External factors affecting business case study of Network Rail



Every business in the busy world never operates on space. Business has to react and act on what is going on beyond its environment and its office walls. Some factors will still influence the company outside it operating zone. These factors are the ones known as the external forces or external factors. In our case study of the Network Rail, an engineering company mandated to take care of the UK railway infrastructures has experienced these external influences. In the UK when people hear about railway they think of the train but they forget the infrastructures associated with a network of the railway. A brief history of the railway in the UK says that the it was first built in the 19th century and in 1947 the government started to control it and was run by the British Rail. In 1994, the business of railway transaction was privatized, and it was now operated by companies such as First Group and Virgin. To cut the long story short in 2002, the government transferred all the assets of the business to the Network Rail.

To start with is the political factor. This is how changes in ruling regime guiding principle could shape the business, for instance, the government might come up with a policy that can lead to the modification of the railway gauge and this could have a significant influence on the business. Since time and memorial tracks have always been a political concern. In the 1960s car ownership became a common thing, and this had some impacts on the railway business since many lines had to be closed. The ruling regime intervened by giving some money to the rail business to protect it from collapsing. The increase in the number of cars did not only try to collapse the rail sector but also had some effects on the environment. To counter attack this effect the government thought of investing more in the railways due to the benefit attached to it that is the environmental benefits. In Paddington, a serious rail crash was reported, and this called for maintenance and safety of the railway, this is what led to the formation of the Network Rail in 2002.

Another external factor that could affect the business of Network Rail is the economic factor. Network Rail gets its income from two sources, from the companies operating the training payment for access to the line and from the Government as a fixed amount payment according to the five-year plan. The economy is a significant factor in the business of the Networks Rails. Growth in the economy means there will be an increased demand for the rail travel simply because there are more jobs, and people need to move to those jobs. The increase in the level of income will mean that people will have leisure and rail travel can provide that at ease. If the economy is declining, all these factors will vice versa. Network Rail has been enjoying a rise in revenue due to working closely and efficiently with the train operators as a way to improve reliability (Fader, 2015).

Another external factor that the Network Rail considered is the social factor. The line runs all over the country and due to this, the rail has an adamant relationship with the public. The noise produced by the train has to be controlled to ensure that the Network Rail maintains a positive and a well-known brand or image. Network Rail is a big company with a national impact. It offers the job to many engineers in the UK and also provides the internship to the engineering students as a way to maintain the positive image. It also participates in social activities by operating the biggest engineering learning and training programme in the UK. The company also plays a vital role in educating the people about major dangers of the rail environment (Parkinson, 2011).

The other external factor that the Network Rail Company considers is technology. Network Rail has integrated the advanced technology in raise order performance; increase the level of safety and also to reduce the costs. The technology they use is advanced to a level that it can detect broken rails. The call for adopting the advanced technology and to come up with new technology continuously is vital because of the little past investment. Nowadays the consumers expect an above average performance and due to this Network Rail have to invest a lot in the newest technology to be able to meet their customers’ wants and preference and by doing so, they will be closing the investment gap left behind during the time of Rail -track (Goldsmith and Reiter, 2015).

Another external factor to look at is the environmental factor. Network Rail has to look at the environment in which the rails will be operating. As a way to take its environmental responsibilities the company purchases woods to be used by the rail tracks from renewable and appropriately managed forests. Railways are also known as nature corridor, and Network Rails plays a significant role in the UKs biggest number of Sites of Special Scientific Interests (SSSIs) near the tracks or along the tracks. It is an advantage to wildlife conservation through the protection of these areas; this helps the company in that it upholds the business image as positive to the eyes of the public hence earning the social benefit (Tarhini and Bish, 2015).

Another factor that the company should consider is the legal factor. Network Rail has to adhere to the strict legislation. As a big property owner, Network Rail associates with firms and households all over the UK. Network Rail is a massive local employer with needs of committed and skilled staff and due to this, it has to comply with most of the laws including company legislation and employment law.


Fader, G. (2015). Fact, Fallacy and Failure in Small Business Governance. JBSGE, 10(2).

Goldsmith, M. and Reiter, M. (2015). Triggers. [New York]: [Crown Business, an imprint of the Crown Publishing Group].

Parkinson, J. (2011). Case Studies And How They Are Used. Journal of Business Case Studies (JBCS), 4(12), p.1.

Tarhini, H. and Bish, D. (2015). Routing Strategies Under Demand Uncertainty. Networks and Spatial Economics.




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