The Case 2015
Following New Tracks
DSB Today
For almost two years, Stig Pastwa has been the CFO and part of the Executive Board of
one of the most important companies in Denmark. DSB is the backbone of the Danish
transportation system, and a company that is vital for providing society with the neces-
sary mobility to enable a dynamic and efficient job market. Mr. Pastwa has experienced
a rough period and during the next couple of years, DSB will face one of the most chal-
lenging periods of its 130-year-old history. The political demand for passenger growth
is extremely ambitious, the customers’ demands are ever increasing, and the reputation
of DSB in the Danish population is less than perfect.
From chaos to turnaround
It has been three years since a radical shift occurred in DSB. At that time, DSB was in a
deep crisis after economic chaos, which ended with a replacement of almost all of its
top management. Fixing the bottom line was the number one priority. Therefore, the fo-
cal point was on recovery and re-establishing profitability. The recovery strategy includ-
ed cost cutting as well as reductions in the number of employees. After two years, DSB
achieved profitability again, and posted profits of 483 million DKK in 2013. Therefore,
today, with DSB “in balance”, the focus has shifted from turn-around to future profitable
growth through improving the customer experience.
Net Profits of DSB (in DKK million)
483
338
50
2009 2010 2011 2012 2013
-577
-698
Source: DSB Annual Reports 2009-2013
Back to basics – the customer as the centre of attention
In 2010, the Ministry of Transportation in Denmark published an ambitious report, which
highlighted a political ambition of doubling the use of public transportation by 2030.
DSB plays a vital role in reaching this goal, which would entail growth rates of a scale
never seen before in a European context. In order to achieve this growth, DSB needs to
put the customer experience more in focus. In other words, DSB needs to get back to ba-
sics. This is a major challenge as customers have a dreary picture of DSB as a company.
A large gap exists between the cold, hard facts of operating trains efficiently, and the
expectations of the customers. Moving forward, this discrepancy can lead to increased
dissatisfaction among customers, unless the expectations of DSB and its customers are
better aligned in the future. Over the next three years, heavy investments will be made
2 DSB - CBS Case Competition 2015
in the rail infrastructure in Denmark, which will result in disruptions in scheduled traffic,
and this will further increase the importance of managing customer expectations.
Operating a railway in today’s Europe has the unique feature that it is typically, when
viewed alone, a bad business case for the actual railway company. However, railway op-
eration has some very significant synergies, which make it very beneficial for society as
a whole. An efficient railway system is crucial for a modern European society, and there-
fore European governments typically subsidize the railway companies heavily. This has
resulted in a complex ownership structure for DSB, which means it must navigate within
the limitations of a highly political environment, while remaining focused on operational
efficiency and customer satisfaction.
With profitability reestablished, Mr Pastwa’s focus has now shifted towards growing the
topline instead. Therefore, the challenge that lies ahead is how to take the initial steps
towards getting more people to take the train. DSB believes the key to getting more
people to take the train is to keep the consumer in focus at all times and continuously
improve the customer experience. Stig Pastwa – now acting CEO – therefore wants your
help to answer the following question:
How can DSB increase the amount of passenger kilometres in Denmark through
focusing on improving the customer experience while remaining profitable?
You are asked to formulate a three-year business plan that will result in a total in-
crease in the amount of passenger kilometres of 7.5% after three years, and serve as
the first step on the journey towards supporting the political ambition of doubling
passenger kilometres by the year 2030. A successful business plan solution needs to
impact DSB and Danish society on a triple bottom line: The economic, the political and
the reputational.
DSB passenger kilometers (in million)
6267 6246
6063
5798
5659
2009 2010 2011 2012 2013
Source: DSB Annual Report 2013
DSB - CBS Case Competition 2015 3
 Company Background Strategy of DSB

