforts in carrying out market research and thus, satisfying customer needs. As the world is becoming a global village, and as more competition has evolved, customers are not only requiring a good product. They require that companies produce what they want, and provide them with quality service. Union Pacific Railroad Company has not lagged behind and has done significant research to find out what customers actually want. Due to the volume of freight transportation these days, customers are extremely mindful of their freight, and want to ensure proper delivery. This is an opportunity for Union Pacific Railroad Company, and they have been successful implementing their customer-centric strategy. The company ensures damage free delivery in order to satisfy existing customers and pull its competitors’ customers. The company has highly trained staff to ensure proper delivery and the presence of field managers makes it possible for the company to solve unexpected problems that lead to damage. Furthermore, The Union Pacific Railroad Company also uses satellite technology to track and deliver products safely. The company uses exceptional technology to keep it informed of its rails speed, location, time, and makes it easier to control collisions and impacts (Union Pacific Official Site). Social Factors The world is in the midst of recession, and given that the world is starting to recover, the trend for the railroad industry suggests that growth is inevitable. This has to be attributed to the global growth of economies, particularly emerging economies such as China, India, and Brazil etc. Cheap labor in these countries has forced many American and European companies to import raw materials, and therefore, freight transportation looks to be increasing in the foreseeable future. On the other hand, growth in Asia has increased their desire to go for Western goods, and so freight transportation is on the rise even there. In the wake of positive outlook for the railroad industry, the Union Pacific Railroad Company has opened several new routes and is continually expanding its already vast network to cater to specific niches. Technological Factors Technology requires financial strength and backing and with the advent of technology, companies have excelled by reducing costs. This helps them to supply products at competitive prices and attract potential customers and retain existing customers for future business. Furthermore, technology also helps to reduce the idle time between processes and therefore, increases productivity. Union Pacific is a leader in the railroad industry, and really gives a bulk of their consideration to improving services through technology. According to the official web site of the company, the company began construction of a $90 million intermodal terminal in Southwest Bexar County (Union Pacific Official Site). The new facility will have economic impact till 20 years and would be worth around $2.48 billion. Moreover, the new facility is being specifically created to cater to the San Antonio area, which has seen increased demand because of the opening of Toyota’s new plant. The new facility will be developed with state of the art technology to reduce waiting time for trucks (or other vehicles) entering or exiting the facility. The national average for waiting time is four minutes, but after the completion of this facility, trucks would only need to wait for forty five seconds. This would also enable less traffic in the facility. Environmental Factors People and customers alike are getting concerned about the earth we live in, and place premier importance to the environmental damages caused by production. Union Pacific Railroad Company is working tirelessly to promote a greener environment and is developing locomotives and vehicles that are environmentally friendly. The company, along with the Oregon Department of Environmental Quality is studying ground contaminations at the company’s yards, believed to be some hundred years old. Recently, one of the company’s employees was given the ‘Industry’s Top Environmental Award’ for innovative environmental management tools (Union Pacific Official Site). Furthermore, the company has also developed low emission locomotives to provide safer transportation services. Legal Factors Legal influences are also very important for a company’s survival. Since a safer and better world is desired, the government has developed agreements with the railroad industry on the issue of carbon emissions. Currently, the railroad industry produces one third of America’s emissions and America itself produces 25% of the world’s pollution. The Union Pacific Railroad Company has set a target to reduce emissions by 55% during a fifteen year period from 2005 to 2020 (Union Pacific Official Site). Stakeholders and Their Judgment 1. Customers Customers are one of the important stakeholders of the Union Pacific Railroad Company. The company’s customers are not primarily passengers, but rather companies from different industries such as automotive, agriculture, energy, chemicals etc. These are large companies who use the services of Union Pacific to transport raw materials and finished goods to the factory. Customers might see the company as a success because customers have been given quality service, and have been loyal to the company. 2. Investors Investors or shareholders are a driving force for the company’s success because they provide the financial strength and backing that is needed for expansion. The company has used the finances from the investors for research and development, and market research and has expanded through innovative services. Investors only value profit and from that aspect, the company is a success because it has given constant dividends to shareholders. From the perspective of the shareholder, the company has been a success. 3. Employees Remember, employees are a firm’s greatest asset. Therefore, employees are also a firm’s biggest stakeholder. From the perspective of the employees, employees are happy if they are paid well, trained, given recognition, job security and safer working conditions and are not discriminated against. If all of these conditions are met, employees would see the company as a success. According to Business Week, Union pacific was among the 50 best places to launch a career. 4. Suppliers Suppliers would value Union Pacific according to the number of orders placed by the company. Union Pacific also values its relationship with suppliers, but wants quality, low cost products, and above all safe products. These places a lot of requirements on the suppliers, Furthermore, the company provides equal opportunities to small and female owned businesses. To better handle relationships, Union Pacific also holds party with suppliers outside of office hours to maintain trust and relationship. Therefore, I feel that the suppliers at Union Pacific see the company as a success. 5. Community The Union Pacific Railroad Company is a community favorite because it is regular donor to many charity organizations around the United States. Furthermore, it also offers workshops and conducts seminars to educate the pedestrians of safety. Also, it has coordinated with the Federal Railroad Administration to establish a quiet zone, where the locomotives don’t blow horns (Federal Railroad Administration). This prevents the community from being disturbed. Moreover, the company is constantly involved in efforts to reduce emissions and attracts a lot of support from the locals. Therefore, I feel that the company is liked by the community. Conclusion In short, I would like to point out that there might be certain mishaps at the Union Pacific Railroad Company, but those mishaps are outweighed by the efforts of the company to satisfy all relevant stakeholders. All in all, I feel that the company is doing a fantastic job to continue in the railroad industry, and have had significant impacts on the industry as a whole since it is forcing other firms to bring innovation in their system to stay in the market. Union Pacific Railroad Company is a perfect example for any firm who looks to establish itself in a particular market. Works Cited 1. Union Pacific Official Web Site. Union Pacific: Company Overview. 2. Department of Transportation: FRA Railroad Bridge Safety. Oct.2007 3. Union Pacific Official Web Site. Customers: Careful Car Handling. http://www.uprr.com/customers/dam-prev/careful_car_handling.shtml 4. Union Pacific Official Web Site. Union Pacific Begins Construction of $90 Million State-of-the-Art Intermodal Terminal in Southwest Bexar County. 5. Union Pacific Official Web Site. Union Pacific Employee Receives Industry’s Top Environmental Award. 23 Apr 2008 6. Union Pacific Official Web Site. Union Pacific Reports Progress in Reducing Los Angeles Area Emissions. 23 May 2007 7. Business Week. Best Places to Launch a Career. 3 Sep. 2009 8. Federal Railroad Administration. Railroad Safety. Final Use on the Use of Locomotive Horns at Highway-Rail Grade Crossings. 5 Oct 2009 Read More