Case Detail

Case Summary

The Trouble with Trains: How the Union Pacific-Southern Pacific Merger Went Awry

Case Number: 5-205-252, Year Published: 2005

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Authors: Robert Gallamore; Patrick Lortie; Jason Maga

Key Concepts

Merger and Acquisition, Corporate Strategy, Leadership, Crisis Management, Management Style, Operations Management

Abstract

On July 3, 1996, the Union Pacific Railroad paid $5.4 billion to acquire its longtime competitor and partner, the Southern Pacific Railroad. Integration missteps, combined with booming demand for railroad services, led to a service meltdown that cost UP billions in lost profits, damaged the company’s reputation as an industry leader, and significantly impacted the U.S. economy. The case, which takes the perspective of Dick Davidson, chairman and CEO of Union Pacific Corp., describes the key events that led to the service meltdown. It provides an excellent platform to discuss post-acquisition strategy and how fast companies should move to integrate acquisitions.

Number of Pages: 22

Extended Case Information

Teaching Areas: Management, Organizational Behavior, Strategy

Teaching Note Available: Yes

Geographic: United States

Industry: Railroad

Organization Name: Union Pacific

Organization Size: Large

Decision Maker Position: CEO

Decision Maker Gender: Male

Year of Case: 2005