130 years as a socioeconomic and political important organization Regaining trust among Danes
In 1847, the first railway track opened in Denmark between Copenhagen and Roskilde. In 2014, DSB launched its new overall strategy program named “Win Confidence in
It was built by the private company “Sjællandske Jernbaneselskab”, and started out as DSB”. The main goals for the strategy is that DSB will return to focusing on the custom-
more of an amusement than an important part of the transportation system. Around the er, through enhancing the ability to work while traveling, improving its public reputa-
same time “Det Jysk-Fynske Jernbaneselskab” started operating railways in Jutland as tion, and making transportation as integrated and seamless as possible.
well. In 1867 the government took over the operations of the railway tracks in Jutland
and Funen, and in 1880, it also took over the railway operations on Zealand. Five years However, the main purpose of DSB going forward will still be delivering reliable passen-
later, the government merged the two regional companies, and established what we to- ger trains and ensuring a high level of integration throughout the entire public transpor-
day know as DSB. tation system. The future is expected to bring further demands for liberalization from
the EU, increased digitalization of all links in the value chain, transfer of maintenance re-
In 1934, the first S-train lines, which operate in the Greater Copenhagen area, and connect sponsibility from operators to producers of trains and finally more standardization of
the majority of the Copenhagen suburbs with the city center with frequent train departures, railway operation across borders.
were established. The InterCity train that connects cities at different regions in Denmark (for
instance from Århus in Jutland to Copenhagen on Zealand) was established in 1974. The railway industry is very unique in some ways and is often very dependent on vari-
ous national socio-economic considerations. The mobility gains that arise from having
In the mid 1990s, a liberalization process occurred in many European countries for their an efficient railroad result in very large and significant benefits and synergies to society
telecommunication, energy and transportation sectors. In 1997, ownership of the infra- as a whole.
structure (rail tracks, signaling systems etc.) was separated into a different and com-
pletely independent company, BaneDanmark. Further, in 1999, DSB became an indepen- This is especially true in Denmark, which has the third highest rail modal-share in Eu-
dent state-owned company, which means that the company basically can operate as a rope. Therefore, the responsibility of DSB to provide a reliable and efficient railroad ser-
private company with its own financials, board and management team, but still has cer- vice in Denmark is of huge importance for Danish society.
tain public obligations as it is still owned by the Danish state.

As an attempt to grow their customer base, DSB started an internationalization process

in 2002 with attempts to enter the English, Swedish and German markets. However, the
internationalization strategy did not prove a success and DSB abandoned most of its for- “We now have a viable, long term strategy
eign ventures again in 2011. Therefore moving forward, the focus for DSB is not on with the aim being substantial passenger growth while
growing internationally, but on increasing its penetration rate in Denmark. Following the remaining focused on profitability and operational efficiency.
failed international attempts, DSB posted large losses in 2010 and 2011. In order to re- The next step is the difficult part: Execution”.
store the company to profitability, the company introduced a tough cost-cutting pro-
gram in 2012, which slimmed the organization and turned the company around. This Jesper Andersen - Chief Strategy Officer
also means that today, the focus of the future is on increasing the topline at a steady
margin — in other words, growing profitably.

Milestones in DSB’s history

The first line opens between Copenhagen and Roskilde.
DSB is established. Prior to this,
railway operation was organised locally.
The Little Belt Bridge opens.
DSB introduces the first
high-speed diesel trains.
The Great Belt Fixed Link opens for trains,
reducing the travelling time between Zealand
and Funen by about one hour.
InterCity trains are introduced with
fewer stops and a fixed timetable.
DSB initiates the rationalisation programme DSB reaches the objective of the rationalisation
“A Healthy DSB”, the objective of which is to programme “A Healthy DSB” and enters 2015 in
reduce operating costs by DKK 1 billion. profit and with a new strategy up to 2030.
One thousand employees are laid off. S-tog
A/S operating the urban rail network in the
Greater Copenhagen area and DSB merge to
become one corporation.
The organisation is simplified.
DSB relaunches itself with the campaign
“The Greater Context”.

