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

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

3. Background & History

4. 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

5. 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

6. 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

7. Internal Analysis

8. 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

9. 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

10. 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

11. 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

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

13. 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

14. 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

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

16. external Analysis

17. 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

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

19. 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

20. 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

21. 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

22. SWOT analysis

23. 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

24. Business Level Strategy

25. 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

26. Corporate Level Strategy

27. Union Pacific Strategies
Single Industry
Transnational
Mexico
Audrea

28. Strategy effectiveness

29. 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

30. Union Pacific Problems

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

32. Questions?