A Case Study

Company Profile

27 million passengers

500 destinations

Operates in 46 states, the District of

Columbia, and 3 Canadian provinces

75,000 riders per day

New Mission Statement

“The mission of Amtrak is to provide efficient and effective intercity passenger rail mobility that is

both safe and secure. The service provided to our customers will be superior to transportation substitutes based on convenience, comfort,

reliability, and price. Technological advancements allow Amtrak to provide environmentally friendly

service throughout the United States and Canada. Amtrak is committed to improving intercity

transportation in areas that will be both profitable and sustainable. Our employees’ wellbeing will

continue to be our greatest concern. Amtrak will continue to be a part of the backbone of American

transportation in times of national disaster and prosperity.”

Financial

2005 2006 2007 2008 2009 20101,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

Total ExpensesTotal Revenue

Expenses

Salaries, wages, and benefits

55%Train operations8%

Fuel, power, and util-ities9%

Materials6%

Facility6%

Advertising and sales3%

Casualty 2%

Other10%

remaining revenue

29%salaries,

wages, bene-fits

71%

Salaries, Wages, Benefits as a Percentage of Total Revenue

Ratios Compared to Competitors

2010Current Ratio

Debt to Equity ROA ROE EPS

Total Asset

Turnover

Amtrak 0.9 0.49 -0.124 -0.254 -0.139 0.24

Southwest 1.29 0.46 3.09 7.84 2.09 0.81

Delta 0.64 17 1.37 103.85 3.4 0.73

Greyhound 0.79 2.93 2.3 15.73 0.94 1.1

Financial Ratio Analysis 2010

2010 Current Ratio

Debt to Equity ROA ROE EPS

Total Asset Turnover

Amtrak 0.9 0.49 -0.124 -0.254 -0.139 0.24

Southwest Airlines 1.29 0.46 3.09 7.84 2.09 0.81

Delta Airlines 0.64 17 1.37 103.85 3.4 0.73

Greyhound 0.79 2.93 2.3 15.73 0.94 1.1

Structure of the Industry

Amtrak is the only company that offers passenger train service in the U.S

Transportation is a very competitive industry

The American public currently does not have a favorable view of train travel

Porter’s Five Forces

Competitive Rivalry: Low

Threat of New

Entrants: Very Low

Bargaining Power of Suppliers:

High Bargaining Power of

Buyers: High

Threat of Substitutes:

Very High

Strategic Map

Low Cost ProviderBroad

Differentiation

Low Cost Niche Focus Niche

AMTRAK is stuck in

the middle

Driving Forces

Time Efficienc

y

Low Cost

Accessibility to

Destination

Customer

Service

SWOT Analysis

Weaknesses

Weak management

Speed/ frequency

Dependency on subsidies

Depends on host railroads

StrengthsNortheast-Corridor Service

More energy efficient per

mileConvenience Security

SWOT Analysis

Threats

Uncertainty of Funding

Competitive Transportation

IndustryLabor Unions Volatile Fuel

Prices

OpportunitiesGreen Trend

Urban Commuter Corridor

“Land Cruiser” Asset Modernization

IFE and EFE Analyses

IFE

2.22

EFE

1.82

Value Chain

Inbound Logistics

SchedulingStaffingFuellocomotives

Operations

MaintenanceTicket production

Outbound

Delivery of ticketArrival of train

Marketing/ Sales

Ticket sales PricingPromotions

Services

SpeedCustomer supportFood/beveragesQuality/Safety

Company Analysis

Key success factors• Sales• Marketing• Service InboundCore competencies• service

Distinctive competencies• Environmental friendliness• Service

Weak areas• Marketing, Operations, HR, Finance,

Potential Strategies for Amtrak

• PrivatizationStrategy 1

• Cross-SubsidizingStrategy 2

• Match/Exceed ompetitors/Substitutes StrengthsStrategy 3

• Benefit from Competitors/Substitutes WeaknessesStrategy 4

• Exclusive Contracts with Suppliers (Unions)Strategy 5

• Horizontal IntegrationStrategy 5

Space Matrix

Based upon the Space Matrix, which strategy would you choose ?

Do you have any questions?

Thank you for yourattention!