1847 1885 1930 1935 1963 1974 1989 1997 1999 2000 2012 2014

The number of railway lines and train stations Locomotive Series MA, popularly known as Sølvpilen The first IC3 trains are commissioned. DSB is divided into two. DSB becomes responsible DSB becomes an The Øresund Bridge opens, connecting Denmark and
reaches an all-time high with 5,296 kilometres (The Silver Arrow), is commissioned. It becomes the Over the years, the IC3 has become the for the trains and train operation, while Banedan- independent public Sweden. More than 20,000 Danes currently live in
of rails and 534 ticket outlets for DSB alone. most iconic DSB locomotive. most popular and reliable train in Europe. mark becomes responsible for the rails and signals. corporation. Malmö and commute to Denmark every day.

4 DSB - CBS Case Competition 2015 DSB - CBS Case Competition 2015 5

”DSB has a triple bottom line: The economic,
the political and the reputational.
As we are not a public traded company,
we view our reputation as our share value.”
Lars Kaspersen - Director of Communication and Branding
6 DSB - CBS Case Competition 2015
The Political Dimension
Strong political interest and influence on the railway industry
DSB is a state-owned company, and is governed by the Danish Ministry of Transportation.
DSB is operating as an independent state-owned company, and the Danish government is
subsidizing DSB with more than 4 billion DKK each year to support its operations.
The business of operating a national railway system
The reason for DSB being subsidized by the government is that on its own, operating a
national railway system is an unprofitable business. From a pure business perspective,
only a few urban routes are attractive, while the majority of the routes operate at a loss.
However, the national railway system plays an important role in society as a whole, and
is necessary to ensure a functioning and effective infrastructure. An efficient and highly
developed public infrastructure system is vital in order to increase mobility in the job
force. As a result of this, railway transportation is subsidized all across Europe.
Share of subsidies in selected countries
Revenue per passenger kilometer
62% 49% 42% 42% 36% Passengers
Subsidy
38% 51% 58% 58% 64%
United Kingdom The Netherlands France Denmark Germany
Source: BCG Analysis (2010)
DSB and the ministry of Transportation
The contract between DSB and the government outlines the responsibilities and require-
ments of DSB. Specifically, it describes what DSB is allowed to do in terms of pricing,
which routes it must operate, and the frequency of the routes. This means that DSB can-
not adjust its prices based on supply and demand. DSB has the option to give discounts
to specific groups or for specific departure times; however, they cannot increase their
prices beyond a specific maximum defined in the traffic contract. In terms of frequency,
DSB can increase the frequency if demand is high, but they cannot decrease the frequen-
cy below a defined threshold if certain routes are unprofitable.
Political agenda - The case of the tip-up seats
Even though DSB is technically run as an independent company, the distance to the poli-
ticians is sometimes very short, and it becomes very clear that DSB is still a state-owned
company. An example of this is the case of tip-up seats for students. DSB offers very
cheap tip-up seats for students, who are traveling across Denmark in off-peak hours. In
September 2014, DSB announced that it wanted to terminate this offer in order to in-
crease room for bikes and baggage on longer routes, and also because the cheap tip-up
seats only accounted for only 0.1% of travel on regional trains. The next day, the minis-
ter of transportation went out publically and told DSB to keep the tip-up seats, as they
served an important role for society. DSB then had to keep the seats. This is a good ex-
ample of how what is best for business and what is best for society do not alway align,
showing the sometimes conflicting bottom-lines of society and DSB.
DSB - CBS Case Competition 2015 7
 Infrastructure

Complex infrastructural factors set out constraints Overview of the responsibilities of DSB and BaneDanmark
The activities connected to operating a railway system can be divided into a number of
different categories, such as building and maintaining the track infrastructure, running
train stations, selling tickets, providing traffic information, buying and maintaining
trains and, finally, actually operating and driving the trains. In Denmark, DSB is respon- DS
Train System”
sible for almost everything except the construction and maintenance of the railway “The B
track infrastructure. k
Equipment

ar
nm
This means that it is also DSB’s role to purchase new trains to meet future traffic de-

Da

ce
mand on the Danish railway; however, procuring trains is a long, expensive and highly Sy

ne

tanan
Purc
complicated process, sometimes taking up to as much as 10 years from the beginning of

