Union Pacific Corporation SWOT & PESTLE Analysis

Strengths

1) Brand Recognition: It is America's one of most recognized companies and carries a brand name and trust of roughly 10,000 by delivering products in a safe, reliable manner.

2) Strong Infrastructure & Network: UNP connects 23 states by rail. From 2006-2015, UNP invested $33 billion in its network. It provides freight transportation, serving a lot of the fastest growing US population centres. Also, it also connects with Canada rail system and is the also serving all six major Mexican gateways.

3) Exceptional Operational Capabilities: UNP has witnessed robust cash flow from operations with operating expenses seeing a decreasing trend in the past few years. It has consistently focussed on improving the productivity by keeping the cost of transporting each carload in check by smart investments to increase the average speed, length, and reliability of trains.

4) Diversification in Products: UNP serves broad and diversified customer base, which includes intermodal, coal, industrial products, chemicals, agricultural and automotive. With the help of diversification, it is not only able to increase its revenue but also has been efficient in the diversification of the risk.

Threats

1) High Litigation Costs: UNP is at high risk in terms of any type of accident which results in the release or combustion of hazardous goods which could involve substantial costs and claims for injury, property damage, and environmental penalties and remediation.

2) Highly regulated sector: UNP is subject to governmental regulations. Failure to adhere to applicable laws and regulations could have an adverse effect on it. Governments or regulators may also change the frameworks within which it operate.

3) Climate Change and High Fuel Cost: Controls on emissions of greenhouse gasses could significantly increase its operating expenses. Government incentives encouraging the use of alternative sources of energy could also affect its product mix being carried.

4) Few Suppliers of Locomotives and rail: For a high percentage of its rail purchases, UNP utilize two steel producers. Due to high barriers to entry, if one of these suppliers discontinues operations it could experience both substantial cost increases for rail purchases and difficulty attaining sufficient rail for maintenance and other projects.