Generic railway strategies TOCs
train operator strategies
a research-oriented knowledge base for train operating companies (TOCs)
a research-oriented knowledge base for train operating companies (TOCs)
4.1 Strategy I: Network-focused operator
To realize the stated strategic setup, numerous moves by incumbent operators are necessary. Strategic options can be clustered into three fields of action: Behavior before competitor entry, short-term behavior in competition and long-term strategic options to outcompete competitors. For network-focused operators competition arises from new challengers as well as from incumbents of other countries. Regarding the second group a prisoner dilemma situation is recognizable because potentially any European incumbent could try to apply for track slots in non-domestic markets. In 2010 after the partial opening of the passenger market a number of operators applied for track slots outside their home markets such as Trenitalia’s applications for slots to operate high‐speed trains in France. In the end, applications were drawn back after intensive dialogues (Laperrouza & Finger, 2009, p. 5).
To withstand competition, strategic adjustments are unavoidable. The presented figure offers an overview on potential development opportunities for network-focused operators.
Network-focused operators mainly concentrate on differentiation strategies by creating a high degree of customer benefit combined with a high connectivity in an intense network. Their optimum strategic setup is presented in the following section.
As a result of their history network-focused operators address the widest possible range of customer preferences reaching from leisure travelers via business customers up to premium travelers to generate high revenues. Customers are offered different segments in network-focused operator’s trains with customer group-oriented treatment and services. Customer satisfaction and adherence to promised service levels will be the crucial factor (KSF 5) for network focused operators because it represents the only differentiation opportunity (Roland Berger Strategy Consultants, 2011, p. 6).
The second differentiation factor of network-focused operators is their geographical reach. International expansion could help TOCs of this group to compensate potentially declining revenues from competition in their domestic markets. Because of their early mover advantages network-focused operators will create a broad international train network with high connectivity between European cities. Moreover, large network-operators could develop into complete mobility providers that integrate several modes of transport into efficient transportation chains. If the liberalization proceeds as estimated by the European Union, a few large European network operating TOCs could be the result from consolidation movements. By today, leading players in this ‘Europeanization contest’ tend to be SNCF and DB (Wright, 2010, p. 1).
As a result of their history network-focused operators address the widest possible range of customer preferences reaching from leisure travelers via business customers up to premium travelers to generate high revenues. Customers are offered different segments in network-focused operator’s trains with customer group-oriented treatment and services. Customer satisfaction and adherence to promised service levels will be the crucial factor (KSF 5) for network focused operators because it represents the only differentiation opportunity (Roland Berger Strategy Consultants, 2011, p. 6).
The second differentiation factor of network-focused operators is their geographical reach. International expansion could help TOCs of this group to compensate potentially declining revenues from competition in their domestic markets. Because of their early mover advantages network-focused operators will create a broad international train network with high connectivity between European cities. Moreover, large network-operators could develop into complete mobility providers that integrate several modes of transport into efficient transportation chains. If the liberalization proceeds as estimated by the European Union, a few large European network operating TOCs could be the result from consolidation movements. By today, leading players in this ‘Europeanization contest’ tend to be SNCF and DB (Wright, 2010, p. 1).
To realize the stated strategic setup, numerous moves by incumbent operators are necessary. Strategic options can be clustered into three fields of action: Behavior before competitor entry, short-term behavior in competition and long-term strategic options to outcompete competitors. For network-focused operators competition arises from new challengers as well as from incumbents of other countries. Regarding the second group a prisoner dilemma situation is recognizable because potentially any European incumbent could try to apply for track slots in non-domestic markets. In 2010 after the partial opening of the passenger market a number of operators applied for track slots outside their home markets such as Trenitalia’s applications for slots to operate high‐speed trains in France. In the end, applications were drawn back after intensive dialogues (Laperrouza & Finger, 2009, p. 5).
To withstand competition, strategic adjustments are unavoidable. The presented figure offers an overview on potential development opportunities for network-focused operators.
