<p style="text-align: justify;">Canadian National Railway, known as CN., is a Class I freight railway in North America, and it is headquartered in Montreal, Canada. As a leading transportation provider, it operates in Canada, Midwestern and Southern United States. It operates through a rail network of approximately 20,000 route miles of track; it provides services to three different coasts and has 23 strategically located Intermodal terminals across our network (CN, 2021).</p>
<p style="text-align: justify;">It is a major transporter of industrial products, including agriculture, forest and consumer products, chemicals, and metals and construction materials. Porter&#8217;s five forces analysis will further help us understand the risks and opportunities the company is exposed to.</p>
<h2 style="text-align: justify;">Competitive Rivalry in The Market</h2>
<p style="text-align: justify;">CN has to compete with other Class I Railway operators in the region. The freight railway industry is an essential pillar of economies in North America. The competition is fierce, and the market is concentrated. Class, I competitor are Canadian Pacific Railway, Norfolk Southern, CSX, BNSF, and Union Pacific. These are the top class I railways in North America (Statista, 2021).</p>
<p style="text-align: justify;">Norfolk Southern and CSX are their big competitor because they operate in the same region of the Midwest, Eastern US and Canada. CN Rails annual revenue for 2020 was $10.3B (Forbes, 2021). 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 style="text-align: justify;">Threat of Substitutes</h2>
<p style="text-align: justify;">The threat of substitutes is high where a better alternative is available. The alternative ways to commute or transport freight is always there. A few of them are trailers, airplanes and futuristic Hyperloop. Trains are the most low-cost and efficient way to transport bulk cargo. 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 centers and industrial parks, especially where it can replace ageing or obsolete freight railroad lines in the US or elsewhere the world (Weforum, 2015). The cost of Hyperloop and to meet the scale of the current railroad network isn&#8217;t possible in the near future. Although the threat of substitute is low, in the next couple of decades threat level can increase.</p>
<h2 style="text-align: justify;">The Threat of New Entrants</h2>
<p style="text-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. Higher capital investment is a huge problem for startups.</p>
<p style="text-align: justify;">CN railway planned to spend C$2.9 to expand and upkeep its existing track in Canada and United States (CN, 2021). The scale of the industry makes it impossible for newcomers. The industry is concentrate and dominated by seven companies. After investing colossal capital, low return on investment is discouraging. Thus, there is a low threat of new entrant.</p>
<h2 style="text-align: justify;">Bargaining Power of Buyers</h2>
<p style="text-align: justify;">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). The primary buyers in freight railway are the bulk buyers. Companies use it to transport finished products and raw products. Customers are demanding as they required the best available services for their value.</p>
<p style="text-align: justify;">The bulk buyers sign long-term contracts, which gave them the upper hand. The on-time delivery, cost and secure and safe transportation of goods are the deciding factors for buyers. 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 style="text-align: justify;">Bargaining Power of Suppliers</h2>
<p style="text-align: justify;">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 suppliers in any industry are usually the material suppliers, human resources supplier or customer supplier. In railway main supplier are the supplier of locomotives, carriages and other vehicles. The rolling stock providers are specialist industry, and their products are used as input to the railways&#8217; transportation industry. The importance of their product provides them with an edge in negotiations.</p>
<p style="text-align: justify;">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 style="text-align: justify;">
References</h2>
<p style="text-align: left;">CN. (2021) Capital Investments Plan. Available at: https://www.cn.ca/en/about-cn/capital-investments-plan/<br />
CN. (2021) Maps &; Network. Available at: https://www.cn.ca/en/our-services/maps-and-network/<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 />
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>