Ba

st
em
the process to the time the trains are delivered.

ns
&

hase
tio

s&
ai

Main

et
DSB

n
Sta

ck
ta
All of these infrastructural factors set a number of constraints for railway operation. For

Ch
Ti
-

in
example, one constraint is the tracks, which limit where the trains can go and how fast ffic tion

an

ann
ra
T ma

ce
they can go, and another is the number of available trains, which determine the frequen- r
nfo

els
cy and capacity of the different scheduled train departures. Taken together, all the differ- Bui Planning i
ld
ent infrastructural factors determine the total network capacity. Today, it is difficult to Service
add more frequent departures because the network capacity is limited by a number of
traffic bottlenecks, such as bridges, low numbers of passing loops, highly trafficked key
Ope
stations and outdated signaling systems. Optimizing ratin
il d g
Bu
The Danish Parliament has recently agreed to invest more than 100 billion DKK in the Danish D
riv

nce
rail infrastructure in order to increase the network capacity so that it will be able to accom- in
g

ana

Serv
modate the future growth of rail passenger traffic. However, these investments are scheduled

s
in
to span over the next 15 years. In addition, DSB and BaneDanmark have scheduled a com-

In

int

tra
ice
fra
prehensive track maintenance and new signaling program over the next three years.

Ma
ru

ng
st
i
ct at
ur er

Ba
Overall, understanding the limitations set by the infrastructure is important when it e
Op

ne
comes to evaluating strategic proposals and ideas.

D
nm

a
ar
k

Source: DSB Internal Data

“While we always focus

on improving our operations,
we are currently
at a level of punctuality
where the majority of the
improvements will come from
better coordination with
BaneDanmark and
technological development
in the signaling system”.

Anders Egehus - Executive

Vice President, Operations

8 DSB - CBS Case Competition 2015 DSB - CBS Case Competition 2015 9
 The passenger transportation industry

An industry dominated by passenger cars and trains Political ambitions for growth in public transportation
As the biggest railroad company in Denmark with the responsibility to operate passenger It is the ambition of the Danish Parliament to increase the modal share of rail in Den-
trains on most of Denmark’s railways, DSB’s main market is the market for passenger mark because a higher share of public transportation is a key component in the govern-
transportation. This market encompasses all passenger transportation in Denmark and ment’s sustainability strategy. Compared to historical growth of the railway sector in
includes all different modes of transportation, such as bicycling and driving. Denmark, the political growth targets are highly ambitious, and require an industry
CAGR of 3.4% from 2011 to 2030. This growth rate is for the entire railway sector, in-
The different modes of transportation have very unique characteristics and each has its cluding regional operators, metro expansion and light railways, as well as DSB, meaning
advantages and disadvantages. In 2012, trains (all operators) had a share of 10.1% in Den- that DSB will not have to deliver the entire industry growth targets alone.
mark in terms of passenger kilometers traveled, while passenger cars constituted more than
80% of total passenger kilometers traveled. This has been fairly stable over the last 10 years;
however, trains have managed to gradually increase their share from 9.3% in 2004. Growth in the Danish Railway Industry
14 RailwayTraffic
Modal transportation shares Modal transportation shares (Passenger kilometre pr. year in billions) 3,4%
Denmark 2004 Denmark 2012
12 CAGR
Political Ambition 2011-2030
Motor coaches, Motor coaches,
buses and trolley buses and trolley 10
buses, 11,4% buses, 9,7% Historic
development
Trains, 10,1% 8
Trains, 9,3%
Passenger Passenger
cars, 79,3% cars, 80,2% 6
1,5% DSB’s
Source: Eurostat Modal Shares 2004-2012 2,2%
4 CAGR development
CAGR 2003-2011
1996-2003
In order to understand the value proposition of train travel and in order to improve 2
the customer experience, it is also important to understand the main alternatives and
competitors that DSB is up against on the passenger transportation market. As can be 0
1995 2000 2005 2010 2015 2020 2025 2030
seen on the graph, the biggest competitor by far is passenger cars. This mode of trans-
portation has become more popular with the introduction of “micro” cars available at Source: DSB Internal data, Trafikstyrelsen: “Trafikplan for den Statslige Jernbane 2012-2027” (2012)

