Case | HBS Case Collection | September 1994 (Revised March 1995)

RailTex, Inc. (A)

by Norman A. Berg and James Weber

Abstract

By 1992, RailTex, Inc., had acquired and was operating 23 geographically separate short-line railroads (feeder lines for larger railroads) in Mexico, Canada, and primarily in the United States. Founded in 1977 with $500,000 of capital as a railcar leasing company, the company began buying and operating short-line railroads in 1984. Since 1988, revenues have increased an average of 35% per year, up to $39 million in 1992, a growth rate far outstripping that of the old, mature railroad industry as a whole. Bruce Flohr, the founder, believed the company's success was due largely to his decentralized management system and emphasis on cost controls and marketing.

Keywords: Acquisition; Business Divisions; Cost Management; Growth and Development; Growth and Development Strategy; Management Systems; Product Marketing; Logistics; Risk and Uncertainty; Valuation;

Citation:

Berg, Norman A., and James Weber. "RailTex, Inc. (A)." Harvard Business School Case 395-033, September 1994. (Revised March 1995.)