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<p align="justify">The Norfolk Southern Railway, known as N.S., is a Class I freight railroad in the United States, and it is headquartered in Atlanta, Georgia. As a leading transportation provider, Norfolk Southern operates 19,500 route miles in 22 states and D.C., supports international trade with service to every major Eastern seaport, ten river ports, and nine lake ports, and operates the most extensive intermodal network in the East (Norfolk Southern, 2021). It is a major transporter of industrial products, including agriculture, forest and consumer products, chemicals, and metals and construction materials. In addition, the railroad operates the most extensive intermodal network in the East and is a principal carrier of coal, automobiles, and automotive parts. Porter&#8217;s five forces analysis will further help us understand the risks and opportunities the company is exposed to.<br />
Competitive Rivalry in the Market</p>
<p align="justify">The freight railway industry is an essential pillar of economies in North America. Railroad provide their customers with cost-effective, environmentally friendly service for almost anything that can be loaded into a truck or a container (AAR, 2021). the competition is fierce, and the market is concentrated. Norfolk Southern has to compete with other Class I Railway operators in the region. Class I competitor are Canadian Pacific Railway, Canadian National Railway, CSX, BNSF, and Union Pacific. These are the top class I railways in North America (Statista, 2021). CN Rail and CSX are their big competitor because they operate in the same region of the Midwest, Eastern U.S. and Canada. C.N. Rails annual revenue for 2020 was $10.3B (Forbes, 2021) as compared to CSX yearly revenue for 2020 was $10.583B (Macrotrends, 2021). Norfolk Southern posted annual revenue for 2020 was $9.789B (Macrotrends, 2021). Thus, there is fierce competition in the freight train business in this region of the world.</p>
<h2 align="justify">Threat of Substitutes</h2>
<p align="justify">The threat of substitutes is high where a better alternative is available. The other options to the railways&#8217; industry exist today, as they had been centuries ago. Today many options of trains exist, including trailers, aeroplanes and futuristic Hyperloop. Trains are the low-cost and efficient transportation means available. Hyperloop can be successful for the transportation of goods. Hyperloop&#8217;s cargo division is designed to haul cars and containers. It could represent a solution for transport between specialized locations such as ports, logistics centres and industrial parks, especially where it can replace ageing or obsolete freight railroad lines in the U.S. or elsewhere the world (Weforum, 2015). The cost of the hyperloop is the only hindrance to this. Although the threat of substitute is low, in the next couple of decades threat level can increase.</p>
<h2 align="justify">The Threat of New Entrants</h2>
<p align="justify">These economies deter entry by forcing the aspirant to either come in on a large scale or accept a cost disadvantage. Scale economies in production, research, marketing, and service are probably the critical barriers to entry in the mainframe (1979 Porter). There most common barriers to entry are regulatory requirements, initial capital, and expertise. The need to form a network of trains that connect the cities and ports is demanding. The world is becoming a global village. The demand for freight transportation is increasing. The scale of the railroad and the cost to meet the market is an impossible task for newcomers. The industry is ruled by seven big companies of the Class 1 category. This deters the incumbents that it will not enjoy hefty profits. After investing colossal capital, low return on investment is discouraging. Thus, there is a low threat of new entrant.</p>
<h2 align="justify">Bargaining Power of Buyers</h2>
<p align="justify">The primary buyers in the industry are the bulk buyers. Companies use the services to transport goods, and the manufacturing industry uses them to transport raw materials and finished products. The Bargaining Power of Buyers is high if the buyers are significant; they can switch easily to another supplier who may be in numbers (Slater &; Olson, 2002). Customers are demanding as they required the best available services for their value. The bulk buyers sign long-term contracts, which gave them the upper hand. The safety of goods, on-time delivery and low cost, are the main decision-making factors for the buyers. Thus, the buyer can deflect to other service providers if they do not cater to their demands. There is a large customer base, and companies know to improve service standards to stave off competition. Companies can switch companies, but they use trains as a primary mode of transportation, and companies are aware of that fact. Considering all the factors, buyers have moderate bargaining power.</p>
<h2 align="justify">Bargaining Power of Suppliers</h2>
<p align="justify">The significant sources of supply to the freight railways industry are rolling stocks. Rolling stocks include carriages, locomotives and other vehicles used on railways. The rolling stock providers are specialist industry, and their products are used as input to the railways&#8217; transportation industry. The suppliers&#8217; industry is more concentrated than the industry to which it sells, and no readily available substitutes are available (Oregon State, 2021). The same situation may occur if the clients ‘costs for switching to other suppliers are high. If the providers know their importance and they can drive the cost of the industry. Another thing they can impact is long term cost, as the quality determines the repairs and maintenance cost. A small number of suppliers may generate monopoly or oligopoly, which can give them unchecked power. The rate also plays a vital role in when to replace the said stock. Independent rolling stock providers can exercise high bargaining power.</p>
<h2 align="justify">References</h2>
<p align="left">AAR. (2021). Freight Rail &; Intermodal. Available at: https://www.aar.org/issue/freight-rail-intermodal/<br />
Forbes. (2021) Canadian National Railway. Available at: https://www.forbes.com/companies/canadian-national-railway/?sh=f88db7d353bfMacrotrends. (2021). Keio Corp.<br />
Macrotrends. (2021). CSX Revenue 2006-2021 &#8211; CSX. Available at: https://www.macrotrends.net/stocks/charts/CSX/csx/revenue<br />
Macrotrends. (2021). Norfolk Southern Revenue 2006-2021 – NSC. Available at: https://www.macrotrends.net/stocks/charts/NSC/norfolk-southern/revenue<br />
Norfolk Southern. (2021) About NS. Available at: http://www.nscorp.com/content/nscorp/en/about-ns.html#:~:text=As%20a%20leading%20transportation%20provider,intermodal%20network%20in%20the%20East<br />
Oregon State (2021) Analyzing the Organization’s Microenvironment. Available at: https://open.oregonstate.education/strategicmanagement/chapter/3-analyzing-the-organizations-microenvironment/<br />
Porter., E. M (1979) How Competitive Forces Shape Strategy. Available at: https://hbr.org/1979/03/how-competitive-forces-shape-strategy<br />
Slater, Stanley &; Olson, Eric. (2002). A fresh look at industry and market analysis. Available at: Business Horizons. 45. 15-22. 10.1016/S0007-6813(02)80005-2.<br />
Statista. (2021). Leading North American railroad companies in 2020, based on operating revenue. Available at: https://www.statista.com/statistics/271613/leading-north-american-railroad-companies-based-on-revenue/<br />
Weforum (2015). How will the Hyperloop change rail transport? Available at: https://www.weforum.org/agenda/2015/08/how-will-the-hyperloop-change-rail-transport/</p>
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