<p align="justify">East Japan Railway Company was incorporated in 1987 and has headquarters in Tokyo, Japan (Nikkei Asian Review, 2020). The company is the largest among seven-passenger rail companies operated by Japan Railway Group. It is a privately owned, for-profit organization. The company operates through its various segments, including transportation, real state, and hotels. The important department provides services through is railway transportation. All these departments offer comprehensive services related to their domains. The Japanese railroad industry has special importance in society because rails are used as a major transportation mode. The company aims to integrate its railways&#8217; network with secondary transportation for seamless mobility with payment integration (East Japan Railway Company, 2020). Porter&#8217;s five forces analysis will further help us understand the risks and Opportunities the Company is exposed to.</p>
<h2 align="justify">Competitive Rivalry in the Market</h2>
<p align="justify">The Passenger railway industry is an important pillar of economies in the world. The railroad network in Germany, Switzerland, and across Europe is a great example. Japan is among the economies where passenger railways form a vital part of the economic fabric. It is the prime transport to commute intercity, and Japan Railway covers the majority of the country (Yudhistira et al., 2015). Due to the demand for trains, there are government and private railway transport companies operating in Japan. East Japan Railway&#8217;s major competitors are Keisei electric railway and Keio Corporation. In 2019 the East Japan Railway earned revenue of $ 27.071 billion with a net income of $2.6 billion (Nikkei Asian Review, 2020). In comparison, Keisei&#8217;s electric railway earned annual revenue of $ 2.3 billion (Nikkei Asian Review, 2020), and Keio Corp. posted revenue of $ 4 billion (Nikkei Asian Review, 2020). There is moderate to high competition in the industry.</p>
<h2 align="justify">Threat of Substitutes</h2>
<p align="justify">The Threat of substitutes is high, where a better alternative is available. The alternatives to the railways’ industry exist today, as they had been centuries ago. Today many alternatives to trains exist, including cars, airplanes, and passenger vessels. The main purpose of public transport is to accommodate commuters and students by providing flexible and secure transportation. This helps reduce road congestion and CO2 emission. Airplanes and vessels cannot be used for a commute because of their nature of operations. They are an expensive mode of transportation. Cars can serve the purpose, but they create congestion and increase traveling costs. Japan is also part of the Paris agreement to reduce emission levels (United Nations Climate Change, 2019). The trains are the most cost-effective and efficient mode of mass transportation. They help achieve the goals of acceptable emission levels and can reduce road congestion. Their effectiveness has made them unassailable in the short-term. Therefore, the threat of substitute remains low.</p>
<h2 align="justify">The Threat of New Entrants</h2>
<p align="justify">There most common barriers to entry are regulatory requirements, initial capital, and expertise. To start a passenger railway company is a difficult ambition, the major impediment is massive capital required. The requirement to form a network of trains that connect the cities and ports is demanding. There is massive effort involved in logistics to run operations in a competitive and demanding industry. Another requirement is compliance with regulatory requirements. There is a strict licensing requirement to adhere to. As the railways&#8217; companies have achieved economies of scale, they had reduced their fixed cost per unit. This provides them with an advantage over new entrants. This deters the incumbents that it will not enjoy hefty profits. After investing huge capital, low return on investment is discouraging. There is a low threat of new entrants.</p>
<h2 align="justify">Bargaining Power of Buyers</h2>
<p align="justify">Passengers are demanding as they required the best available services for their value. The smaller the passenger base holds higher bargaining power. The more power passengers hold, they will require better terms of service along with discounts. There is competition from other passenger railway companies. Thus, the buyer can deflect to other service providers if the company does not cater to their demands. Generally, servicing standards are satisfactory in Japanese passenger railways. There is a large customer base, and companies know to improve service standards to stave off competition. Consumers 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 Supplier</h2>
<p align="justify">The major sources of supply to the passenger 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 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. The quality also plays an important role in when to replace the said stock. Independent rolling stock providers can exercise high bargaining power. In Japan, many railway companies have integrated rolling stocks in their supply chain, thus reducing reliance on independent suppliers.</p>
<h2 align="justify">References</h2>
<p>East Japan Railway Company. (2020). Investor Relations. JR East Group Management Vision &#8220;Move UP&#8221; 2027. Available at: https://www.jreast.co.jp/e/investor/moveup/index.html?src=gnavi<br />
Nikkei Asian Review. (2020). East Japan Railway Co. Available at: https://asia.nikkei.com/Companies/East-Japan-Railway-Co<br />
Nikkei Asian Review. (2020). Keio Corp.Available at: https://asia.nikkei.com/Companies/Keio-Corp<br />
Nikkei Asian Review. (2020). Keisei Electric Railway Co., Ltd. Available at: https://asia.nikkei.com/Companies/Keisei-Electric-Railway-Co.-Ltd<br />
United Nations Climate Change. (2019). The Long-term Strategy under the Paris Agreement. Available at: https://unfccc.int/sites/default/files/resource/The%20Long-term%20Strategy%20under%20the%20Paris%20Agreement.pdf<br />
Yudhistira, G., Firdaus, M. I., &; Agushinta, L. (2015). Transportation System in Japan: A Literature Study. Jurnal Manajemen Transportasi &; Logistik, 2(3), 333-352.</p>