C A S E T E A C H I N G N O T E S
QR National Aurizon
Kenneth Wiltshire
1. Introduction
This case is essentially about corporate and business strategy in a very complex environment
viz. government ownership. The case raises the fundamental question as to whether
governments should be in business, and, if so, whether government business enterprises can
2. Position of the case
Note: Although QR has recently been privatised and changed its name to Aurizon the case
focuses on the period prior to privatisation when government ownership was the milieu for
operations. It is too early to speculate on any differences that privatisation might bring.
3. Learning objectives
The case is designed to give students an insight into the formulation and implementation of
strategy in one of the most challenging situations which can be faced by a corporate entity in
4. Teaching scheme
A very good place to begin would be the PESTEL framework (see Section 2.2.1 in Exploring
Strategy) since it is crucial for students to understand the vast array of stakeholders (see
Chapter 4) in a government business enterprise and the complex relationships between them.
The notion of the government as stakeholder would be worth separate consideration. The
Balanced Scorecard approach (see Chapter 13) could then be addressed in the same vein to
illustrate the complexity of reconciling the needs and demands of the array of clients and
5 Questions for discussion
1. Is it possible for a government-owned business to operate strategically and in an
entrepreneurial manner given the political context in which it has to function?
2. Is risk taking compatible with public sector accountability regimes?
6. Case analysis
1. Is it possible for a government owned business to operate strategically and in an
entrepreneurial manner given the political context in which it has to function?
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To answer this question, students will have to revisit the very fundamentals of strategy. This
includes defining the corporate goals and purpose, in which the tension between serving the
public interest and attaining profitability will be confronted. It will also become evident as
students draw up the PESTEL and stakeholder analysis. If public interest is considered the
dominant element of the operations of railways in a particular country at a particular time then
2. Is risk taking compatible with public sector accountability regimes?
Here we have a unique case of innovation dilemmas as outlined in Chapter 9 of Exploring
Strategy. It is necessary to remind students that although in government ownership all of the
railways funding is coming from taxpayers funds or being raised with taxpayers guaranteeing
the loans. So it is the public at large that is bearing any risk that is undertaken. Moreover the
3. Can an entity such as Queensland Rail maintain a truly arms length relationship from its
government owner to facilitate day to day business decision making?
All owners impose controls of some sort on companies. However, with private companies there
is an understanding which permeates the governance arrangements that the management needs
to be given discretion in decision making to allow for innovation and speed of response. The
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4. What are the potential advantages and disadvantages of privatisation of an acknowledged
successful government business enterprise such as Queensland Rail?
This question takes the discussion a little beyond the realm of conventional corporate strategy
but is worthwhile for the light it will shed on the importance of context and stakeholder
frameworks and the freedom to set corporate strategy and direction. It would be best not to let
5. Is there a case, in the transport and infrastructure sectors, for maintaining government
ownership of networks and only privatising the value-added components?
This question introduces yet another facet of the public versus private ownership debate. It
introduces a hybrid solution which could preserve both perspectives. The aspects of transport
operations which are considered vital for public interest, such as safety, maintenance of
infrastructure, equality of access, fair competition and sound regulatory pricing to achieve
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6. What can a government achieve, in the public interest, through public ownership, that it
cannot achieve by privatisation plus regulation?
Once again it would be advisable to keep the confines of this debate to corporate strategy. The
wisdom of the old adage will become quickly apparent where you stand depends on where you
sit; students with a private enterprise bent will probably quickly conclude that privatisation