Norfolk Southern Corporation: Company Analysis Presentation

Introduction

• It is one of the leading rail transport companies in US.
• It deals with freight intermodal shipments, transportation of minerals such as coal, Iron Ore and Coke.
• It also deals with transportation of cars, car parts, and lumbers.
• The company has transportation services for commuters both long distance and short distance.
• NS Corp has 4 different types of railways:
  • Norfolk and Western Railway;
  • Southern Railway;
  • Conrail and Pocahontas Land Corporation.

• It has a vision to efficiently and effectively transport Cargo while expanding to different areas of the world.
• It maintains its competitive advantage through good management and Innovation.
  • An example is the newly developed Green Machine which aimed at sustainable development which had three innovative objectives
    • To improve the economy;
    • To consider the people;
    • To reduction of carbon emissions.
• The company contributes to the economy and the people through the following:
  • The Economy
    • Through improving the rail transport system, the company improves on its revenues;
    • This improves the economy.
  • The people
    • Norfolk has a consumer oriented strategy;
    • Customers get what they want at the right time in the right place and at agreed terms and conditions;
    • The company also ensures environmental safety by reduction of carbon emissions.

History

• It was started in 1838 by William Mahone.
• Initially it was South Carolina Canal and Rail Road Co in 1833.
• Was bought is1881 by E.W Clark and CO then expanded to West Virginia, Columbus, Cincinnati, Durham and Winston-Salem.
• Formed the Southern Railway through a merger between East Tennessee, Virginia & Georgia and Richmond & Danville system Railroads in 1884.
• In 1901, NW Railway Company acquired Pocahontas Coal and Coke Company.
• 1939 it became Pocahontas Land Corporation.
• Merged into NW in 1959.
• Expanded further under the leadership of Samuel Spencer.
• Central Georgia became part of it in 1963.
• In 1968 it became Penn Central after merging with their largest competitor, New York Central.
• Filed bankruptcy in 1970.
• Joined by Norfolk Southern railway in 1974.

Marketing Strategy

• The company developed a consumer focused marketing strategy.
• This strategy focuses on consumer preferences, needs and ensures satisfaction.
• It has different business groups that operate under different management to achieve its goals.
• Each group has to develop the consumer focused strategy.
• This strategy is dependent on the business group.
• In this paper, the coal group is given as an example.
• Norfolk Southern Corporation’s Coal Group
  • Is divided in three functional areas:
    • Coal transportation services account management,
    • Marketing, sales and other commercial matters,
    • Planning and management of Coal resource development and Coal transportation services.
• Consumer satisfaction is done through logistic management.
• Marketing is done considering consumers’ delivery specification as the market segments.
• Coal group is further divided into:
  • Steam coal marketing;
  • Domestic metallurgical coal, coke and Iron Ore Marketing;
  • Industrial coal, coke and Iron Ore Marketing;
  • Export, coal, coke and Iron Ore Marketing.
• All the groups ensure marketing is done effectively.
• Each group has its ways of achieving the aim of the company’s marketing strategy which is to maintain customers and attract more.
• Marketing is supported by various departments of the organization for example Modalgistics Supply Chain Solutions (MSCS).
• The department offers supply chain services aimed at consumer satisfaction.
• They are;
  • Supply chain based consulting;
  • Innovative operations planning and management;
  • Industry leading asset management technology.

The Role in Supply Chain

• Supply chain is the link between customers and suppliers.
• The activities and businesses of NS address the organization of the supply chain.
• The company ensures delivery of goods from one destination to the other.
• It delivers goods from suppliers to various retailers and even wholesalers.
• Norfolk Southern Corporation’s operations are driven by a profound history of prosperity in providing efficient, economically, and environmentally added services and continuous customer satisfaction.
• It therefore provides the link between producers/suppliers and the consumers of the goods.
• The role in this link is transportation.
• The rail transport company offers intermodal services for different shipments from one area to another.
  • An example is transportation of refrigerated trailer shipments between Los Angeles and Atlanta.
• The corporation’s Modalgistics business unit works with customers to ensure customized supply chain solutions.
• It makes use of logistic providers, management consultants and technology providers to ensure reduced operating costs, free tax capital, enhanced revenue and free working capital.
• Norfolk Southern Corporation’s supply chain services combine technology with industry specific expertise to produce continuous supply chain solutions.
• Norfolk Modalgistic business unit ensures that every shipment is in the right mode.
• Product deliveries are made through intermodal means, rail, parcel or truckloads.

Economic Analysis

• Economic factors of any region affect businesses of any kind.
• Below are the economic factors that have affected the company.
  • Increased fuel price;
  • Recession;
  • Weak international business.
• Norfolk Southern Corporation has been affected by reduced demand due to recession.
• The company’s second-quarter earnings reduced to 45% due to reduced shipping demands.
• Weak international business affected the intermodal shipments.
• Some important results about revenue collection are as follows:
  • General merchandise revenue decreased to 33%.
  • Coal shipping reduced 34%.
  • Sales from intermodal transportation dropped to 31%.
  • The operation expenses also reduced to 29%.
• The company resorted to development of new projects and discounting to remain in business.
• These results show that the company is not in a very good business position currently.
• The company however has a strong competitive position, the ability to continue expanding and opportunities for growth from unexploited markets.

