Case Study Description of National Railroad Passenger Corporation ("Amtrak"): Acela Financing
This is a Darden case study.In the late 1990s, the National Railroad Passenger Corporation (Amtrak) faced a rude awakening as Congress stipulated that it eliminate its reliance on federal subsidies by 2002. In response, Amtrak drew up a plan for self-sufficiency, the centerpiece of which was a new high-speed passenger service that, it was hoped, would boost revenue enough to make Amtrak self-sufficient by 2002. To run this new service, Amtrak needed to purchase $750 million worth of new locomotives and train sets in 1999. Three alternatives were available for funding the purchase: debt financing, lease financing, or reliance on federal sources. The case opens with Amtrak's CFO instructing her staff in April 1999 to review a leveraged-lease proposal that has just been submitted by BNY Capital Funding LLC. The objectives of the case are to introduce students to financial leases as a financing alternative, explore the lease-versus-buy decision and the conditions under which financial lease arrangements make sense, and exercise skills in the valuation of financial leases.
Swot Analysis of "National Railroad Passenger Corporation ("Amtrak"): Acela Financing" written by Robert F. Bruner, Jessica Chan includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Amtrak Lease facing as an external strategic factors. Some of the topics covered in National Railroad Passenger Corporation ("Amtrak"): Acela Financing case study are - Strategic Management Strategies, Financial analysis, Strategic planning and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the National Railroad Passenger Corporation ("Amtrak"): Acela Financing casestudy better are - – geopolitical disruptions, supply chains are disrupted by pandemic , cloud computing is disrupting traditional business models, talent flight as more people leaving formal jobs, digital marketing is dominated by two big players Facebook and Google, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing household debt because of falling income levels,
increasing energy prices, increasing government debt because of Covid-19 spendings, etc
Introduction to SWOT Analysis of National Railroad Passenger Corporation ("Amtrak"): Acela Financing
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in National Railroad Passenger Corporation ("Amtrak"): Acela Financing case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Amtrak Lease, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Amtrak Lease operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of National Railroad Passenger Corporation ("Amtrak"): Acela Financing can be done for the following purposes –
1. Strategic planning using facts provided in National Railroad Passenger Corporation ("Amtrak"): Acela Financing case study
2. Improving business portfolio management of Amtrak Lease
3. Assessing feasibility of the new initiative in Leadership & Managing People field.
4. Making a Leadership & Managing People topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Amtrak Lease
Strengths National Railroad Passenger Corporation ("Amtrak"): Acela Financing | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Amtrak Lease in National Railroad Passenger Corporation ("Amtrak"): Acela Financing Harvard Business Review case study are -
Training and development
– Amtrak Lease has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in National Railroad Passenger Corporation ("Amtrak"): Acela Financing Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Superior customer experience
– The customer experience strategy of Amtrak Lease in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Operational resilience
– The operational resilience strategy in the National Railroad Passenger Corporation ("Amtrak"): Acela Financing Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Innovation driven organization
– Amtrak Lease is one of the most innovative firm in sector. Manager in National Railroad Passenger Corporation ("Amtrak"): Acela Financing Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Learning organization
- Amtrak Lease is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Amtrak Lease is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in National Railroad Passenger Corporation ("Amtrak"): Acela Financing Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Ability to lead change in Leadership & Managing People field
– Amtrak Lease is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Amtrak Lease in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Cross disciplinary teams
– Horizontal connected teams at the Amtrak Lease are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Organizational Resilience of Amtrak Lease
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Amtrak Lease does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Successful track record of launching new products
– Amtrak Lease has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Amtrak Lease has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Sustainable margins compare to other players in Leadership & Managing People industry
– National Railroad Passenger Corporation ("Amtrak"): Acela Financing firm has clearly differentiated products in the market place. This has enabled Amtrak Lease to fetch slight price premium compare to the competitors in the Leadership & Managing People industry. The sustainable margins have also helped Amtrak Lease to invest into research and development (R&D) and innovation.
High brand equity
– Amtrak Lease has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Amtrak Lease to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
High switching costs
– The high switching costs that Amtrak Lease has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Weaknesses National Railroad Passenger Corporation ("Amtrak"): Acela Financing | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of National Railroad Passenger Corporation ("Amtrak"): Acela Financing are -
Slow to strategic competitive environment developments
– As National Railroad Passenger Corporation ("Amtrak"): Acela Financing HBR case study mentions - Amtrak Lease takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Amtrak Lease is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study National Railroad Passenger Corporation ("Amtrak"): Acela Financing can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Aligning sales with marketing
– It come across in the case study National Railroad Passenger Corporation ("Amtrak"): Acela Financing that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case National Railroad Passenger Corporation ("Amtrak"): Acela Financing can leverage the sales team experience to cultivate customer relationships as Amtrak Lease is planning to shift buying processes online.
