Assignment - A solution to a scenario where Zambia railways needed a strategic change in PDF

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A solution to a scenario where Zambia railways needed a strategic change in management...

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COMPANY BACKGROUND Zambia Railways has been in operation since the colonial era but was only incorporated in 1982, initially for the purpose of transporting mining produce and raw materials around the major mining areas in Zambia. It was incorporated as a state owned firm but during the privatization operations that took place in Zambia, it was privately owned from 2003 to 2012. After this, the Zambian Government repossessed it and currently it is fully owned by the Zambian government.

THE SWOT FRAMEWORK Undertaking a situation analysis using the SWOT framework, would yield an outcome of the company’s Strengths, weaknesses, opportunities and threats. The SWOT framework answers questions such as: -

Is the company currently in a strong competitive position?

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Can it continue to operate and pursue profitable objectives?

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Can it turn the current threats into opportunities?

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What strategies can be employed to do this?

The strengths are capabilities that the company can leverage in order to achieve success. The weakness are problems that exist in the company that could hinder its success and must be addressed. Opportunities are trends, events, or situations that the company could exploit to achieve success. Threats are events or trends beyond the company’s control that could hamper its success. The company will have to avoid these or come up with strategies to deal with these.

THE CASE OF ZAMBIA RAILWAYS LIMITED. Strengths There are quite a few strengths that are identified within ZRL and in their business environment. One of them is the fact that they have international partnerships. This also works as an opportunity because they are able to capture market outside Zambia. When there is a lot of economic activity in neighbouring countries and there is a need to use the Railway

services, ZRL benefits from this. This is a strength which they can also use to ensure success by receiving the support they may need at any given time from their partners. One of their major lines of business is in the import and export business and therefore, international trade being done by the country translates into business from ZRL. Also, people want a cheaper form of transport from one country to another, either just by passing through Zambia or if Zambia is the country the person is coming from or going to. This also gives them a good platform to thrive. Another Strength is the predictability of the transit times. As opposed to other alternative forms of transportation, such as road transport, railway transport does not experience delays due to traffic. This means the transit times are a lot more predictable and therefore this can help with decision making and planning. This makes estimations much easier and therefore people transporting goods have a more reliable prediction. The final strength is their service differentiation in the transport sector and the monopoly they enjoy in the rail transport sub sector. They are the only company that are offering rail transport and therefore, they have complete market share of people that wish to move or transport their goods by rail. The service differentiation side of the coin is when it is looked at from the general transport sector. What ZRL is offering is a form of transport that is different from any other transport company in the country. IN addition to the fact that they are currently the only ones offering this form of transport, the cost of entry into the transport industry, particularly using rail transport is very high. This therefore reduces the chances of new entrants into the market and therefore, they are set to have 100% market share for quite a while.

Weaknesses Despite all the strengths that have been brought out, there are a number of significant weaknesses, that if not dealt with, could hinder the success of ZRL. The first weakness that will be discussed is the poor infrastructure. Since the construction of the rail-lines in the early 1900s, there have not been any major upgrades to the infrastructure. The work that has been done on the infrastructure has mainly been maintenance and rehabilitation. This has left the company with old infrastructure with questionable efficiency when compared to the substitutes. The current systems move at speeds below 70kmh on average, and this can be

seen from their plans to increase the average speed to 70 to 80kmh. This is a major factor that discourages users. Another problem that stems from the poor infrastructure is the luxury of passengers. Passengers would like a comfortable ride and ZRL does not offer that with their current infrastructure. The next weakness to be explored is the poor marketing strategies that have been employed by the company. Even after the improvements that were made by the government after repossessing ZRL, they have not marketed much in order to let people know of the benefits of using their transport as opposed to other methods. Finally, the third weakness is their limited reach. Their railway system does not cover many areas and therefore they have limited options in terms of the people who might use their service. Whereas alternatives such as public buses have a very dynamic route systems and can, therefore, reach larger groups of people, the rail-line only passes through very specific areas and expansion to other areas would be a very expensive and tedious process.

Opportunities There is a statutory instrument was signed that all cargo exceeding a certain amount is to be ferried by rail. This has proven to be a great opportunity for ZRL given that they have monopoly in the market and therefore all such clients will be using their services in order to comply with the Statutory instrument. This gives them a guaranteed class of clients. Another opportunity for ZRL is available because of the increase in fuel prices which has translated to increased road transport fares. The increased road transport costs could possibly lead to people considering rail transport as a more affordable substitute. This therefore could be exploited to increase revenues.

Threats The only threat to be identifies here is the other forms of transport which will be substitutes to rail transport. More efficient substitutes pose a huge threat for ZRL and they move the company towards a shared market share.

CONCLUSION All these strengths, weaknesses, opportunities and threats all come together and form the internal and external environment in which ZRL operates. In order to have higher chances and degrees of success, they must leverage the strengths, address the weakness, capitalize on the opportunities and manage the threats....