Unit 9 Final

Running head: COMPETITIVE ADVANTAGE AND INTERNAL ALIGNMENT 1

COMPETITIVE ADVANTAGE AND INTERNAL ALIGNMENT 1

Competitive Advantage

Stephanie A. Gillmer

Purdue Global University

HR 435-01 Compensation

Dr. Ileana Felipe

August 18, 2020

BNSF Competitive Advantage and Internal Alignment

BNSFs business strategy is to be efficient in transportation for customers shipping through rail transport. The BNSF railway mission statement is to deliver what matters. Delivering what matters is to take care of customers, employees, and partners in the communities. BNSF is continuously designing new ways to meet higher customer expectations (BNSF Logistics Mission, Vision & Values, n.d.). BNSFs vision is to provide excellent transportation services that consistently meet customers’ expectations. To realize the vision, BNSF listens to customers and strive to meet their expectations, and strives to be safe and efficient (Our People: BNSF, n.d.). Company goals are to keep employees safe and have a secure environment; BNSF consistently focuses on improvement. BNSF also strives to be a diverse workplace, where each employee supports each other to complete a common goal.

BNSF strengths consist of having skilled labor pool employees, a healthy revenue stream and profitability, reliable parent companies to back up the financial stability, and strengthened mergers and acquisitions over the years. Weakness is a debt burden as a privately owned, a low global presence, and having to hire consistently and lay off workers with the fluctuation of the economy (Team, 2020). BNSF has tremendous opportunities as when the North American market grows, and have insight into the scope in the global market. Competitors of significance are railroads Union Pacific, Norfolk Southern, and Canadian Pacific; all conduct the same services as BNSF putting significant pressure on keeping customers. Fuel prices and economic hardships can impact BNSF in harmful ways (Team, 2020). For over 170 years, BNSF has played a crucial role in sustaining and building the nation’s economy. Fuel prices and economic hardships can impact BNSF in harmful ways (Team, 2020). In the current marketplace, BNSF is a critical connection between consumers and the global market.

For BNSF to sustain a competitive advantage, it does use compensation. For a railway to function, it requires many employees to serve its customers nationwide. Incentive compensation plans aim to communicate and focus attention on BNSFs business goals. It allows employees to be identified and rewarded for superior performance, and a competitive compensation package means to attract and retain high-quality employees. BNSF offers compensation to employees; contributing 3-5% in a 401k plan for all employees, purchase of Berkshire Hathaway stock is available to employees at a discounted rate, and instead of employees paying into social security money is paid into the railroad retirement (better than social security).

Three tests for competitive advantage

Consistent Difference: For BNSF to keep a different experience to its customers from the competitors, they have to offer better deals. In order for there to be more significant influence from the competitors, BNSF offers companies discounts that send significant amounts of product over the rail.

Difficult to Imitate: BNSF has established relationships that Union Pacific does not have. For example, UPS has been a customer for at least five years consistently again after some trouble. BNSF was offer UPS a shipping discount and built a repour again to ensure UPS will get their freight in time to make their customer needs. Some companies will only ship via BNSF because of the repour and promised pricing and delivery times.

Constant Improvement: BNSF is always looking for ways to serve their customers better. Includes are unloading equipment faster, better deals, and extending rails. BNSF is continuously looking to stay ahead of the competition. A couple of years ago, BNSF was talking about buying out an east coast railroad to expand entirely across the United States. There are many tools to keep customers informed to where their shipments are and when they arrive at the destination when they are unloaded from the train and ready to pick up.

Internal alignment defines in the textbook as referring to pay relationships between different jobs, skills, and competencies within a single organization (Gerhart, B. 2019). Many jobs within BNSF require various skills, education level, problem-solving, strength, communication skills. The pay structure needs to match each position accordingly, depending on the labor and skills required. If a senior manager were paid the same as an entry-level job, the turn over rate would be tremendous. Internal alignment keeps compensation plans in check; each job should be analyzed accordingly and give higher jobs a decent pay difference between the lower-level positions.

If BNSF expanded to a foreign country, it would take planning and surveying other railways in the country already established. A market study needs conducting to know what the status is before going over their head. If there are not enough clients to ship via rail, it will not bring in enough compensation to pay employees and bring in any revenue for BNSF. It will not make sense to expand in that particular country if that is the case. Another part of expanding to another country is staying focused on the customers. Businesses can lose sight of what the mission and values are. The service needs to remain superior, including pricing, product delivery time, and quality compared to other competitors. The cost of living in Tokyo, Japan, consumer prices are 14.36%, and groceries are 17.77% higher. Although the U.S. has 50.64% higher rent and restaurant prices are 44.77% higher than in Japan. The United States is ranked 15th in the world, and Japan is ranked 17th. The U.S. has a slight advantage compared to Japan, which is something for BNSF to consider in compensation if expanding overseas.

References:

BNSF Logistics Mission, Vision & Values. (n.d.). Retrieved August 18, 2020, from https://www.comparably.com/companies/bnsf-logistics/mission

Gerhart, B. (2019). Compensation. [Purdue University Global Bookshelf]. Retrieved from https://purdueuniversityglobal.vitalsource.com/#/books/9781260486100/

Our People: BNSF. (n.d.). Retrieved August 18, 2020, from https://www.bnsf.com/about-bnsf/our-people/

The project, B. (2020, July 01). Five Facts on the Cost of Living in Japan: Talking Numbers and Life Quality. Retrieved August 18, 2020, from https://borgenproject.org/five-facts-on-cost-of-living-in-japan/

Team, M. (2020, April 12). BNSF Railway SWOT Analysis: Top BNSF Railway Competitors, STP & USP: Detailed SWOT Analysis of Brands. Retrieved August 18, 2020, from https://www.mbaskool.com/brandguide/transport-and-logistics/13083-bnsf-railway.html