Railway Reform: Toolkit for Improving Rail Sector Performance - ppiaf

Railway Reform: Toolkit for Improving Rail Sector Performance
5. Creating the Industry Structure
Generally, this toolkit advocates against diversification and in favor of management
focus on improving core railway business, particularly when the core business
faces capital constraints or requires on-going budgetary support. However, a
well-supported business case would justify exceptions. Railways contemplating
restructuring should review all extended businesses and select the most efficient
business strategy. Figure 5.6 presents a process for reviewing and for any restructuring
activities in the three groups described.
5.6.5 Use of professional advisers
The complex process of analyzing and restructuring non core railway activities
involves appraising large numbers of diverse activities, in diverse corporate
forms, involving distinct skills, operating in distinct internal and external markets.
No transport ministry and few railway organizations have all the skills to
develop and implement a strategy to rationalize non core activities.
Also, the process of implementing reforms is industrially sensitive—always in the
affected units and often in the core-railway itself—and if prolonged, liable to depress
worker morale and performance and guaranteed to encounter opposition.
Neutrality and deep expertise is required to separate legitimate commercial issues
from entrenched vested interests.
The World Bank Page 95