STRATEGIC BUSINESS 5
Theresource-based model provides great influence. The lack ofoverreliance on external forces and the insistence of understandingof all the areas surrounding a business make the model more robustand superior. The I/O model insists on the external influences thataffect the firm and pays little attention to the internal forces. Itis arguable that the internal forces determine how the organizationfaces the external environment. Business strategies that considerall the aspects of an organization provide strong capabilitiescompared to those that ignore one part and insist for the other. Anyarea worth affecting the success of a business is worth consideration(Collins,2001).
Theresource-based model is in a capacity to enhance the Union Pacific toearn above average returns. The model pays attention to both theinternal and external environments of business. Specifically, itadvocates for inimitability, durability, appropriability,substitutability, and competitive superiority as they apply to allaspects of the company.The Union Pacific is a vast company thatoperates North America’s premier railroad franchise and has covered23 countries. The performance of such a business is measured in termsof internal and external capacities. The major proponents of theresource model such as those of inimitability and competitivesuperiority are placed for the company. For example, inimitabilitycalls for the development of products or services that are hard toimitate by competitors. Such a proponent is active to enable thecompany earn above average returns. It applies to Union Pacificdeveloping essential services that earn it the respect of customers.The inimitability proponent can aid in making more than above returnsby reducing the chances for competition. Consequently, Union Pacificcan attain the monopoly of the market. Such monopolies earn aboveaverage returns. The resource based model calls for the examinationof a company’s internal structure to determine internal strengthsand weaknesses. The internal components of a firm play a great rolein determining the performance. The strengths of the business arematched with the weaknesses and further improve the performance(Collins,2001).
TheUnion Pacific company faces a vast socio-demographic environment. Theability of the business to link 23 countries in Northern Americaproves the concept. Consequently, the company faces high expectationsto provide quality transport services. The location in 23 countriesfurther indicates the need for Union Pacific to meet the varyingexpectations from all the member countries. In terms of technology,the company dwells in an environment where rapid changes intechnology are affecting the transport industry. Specifically, thecurrent technology places more emphasis on the use of electricity onrail transport that comes to replace of diesel engines. In terms ofthe environment, the company faces vast logistical exposures. Thetracks for the business need to be placed strategically to providethe best logistical solutions to people. The rails are exposed toenvironmental factors. Natural disasters like floods carry the tracksaway and hinder transportation. There are also geographical featuressuch as mountains that hamper the laying of tracks. The companyinteracts with the government in the effort to meet variousregulations such as tax and other business imposed rules (Collins,2001).
Theporters five forces model apply to the rail industry. First is thethreat of new competitors. The rail sector is capital intensive itrequires massive capital to venture. Consequently, the union pacificplays as a major monopoly in 23 countries. The threat of new entrantsdoes not affect the company. Second is the bargaining power ofsuppliers. The major goods procured by union pacific include metalfor the construction of rails and trains. It also obtains buildingmaterials in case it needs to install the rails other suppliersinclude fuel. These are all big industries that have an influence onthe market. Consequently, the firm faces the substantial threat ofvendors. The treat for substitutes seems minimal. The rail sector iscapital intensive, and specifically, the installation of rails isquite involving. However, the company faces a threat of substitutesfrom the emergent electric trains that may replace the company’sdiesel engines. The buyers have low bargaining power due to themonopoly associated with the firm. As a result, the firm faces arelatively low competitive industry (Collins,2001).
Thefirst brand is Toyota. The name shall remain a market leader in the21st century due to the provision of variety and low-costautomobiles. The Toyota Company produces motor vehicles that suiteveryone. It has invested in quantity and quality with a focus onthe global economy. The ongoing upsurge in the purchase of ToyotaMotor Vehicles makes it popular to a broad market for the 21stcentury. Second is BMW. It is the exact opposite of Toyota andspecializes in high-quality products. The BMW Company releases a newmodel of its cars in almost every New Year. Its products getassociated with deluxe and robust performance. The association withsuch qualities makes loyal customers. Consequently, they remained asignificant source of advantage in 2014. The Third is Buhler Companythat sells related agricultural machinery. The association withagriculture further implies a substantial advantage since people willalways eat food. The increased population further calls for themechanization of agricultural processes to increase food production(Collins,2001).
Theinternet provides a broad spectrum for the companies to market theirproducts. Specifically, the Internet provides a 24-hour display and alarger outreach to customers. The owners of these businesses shouldcapitalize on the strengths offered to maximize their returns. Theyshould advertise more using the social media platforms like Facebook, twitter and linked in to reach more people (Collins,2001).
Theprimary strengths of the Union Pacific are the skilled work force.The company provides services to attract and maintain a diverseworkforce. Besides, it has an active board to provide the necessarydirection into the company’s future. The workforce is crucial inthe achievement of the organization’s mission. However, the majorweakness for the firm is a lack of strategic direction. It requires asubstantial mission and vision, the operational manual and servicecharters. These detrimental documents serve as a compass to indicatethe direction for the firm. It is imperative that management candevelop a strategic plan to indicate the direction of theorganization to relevant stakeholders like employees, suppliers,government and the media (Collins,2001).
Collins,J. (2001). Goodto great: Why some companies make the leap–and others don`t.New York, NY: HarperBusiness.