Cx's Operating Ratios

CSX Corporation recently went public with a strategy to obtain an operating ratio of 60% by the year 2020 (CSX.com, 2018). The past several years, the company has been able to improve the operating ratio significantly. However, the best number achieved has been around 65%. The railroads and investors use this measurement significantly to benchmark performance amongst its competitors. A lower number is desirable. The operating ratio measures what percentage of revenue is operating expense. Strategy implementation is deciding a game plan and then executing. Normally, executive management adopt what direction the company will take, and will instruct middle management to implement the plan. CSX, Chief Executive Officer James Foote said this,

It starts at inception, or infancy, then goes through a growth stage, maturity, and finally either a declining, or redevelopment stage (Chin & Gupta, 1994). The best way to extend the life cycle of the company is to remain in the growth stage if possible by being sustainable. Many businesses never climb out of the infancy, or inception stage and fail. This could be due to inadequate funding, poor business plan, a change in market conditions or competition, and various other reasons. Normally, a company can remain in the growth phase by maintaining a competitive edge by offering new products, being lean with minimal waste, and avoiding situations that could be detrimental to the company like lawsuits, bad publicity, and scandals. During this phase, more emphasis is placed on rules and procedures to try and prevent these issues from happening (Chin & Gupta, 1994). CSX Corporation would fall in the redevelopment stage. The business, and railroad in general has been around for quite some time and was the result of many mergers in the past that saw the number of large railroads decrease to the single digits. The past several years, CSX was in the maturity phase as complacency set in, and the need to grow was not emphasized. However, with the executive management shakeup that happened recently, redevelopment has occurred with a strong focus on increased profitability and gaining more

The honest answer is, it depends. A certain strategy can shape the culture of the business. In many circumstances like Enron, the focus of profitability at all costs can lead to employees taking risks or putting the company at risk to meet certain targets that will result in personal financial gain. CSX recently did an internal audit to find out that a certain location was fudging performance numbers as managers were trying to reach goals that resulted in year end bonuses and made the terminal appear to be more efficient then it really was. This false reporting gave middle and upper managers poor numbers to make decisions from. The result was the firing of several lower managers, and a change in the operating