Lecture 08 - Rail Industry Restructuring: Drivers of Change

Question 1

Background
[⛵️ Study Case JoN]

• Outsourcing decisions (3)
• Vertical disintegration (2)

Answer 1

Outsourcing decisions

• in heavy industries. Influenced by unions & New Public Management (NPM)
• Aimed at reducing labor costs and increasing efficiency. To flatten production curve fluctuations
• address complex management structures.

Vertical disintegration

• leads to transaction and coordination costs.
• Importance of knowledge outflow and absorptive capacity.

Question 2

New Public Management (NPM)
main characteristics? (3)

Answer 2

Policy decisions in OECD countries for increased privatization.

NPM is a management philosophy and set of practices …

• that apply private sector management approaches to public sector organizations.
• It emphasizes efficiency, cost control, and performance measurement in public administration.

______
Characteristics include …

• competition-oriented management,
• separation of strategic operational levels,
• focus on outputs and innovation.
• Variable, performance-based wage structures and competitive provision.

Question 3

Economic
Outsourcing Drivers (3x2)

Answer 3

Promising opportunities

• focus,
• strategic repositioning.
• scale without mass,
• disruptive innovation,

Control of capital costs

• rapid project start.
• increased efficiency,
• reduced labor costs,

Additional drivers

• cultural resistance,
• over-regulation,
• labor mobilization,
• government permissions,
• manager biases.

Question 4

Hybrid Outsourcing (4)
Deutsche Bahn

• History
• Transition
• Challenges
• Campaign

Answer 4

Complex history

• similar to English or Dutch equivalents.

Transition

• to a single public entity with turbulent political circumstances. 🛺

Challenges

• excessive labor costs, lack of profitability, high debt,
• organizational non-conformity.

Campaign

• Reforms based on New Public Management (privaticstion “light” but with the worst from bouth concepts)
• led to the establishment of DB AG with three divisions.

Question 5

Name 1 example for input, strategy, transformation and output! (4) X

Answer 5

● Input: General - new machine learning algorithm
● Strategy: Cost leadership through optimized production
● Transformation: Formal: Reward structure for performance
● Output: Customer satisfaction