Scott Claxton
BUSA 4126
Amtrak Case Study
Dr. Jun Wu
1) History of the Company Amtrak
National Railroad Passenger Corporation or Amtrak was created after the passing of the
Rail Passenger Service Act of 1970 which was signed by President Richard Nixon. The main
reason for the creation of Amtrak was to create a form intercity passenger railcar service
connecting major cities. Before airplanes and the interstate were created, the main form of longdistance travel was train travel. But, as the airlines and automobile travels increased, train travel
decreased which prompted the need to enact the Rail Passenger Service Act to give way for
Amtrak to begin operations and once again rebuild the train service. Amtrak began operations in
May of 1971. Amtrak provides transportation to major cities and also used as commuter travel
for mail and express freight. Amtrak operates through 46 American states, The District of
Columbia, and three Canadian Provinces.
The federal government funds the National Railroad (Amtrak) and generally helps this
sector to improve tracks, safety, employment jobs, and mainly to keep Amtrak afloat during hard
times. The Northeast Corridor (NEC) is the most well-known railroad services traveling from
Boston to Washington D.C. The Government funded the reengineering of this route to speed
travel time for consumers. Congress had meetings with Amtrak in the early 1980’s noting that
Amtrak needs to build their assets and efficiently use their resources to minimize the support
from the federal government. Amtrak began to create better and efficient ways of communication
and travels by improving the fiber optic cables, computer systems, and opened new markets such
as mail delivery services and freight carriers.
In 1994, the Bush administration suggested to Amtrak that operations will be selfsupported, meaning that the Government will not continue to fund Amtrak’s economic sector. So
Amtrak decided to raise fares, cut routes and services, and create cost reduction programs to save
money. In 1997, Amtrak was very close to going bankrupt and the government stepped in to
allocate money in order to save the organization. After receiving the federal funds, Amtrak
launched a $360 million dollar improvement plan that bought new train sets, refrigerated cars,
which increased productivity within Amtrak’s operations. The fastest train that carried
passengers was created in 2000 which was called The Acela Regional Passenger Express that
reached speeds of 150 mph. Today Amtrak seems to be on a steady track to success. Even
though Amtrak was funded generally less than airlines and bus travel, Amtrak is doing a great
job. Today Amtrak has been successful with creating more ridership and decreasing costs by in
turn increasing revenue.
2) General Environment Analysis
National Railroad passenger corporation (Amtrak) has many outside factors that affect
the business and its day to day operations. One factor is the weather, if a rail goes down because
of a natural disaster that route becomes unusable until the track is cleared or the damaged area is
restored. Unlike planes and interstate travel a train cannot reroute of just simply continue around
the situation. Another big factor is competition and the growing number of advances taking
place in the industry. Rival companies will stop at nothing to gain an edge on the competition.
Newer more fuel efficient cars are hitting the market which allow people to drive further for less
money than ever before. The industry has also fell on more modern times when most people
who travel never even think of taking a train. Most all of the travel agencies offer a flight and
hotel package, but don’t include train as a means of travel. Time also plagues the industry
because people want to get places as fast as possible and rail travel is in many cases is a slower
process than flying or driving. All of these external factors hinder Amtrak in their day to day
operations. Amtrak must try to contend with these outside elements and come up with ways to
operate effectively.
3) Industry Environment analysis
Amtrak leads the market of train travel by 80% and relies on the contracts from other
companies that allows for their business to be a part of Amtrak’s business. The other companies
include Caltrain, Maryland Area Regional Commuter, and Connecticut’s Shore Line East. The
external factors that affect Amtrak have been setup in the EFE Matrix below. The opportunities
include the findings of new fuels, population growth, the growth of cities, our recovering
economy, elected public officials, technology changes, and contracts with private firms. The
external threats that Amtrak faces include: fuel prices, poor economy, airline industry, the
weather, government funding, elected public officials, terrorist attacks, personal automobiles,
and private train companies. Based on the EFE Matrix, Amtrak scored a total weighted score of
2.54 which is slightly above average for a company. This suggests that Amtrak is on the right
path when considering the external factors that it is faced with.
EFE Matrix-Key External Factors
Key External Factors
Weight
Rating
Weighted Score
1. New fuels
.08
3
.24
2. Population growth
.05
2
.10
3. Growth of cities
.06
3
.18
4. Economy recovery
.07
2
.14
5. Elected public officials
.07
2
.14
6. Technology improvements
.09
4
.36
7. Contracts with private firms
.08
3
.24
8. Fuel prices
.10
3
.30
9. Poor economy
.05
3
.15
10. Airlines
.04
2
.08
11. Automobiles
.06
2
.12
12. Private train firms
.06
2
.12
13. Weather
.05
1
.05
14. Government funding
.09
3
.27
15. Terrorist attacks
.05
1
.05
Total
1.00
Opportunities
Threats
2.54
4) Internal Competence
Amtrak was originally setup by the government to be a government funded corporation
which would rely on the government funds that are allocated to Amtrak. The key internal factors
are in the Internal Factor Evaluation (IFE) matrix below that are used to continue to build the
company. The internal strengths include: use of resources, faster travel times, leader in the
market, affordable prices, many departures and routes, security, few competitors, and improved
technology. The key internal weaknesses include: lack of advertising, product offerings,
company image, funding limitations, poor infrastructure, employee benefits, and Amtrak’s
property. Based on the IFE matrix Amtrak has a total weighted score of 2.74 which is above the
average for a company. The matrix suggests that Amtrak is efficiently analyzing the internal
factors that are critical to their success.
IFE Matrix- Key Internal Factors
Key Internal Factors
Weight
Rating
Weighted Score
1.Use of resources
.06
4
.24
2. Faster travel times
.10
4
.40
3. Leads market
.09
3
.27
4. Prices
.06
4
.24
5. Schedule of departures
.06
3
.18
6. Security
.09
4
.36
7. Few Competitors
.05
3
.15
8. New technologies
.06
3
.18
9. Advertising
.08
2
.16
10. Product offerings
.04
2
.08
11. Company image
.07
2
.14
12. Funding limitations
.10
2
.20
13. Poor infrastructure
.04
1
.04
14. Employee benefits
.05
1
.05
15. Property
.05
1
.05
Total
1.00
Strengths
Weaknesses
2.74