Burlington Northern The ARES Decision A
Burlington Northern Railroad was formed in 1970, by the merger of four different railroads. ... In July 1990, Burlington Northern¡¯s senior executives were deciding whether to invest in ARES (Advanced Railroad Electronics System), an automated railroad control system. ... Yet managers were still divided about whether the ARES project should be continues. Burlington Northern contemplated if continued to implement ARES strategy or not in the future. ... Through developing and operating ARES prototype, it indicated clearly that ARES would enable BN to provide better service, improve asset utilization, and reduce costs. BN also contracted with a half dozen outside consultant to measure the variety of benefits from a full-blown implementation of ARES. From above we can see that BN did a lot of work to prove that ARES project was worth to invest and would take higher revenue potential for them in the future. Investing in ARES strategy would cost $350 million that was a large amount for BN and ARES included highly uncertain factors, so it was hard for BN to determine invest it or not. Although BN already did a mass of research about ARES project, I still think they should built an integrity profit plan using profit wheel, cash wheel, and ROE wheel analysis. ... Even BN using ARES project, I think trucking service is still the prefer choice for these five business customers. ... It seemed that even BN could not estimate how many percentage the revenues would grow after operating ARES project. ... The ARES team concluded that the primary known benefits of ARES were to be measured in reduced expenditures on fuel, equipment, labor, and trackside equipment; damage prevention; and enhanced revenue.