Devising business strategy for railways

This paper presents a case study which tackles a general problem for railway management, namely the formulation of a strategy to improve business financial performance. This is prefaced, in Section 2, by discussion of general principles - concerning the type of information system required, investigations to be conducted and associated measurement needs. The case study, of Section 3, concerns our investigations of VicRail's total business and its constituents. The task of financial improvement is revealed from an assessment of sectors' current cost-recovery positions and the identification of system joint costs. For freight sectors, future traffic prospects, pricing possibilities and the scope for more efficient operations are then considered, and the implications traced for overall deficit reduction and the development of business strategy. The concluding section draws some general lessons for railway managements.A fuller discussion by the authors of the theoretical framework employed, and particularly of the case study application, is contained in a complimentary publication: Improving Railway Financial Performance, published by Gower in January 1985.Transmark is a subsidiary of the British Railways Board, acting as its international consultancy. The authors, who were respectively study director and manager, wish to thank Bernard Warner (an independent consultant), Richard Eccles (of Transmark) and Adrian Balkyn-Rackowe (of British Rail) for their valuable contributions. The study report, titled Rail Cost — Pricing Options, was released by the Minister in April 1981.