Railway Reform: Toolkit for Improving Rail Sector Performance - ppiaf

Railway Reform: Toolkit for Improving Rail Sector Performance
5. Creating the Industry Structure
make more sense in the context of a longer-term structural strategy to create a
competitive railway that is affordable to users and taxpayers.
The Case Studies contain descriptions of many railway industry structures and individual
rail entities that illustrate structures described in this toolkit. Individual
case studies illustrate variants of core railway structures. Collectively, the case studies
illustrate the diverse solutions to organizing a national railway industry.
5.6 Dealing with Non Core Activities
In much earlier times, archetypal railways needed to be highly self-sufficient. Often,
they manufactured at least some of their own rolling stock and/or constructed
their own infrastructure according to the specifications of their own design
offices, in which they employed engineering staff who had been trained in
their own educational institutes. Railways also printed their own tickets, timetables,
and manuals, employed their own security force, and sometimes accrued
other businesses such as hotels, ferries, ports, haulage companies, and so on.
Few railways now retain such a wide range of activities. This section explains the
historical reasons behind archetypal railways initiating so many non core activities,
why most railways now find it necessary and desirable to reject this strategy,
and business processes for dealing with these non core activities.
What is ‘core’ business? ‘Core’ is generally interpreted to mean the market focus
of organizational activities—a focus that differentiates a business from its competitors,
or from activities of other sorts of businesses. 62 For railways the core
business is delivering competitive transport services through efficient use of railway
technology. Constructing railway lines, manufacturing rolling stock, or printing
tickets and timetables are non core activities—not only unnecessary for a
railway to do itself to be successful, but also responsible for diverting resources
from the core business.
Four main groups of activities associated with archetypal railways can be considered,
prima facie, outside the ‘core’ railway business. These are social and recreational
services for employees; materials supply and manufacturing companies;
business support services; and ‘extended’ businesses that are ancillary, diversified,
or involve real estate holdings. Box 5.7 gives examples of such activities.
62 An influential management text by Peters and Waterman (1982) identified poor results
among companies that diversified beyond their fields of real competence, and concluded
that an organization's core business consists of activities delineated by its core
competencies.
The World Bank Page 86