Essay About Did Norfolk Southern And Norfolk Southern

Why Did Norfolk Southern Make a Hostile Bid for Conrail?
1.Why did Norfolk Southern make a hostile bid for Conrail?“Both (companies) are in a position where they cannot be willing to lose. The winner will obtain an overwhelming dominance of the Eastern and Midwestern rail freight markets. The loser not only will lose the instant battle, but, perhaps, its very existence.”This statement itself might be enough to explain the rationale behind Norfolk’s hostile bid for Conrail.There are numerous purposes regarding  Norfolk trying to prevent this merger to take place.First of all, if the merger between Conrail and CSX succeeded it would have significant implications for the nation’s transportation system, for the shipping public, and therefore for Norfolk, which would lose a significant chunk of market share. Norfolk Southern’s CEO added that the merger between CSX and Conrail would pose a serious danger for the company, being one of the main threats the possibility of being excluded from the very important North- Eastern market (considered by many to be one of the industry’s prize possessions). We should recall that the industry had few firms, Conrail was a unique opportunity, one that could allow a very competitive advantage to CSX in case of acquisition under every aspect. In simpler terms, if either CSX or Norfolk acquired Conrail, they would be able to become one of the top players in the sector with superior market share than the direct competitor. This situation can be seen as a typical strategic problem broadly defined as “Kill or get killed”. If the merger between CSX Conrail was successful, it would create an entity with $8.6 billion in revenues and 68% of the Eastern market which would probably be capable of driving Norfolk Southern out of business. The same can be said about the opposite case. If the opposite happened and Norfolk Southern merged with Conrail, the new company would have rail revenues of $7.8 billion and 61% of the Eastern market.