Skills based hiring
– The stress on hiring functional specialists at Amtrak Lease has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Slow decision making process
– As mentioned earlier in the report, Amtrak Lease has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Amtrak Lease even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Interest costs
– Compare to the competition, Amtrak Lease has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Workers concerns about automation
– As automation is fast increasing in the segment, Amtrak Lease needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the National Railroad Passenger Corporation ("Amtrak"): Acela Financing HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Amtrak Lease has relatively successful track record of launching new products.
Need for greater diversity
– Amtrak Lease has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Capital Spending Reduction
– Even during the low interest decade, Amtrak Lease has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Products dominated business model
– Even though Amtrak Lease has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - National Railroad Passenger Corporation ("Amtrak"): Acela Financing should strive to include more intangible value offerings along with its core products and services.
Opportunities National Railroad Passenger Corporation ("Amtrak"): Acela Financing | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study National Railroad Passenger Corporation ("Amtrak"): Acela Financing are -
Redefining models of collaboration and team work
– As explained in the weaknesses section, Amtrak Lease is facing challenges because of the dominance of functional experts in the organization. National Railroad Passenger Corporation ("Amtrak"): Acela Financing case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Better consumer reach
– The expansion of the 5G network will help Amtrak Lease to increase its market reach. Amtrak Lease will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Amtrak Lease to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Developing new processes and practices
– Amtrak Lease can develop new processes and procedures in Leadership & Managing People industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Leveraging digital technologies
– Amtrak Lease can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Amtrak Lease to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Amtrak Lease to hire the very best people irrespective of their geographical location.
Low interest rates
– Even though inflation is raising its head in most developed economies, Amtrak Lease can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Using analytics as competitive advantage
– Amtrak Lease has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study National Railroad Passenger Corporation ("Amtrak"): Acela Financing - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Amtrak Lease to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Amtrak Lease can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Leadership & Managing People industry, but it has also influenced the consumer preferences. Amtrak Lease can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Amtrak Lease can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, National Railroad Passenger Corporation ("Amtrak"): Acela Financing, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Manufacturing automation
– Amtrak Lease can use the latest technology developments to improve its manufacturing and designing process in Leadership & Managing People segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Amtrak Lease can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Threats National Railroad Passenger Corporation ("Amtrak"): Acela Financing External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study National Railroad Passenger Corporation ("Amtrak"): Acela Financing are -
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Amtrak Lease in the Leadership & Managing People industry. The Leadership & Managing People industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Amtrak Lease needs to understand the core reasons impacting the Leadership & Managing People industry. This will help it in building a better workplace.
Easy access to finance
– Easy access to finance in Leadership & Managing People field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Amtrak Lease can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Amtrak Lease with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Amtrak Lease can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study National Railroad Passenger Corporation ("Amtrak"): Acela Financing .
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Amtrak Lease business can come under increasing regulations regarding data privacy, data security, etc.
Technology acceleration in Forth Industrial Revolution
– Amtrak Lease has witnessed rapid integration of technology during Covid-19 in the Leadership & Managing People industry. As one of the leading players in the industry, Amtrak Lease needs to keep up with the evolution of technology in the Leadership & Managing People sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Environmental challenges
– Amtrak Lease needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Amtrak Lease can take advantage of this fund but it will also bring new competitors in the Leadership & Managing People industry.
High dependence on third party suppliers
– Amtrak Lease high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Regulatory challenges
– Amtrak Lease needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Leadership & Managing People industry regulations.
Stagnating economy with rate increase
– Amtrak Lease can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study National Railroad Passenger Corporation ("Amtrak"): Acela Financing, Amtrak Lease may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Leadership & Managing People .
Weighted SWOT Analysis of National Railroad Passenger Corporation ("Amtrak"): Acela Financing Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study National Railroad Passenger Corporation ("Amtrak"): Acela Financing needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study National Railroad Passenger Corporation ("Amtrak"): Acela Financing is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study National Railroad Passenger Corporation ("Amtrak"): Acela Financing is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of National Railroad Passenger Corporation ("Amtrak"): Acela Financing is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Amtrak Lease needs to make to build a sustainable competitive advantage.