Impact on Globalization

• Globalization is the growth and differentiation of various sectors or industries in the world.
• It is characterized by affordability, diversity and availability of goods, new cultures in different places and new technologies.
• Norfolk Rail transportation has contributed to globalization through two ways:
  • Transportation of goods and people from one area to the other.
    • Transportation of tourists contributes to the changing cultures.
    • Transportation of goods to different regions leads to availability and diversity of the goods in such areas.
  • Development of new technologies in their operations.
    • In the quest to improve their services and satisfy consumers, they develop new technologies.
    • This is supported by new technologies that keep on emerging.
• Norfolk SC rail transport system has also been globalized due to trade and globalization in other industries.
• Norfolk has changed with improvements on capacity of goods carried generally, volume, efficiency and speed.
• The company’s modem international railway transport system has shaped global production and markets, and has linked manufacturing activities to global markets.

Norfolk Southern Corporation’s Current Issues

• This section considers the company’s current issues based on the security, projects, labor shortage, RFID and Freight damages.
• Security:
  • It has improved its security by implementation of NICE’s 7-digit transportation project
    • The aim was to capture, manage and analyze rail communications
    • The company aimed at improving incident reconstructions and their investigations
• Labor shortage:
  • The company is currently experiencing shortage of engineers due to technological revolution, changing consumer requirements and development of new ideas in the rail transport industry.
  • The problem is lack of enough engineers with updated skills due to;
    • Lack of training the necessary skills.
    • Competition for the already trained skills from other industries.
• Freight Damages:
  • The company operates efficiently and delivers goods with little freight damages.
  • This efficiency has been contributed to by demand rise between 2004 and 2005.
• RFID-Radio Frequency Identification Data:
  • The company uses this system in its supply management due to improved operations and methods in the rail industry, competition, new technologies and the quest to provide quality services.
  • Norfolk’s RFID is currently used for provision of freight shipment information, shipments auditing and for data supply.
  • These are important in logistics and transportation management.
• Projects:
  • Norfolk resorted to implementation of new projects to remain in business.
  • The company currently aims at building another intermodal terminal (announced on July, 16th).

Conclusion

• Norfolk has grown to a level where it is the leading company in the rail transport industry in US.
• Its position is maintained by its effective management and marketing strategy used in each business unit.
• It also plays a very important role in the supply chain by transporting goods to consumers from suppliers.
• The current situation however has destabilized the company having reduced revenues due to weak international business and recession.
• The company has also contributed to globalization of the rail transport industry through its operations and innovations.

Reference List

• Associated Press a. (2009). Norfolk Southern 2Q profit plunges 45 percent. Bay News 9. Web.
• Associated Press b. (2009). Norfolk Southern 2Q profit plunges 45%. World Now and WRIC. Web.
• Beachey, A. (2008). Skills Shortage in the Rail Sector. Railway Technology. Web.
• Berman, J. (2009). Railroad/Intermodal Shipping: Norfolk Southern, Union Pacific Launch Intermodal reefer Service. Logistics Management. Web.
• Bureau news. (2009). Norfolk Southern Sees demand will reach Worst level this Quarter, Might Pick up in Second Half. Taragana. Web.
• Community. (n.d.). Web.
• Congress of the United States. (2005). Freight Rail Transportation: A Review of the 2004 Experience. A CBO Paper. Web.
• Environmentally Friendly. Proquest Career & Technical Education. p. 104. Web.
• Forbes.com . (2009). Norfolk Southern Corp (NYSE: NSC): Buy/Hold/Sell Analysis. ZACKS Investment Research. Web.
• Gourdin, K. N. (2001). Global logistics management: a competitive advantage for the New Millennium. New Jersey, US: Wiley-Blackwell.
• Kell, J. (2009). Norfolk Southern Hit by Demand Drop, 2009. Dow Jones & Company. Web.
• Modalgistics Supply Chain Solutions (2009). Consultancy, Technology and Operations. Norfolk Southern Corporation. Web.
• NICE. (2008). NICE Wins 7-digit Transportation Project from Norfolk Southern Corporation. NICE Systems Limited.
• Norfolk Southern Corp. (a) (2009). Coal Business Group. Web.
• Norfolk Southern Corp. (2008). James A. Squires, Executive Vice President Finance and Chief Financial Officer Norfolk Southern Corporation’s Remarks on NYSE Euronext Investment Conference Tokyo, 2008. Web.
• Norfolk Southern Corp. (b) (2009). Norfolk Southern Selects Greencastle Site for New Franklin County Regional Intermodal Facility, Supporting Crescent Corridor Initiative. Web.
• Rodrigue, J. P. (2009). Transportation and Globalization. Department of Economics & Geography, Hofstra University, Hempstead. Web.
• UNIVERSUMUSA. (2008). Transportation: RFID Technology.