Business strategies of private railway operators and regulatory change: Lessons from the case of Japanese major railway companies


In this research, we aims to identify the effects of regulatory changes represented by deregulation of entry and exit on strategies of railway business and to consider the role of regulation and market to enhance railway service, focusing on the business strategies of private railway companies (PRCs). As a result, we find that market environment and competition which was formed at the early stage of railway business are more likely to lead the companies to make strategies for increase of demand and improving value of the railways because of value system, rather than regulatory change to foster competitive environment by introducing new entrants. We analyse the case of six private railway companies in the West Japan area because of their competitive environment in the market and entrepreneurial behaviour as well as regulatory change. While we find ceasing operations of some local lines and decrease of total amounts of railway invest and operating costs after deregulation, it is difficult to come the conclusion that two situations other than abolition of local lines are caused by deregulation. Contrary to some changes in railway segment, the strategies of diversified strategies are likely to be deployed constantly as exploiting strategic resources like brand images of railway and physical assets from railway business like terminal buildings and lands along with the routes. In addition, we find from the management plans of each firm that companies still struggle to capture more passengers for railway by deploying diversified businesses which enable to attract customer to use railways, as they have done so far, and railway segment and other diversified businesses are collaborating in value system of the firm in order to attain competitive advantages in each business segment by serving the same customers simultaneously.

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Yeonjung Song