Union PACIFIC CORPORATION Brooke Beasley, Audrea Gandy, Joshua McCree, & Deona Tucker

Agenda Background & History Internal Analysis External Analysis SWOT Analysis Business Level Strategy Corporate Strategy Strategy Effectiveness Problems

Background & History

Union Pacific History 1862: President Abraham Lincoln signs the Pacific Railroad Act 1865: Broke ground for Transcontinental Railroad 1869: Golden Spike driven connecting railroads 1969: Union Pacific incorporated 1996: Southern Pacific and Union Pacific merge 2012: 150th anniversary of Union Pacific 2012: John J. Koraleski named President and Chief Executive Officer Deona

Current Summary Established in 1862 Headquarters located in Omaha, Nebraska Employees 45,928 Operates 31,868 miles of track Maintains 8,391 locomotives Provides rail service to 23 states in the Midwest Deona

Current Summary Graphs Figure 1.1 UP vs Industry Revenue Trend Source: MorningStar New techniques & technologies have increased volume, revenue, and profit Figure 1.2 UP Stock Price Source: MorningStar Deona Average growth rate of 8.9% over the last 14 quarters

Internal Analysis

Mission Statement The Men and Women of Union Pacific are dedicated to serve. Union Pacific works for the good of our customers, our shareholders, and one another. Our commitment defines us and drives the economic strength of our company and our country. Josh

Values & Ethics Union Pacific’s value are: Focus on Performance: Our concentration and determination will drive our safety, customer satisfaction, and quality results. Ensure High Ethical Standards: Our reputation will always be source pride for our employees and a bond with our customers, shareholders, and community partners. Work as a Team: We are all part of the same team, and working together to reach our common goals is one of our strengths. Communication and respect are the foundation of great teamwork. Josh

Social Responsibility Fortune Magazine’s “World’s Most Admired Companies” Environmental Developing clean locomotives Reducing greenhouse emissions Philanthropic $7 million in 2013 Community-Based Grant Program Human Rights Safety Unfair practices Josh

Financial Performance Figure 2.1 ROIC Trend Analysis Source: MorningStar   Ultimate goal is to increase shareholder’s value Drivers include profitability and profit growth Figure 2.2 ROIC vs. WACC Trend Analysis Source: MorningStar   Brooke ROIC > WACC = creating value ROIC < WACC = destroying value

Economic Moat Analysis Figure 2.3 Economic Moat Process Source: (Hill, Jones, & Schilling, 2015) Brooke

Building Blocks Analysis Innovation Alternative fuels (R&D) Reducing greenhouse emissions (R&D) Types of transportation services (Production) Quality as Excellence Track Network (Production) Efficiency GPS (Production) Quality as Reliability On-time (Production) Damage free delivery (Production) Safety (Production) Customer Responsiveness Specialized marketing & sales teams (Marketing & Sales) Customer service call centers (Customer Service) Audrea

Strengths & Weaknesses High Switching Costs Low Cost Production Brand Reputation Innovation Efficiency Quality as Reliability Quality as Excellence Customer Responsiveness Mission Statement Human Rights Safety

Competitive Advantage Broad Differentiator Innovation Quality as Excellence Efficiency Quality as Reliability Customer Responsiveness Figure 2.4 ROIC Trend Analysis Source: MorningStar   Brooke

external Analysis

Macroeconomic Forces Macroeconomic Global Technological Automobile Natural gas Coal and crude oil sales Weather and climate changes Global Population growth Overall health of the global economy Technological Increase fuel efficiency and safety standards Josh

Macroeconomic Forces Cont. Demographic Shortage of skilled workers Political & Legal Regulatory agency Social Environmental awareness Safety issues Veteran employment Josh

Opportunities & Threats Growing automobile industry Growing natural gas demand Population growth Environmental awareness Veteran employment Growing natural gas demand Decline of coal & crude oil demand Weather & climate changes Declining global economy Retiring Baby Boomers Safety concerns Regulations Josh

Life-Cycle Analysis 1830s- First Steam Locomotive Embryonic 1830s- First Steam Locomotive Growth 1840s-1870s- Major Boom, Civil War, & Reconstruction Today- Forecasted to grow at an annual rate of 5.2% from 2009 to 2019 Shakeout 1870s- Consolidation Began Mature 1900s Decline Late 1940s- Post WWII 1980s- 2000s- Consolidation Continues Audrea

Industry Attractiveness An unattractive industry for investors because they are not gaining any value from their investments Figure 3.1 ROIC Trend Analysis Source: MorningStar   Figure 3.2 ROIC vs. WACC Trend Analysis Source: MorningStar   Deona

SWOT analysis

SWOT Analysis Strengths Weaknesses Opportunities Threats Executive Incentives Innovation Efficiency Safety Mission Statement Declining Commodity Segments Opportunities Threats Growing Auto Industry Global Population Growth Veteran Employment Weather & Climate Changes Industry Attractiveness Declining Global Economy Brooke

Business Level Strategy

Business Level Strategy Cost Leader Differentiator Broad Differentiator Capabilities, resources, & distinctive competencies Building blocks support Union Pacific’s strengths Figure 5.1 Value Chain Frontier Source: Hill, Jones, & Schilling, 2015   Deona

Corporate Level Strategy

Union Pacific Strategies Single Industry Transnational Mexico Audrea

Strategy effectiveness

Strategy Effectiveness Figure 7.1 ROIC Trend Analysis Source: MorningStar   Figure 7.2 ROIC vs. WACC Trend Analysis Source: MorningStar   Figure 7.3 Revenue Trend Analysis Source: MorningStar Figure 7.4 Operating Expenses Trend Analysis Source: MorningStar Brooke

Union Pacific Problems

Problems Mission Statement Human Rights Public Safety Coal Segment Agriculture Segment Josh & Brooke

Questions?