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ORGANIZATIONAL STRATEGY

CHAPTER 1 -Background

HISTORY

State-owned “Russian Railways” company was formed on 23rd of November, 2003 on the basis of the reform of 2001 by the merger of 987 firms of Russian railway industry.

At the present moment, “Russian Railways” contributes for 2% of Russian GDP, and the length of railroads owned by “Russian Railways” accounts for 85200 km making company the second in the world in terms of length of railroads. “Russian Railways” corporation annually serves approximately 1 billion of passengers and delivers around 1,2 billion of tons of cargo. Company employs 1 million of employees working both at Russian facilities and foreign representative offices and company’s demands give job to 500 thousand people working for adjacent sectors such as oil extraction and refinery industry, power generation industry, iron extraction and steel industry. There are about 20 thousand of locomotives and 1 million of wagons belonging to the company. In the 2010, the company holds the forth place by the value of sales among Russian companies[1].

“Russian Railways” is of a great importance to Russian economy because it provides services for many Russian companies, connects distant regions and offers the most affordable means of transportation. Despite there were many structural reforms of “Russian Railways”, there are a lot of problems connected with its operations efficiency. It is important to notice the first steps in implementation of reforms which have started more than 10 years ago.

The goals of the reform of 2001 were: (1) to increase sustainability of railway transportation, (2) to increase safety, accessibility and quality of transportation services to foster the economic development of the country, (3) to form unified transportation system, (4) to decrease costs of freight transportation, (5) to satisfy growing demand for the services of railway transportation. The key actions to achieve the goals of that reform were: (1) partial elimination of public management with adoption of more professional management, which is more or less independent of government, (2) withdrawal of the set of some functions from the structure of the company in order to create competitive environment of suppliers markets, (3) saving control over the main railway infrastructure and provision of centralized dispatching management, (4) elimination of cross-subsidies between passenger and freight transportation division; between domestic and import-export operations.

The reform started in 2001 still continues. It reflects complex conditions in which the reform is implemented. For instance, last actions taken connected with the decentralization of operators of carriages have not achieved the desired result, and the average costs of freight transportation have increased and require the review of the reform’s plan. The new hallmark for the evaluation of progress of reform is appointed for 2015.

 

 

OPERATIONS

The main types of activities are:



· transportation of passengers

· freight transportation.

Other types of activities include:

· manufacture, repair and construction of rolling stock (locomotives and wagons);

· maintenance of railways infrastructure

· R&D activities (planning, design, construction, testing laboratories)

· information and communication

· trade

· the social sphere

· foreign trade activities

ORGANIZATIONAL STRATEGY

The company’s management has formulated a long-term organizational strategy based on its vision of making “Russian Railways” efficient transportation business that is able to compete on the Russian and international markets, while implementing the responsibility of a national carrier and rail infrastructure owner. Organizational strategy includes next objectives:

  1. to increase the scale of operations with a particular focus on freight traffic
  2. to achieve better customer orientation and to create better values for the customer by adding new transportation services, by improving the quality of existing services (reduction of delivery time, higher capacities, higher safety of cargo and passenger trains), by developing supply chains and by introducing innovative operational techniques.
  3. to improve the processes of transportation by increasing the technical reliability of infrastructure
  4. to improve the company’s image by reducing environmental impacts, accident and industrial injury rates
  5. to expand employees competences
  6. to ensure that corporate governance meets global best practices.

 

To support the implementation of organizational strategy “Russian Railways” continued the process of its restructuring. There were various changes in organizational structure (the number of departments was diminished and several branches appeared), big efforts were made to improve management vertical, non-core assets were partly sold. Functional strategies also were reviewed putting more emphasis on issues of the capacity development, the reliability of the transportation process, finance management and human resource development.

 


Date: 2015-12-24; view: 808


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