very cheap prices of less than 100,000 DKK. These micro cars are small and very fuel
efficient, which makes them relatively cheap, compared to other transportation modes.
A key advantage for the cars is the flexibility they bring, as the driver decides when to In order to support the political ambition on passenger growth, it is necessary for DSB
depart. Additionally, the driver can often complete the journey in one leg, rather than to get more people to use the train in the future. Currently 10.1% of all public transpor-
having to go through multiple legs such as is often the case with public transporta- tation in Denmark is by train, which is among the highest penetration rates in Europe.
tion. However, the cars also have certain drawbacks — for instance, with the increased This underlines the challenges within the political growth targets.
number of cars on the roads, traffic congestion is increasingly becoming a hassle, and,
similarly, parking spots are becoming more difficult to find within cities.
Rail modal share EU comparison 2012
20%
Drivers for change
The main drivers for changes in modal shares between trains and cars have histori- 15%
cally been availability of cars, development of highways, door-to-door speed of cars
vs. trains and the number of train services operated. In the future, the key drivers for 10%
growth in the modal share of rail transportation is expected to be investments in rail-
5%
way infrastructure, continuous improvements in business performance and customer
experiences, and technological changes that advance door-to-door connectivity. 0%

Switzerland
Austria
Denmark
Hungary
France
Sweden
Germany
Netherlands
Czech Republic
United Kingdom
European Union
Belgium
Slovakia
Italy
Spain
Finland
Romania
Latvia
Poland
Norway
Luxembourg
Portugal
Croatia
Bulgaria
Ireland
Slovenia
Estonia
Turkey
Macedonia
Lithuania
Greece
In order to achieve the passenger growth targets set for DSB, it is imperative to under-
stand the alternative offerings in the market, and to recognize that different modes can
be seen both as competitors and as complementary services. Multi-modal journeys and
better integration across different means of transportation are ways to improve cus- Source: Eurostat Modal Shares 2012

tomer experience, and therefore represent a significant growth opportunity.

10 DSB - CBS Case Competition 2015 DSB - CBS Case Competition 2015 11
 Integration across different modes of transportation

Facilitating other transportation vehicles:

DSB as the backbone of the Danish transportation system A way of making the train more attractive is increasing the reachability of the stations.
DSB has an ambition to be the backbone of the Danish transportation system. This The figure shows that distance to the stations is very important when people choose
means that they will play an ever more important role in further integrating the public their mode of transportation. By increasing parking facilities for cars and bikes, the train
with the private transportation system. This goal requires taking responsibility for the can become a more attractive alternative.
customers’ journey from A-Z, and ensuring that the travel experience is as seamless as
possible. In order to achieve higher levels of integration, critical factors include improv- % that uses public transportation
60%
ing the traffic information provided to customers, making ticketing easier, and accom- to and from work
modating other transportation modes such as busses, the metro, cars and bikes. Public Administration workers
Consulting engineers
40%
Insurance companies

Traffic information between

different transportation methods Rejseplanen.dk
20%
Informing customers about how to get from point A to Z in an
easy, available, fast and reliable way across different transpor- Rejseplanen.dk is a portal
that contains all scheduled
tation forms is a task DSB has undertaken to ensure connec- Distance from nearest
and current departures and 0%
tivity for the customer, thereby providing one focal point (one arrivals within the Danish station to workplace
0 200 400 600 800 M
point of touch) to customers and giving them a better travel public transportation system.
experience. It contains running times for Source: By- og Landskabsstyrelsen, Fingerplan 2007
all operators and transport
modes, and users can find
Rejseplanen.dk is an example of a digital solution that inte- The development of car and bike sharing can provide new opportunities for integration
travel information from/to
grates the different public transportation systems; however, all addresses in Denmark.
with the train. In Paris, for example, rental cars, city bikes and trains have been so close-
the system still faces challenges in giving fast and reliable up- Scheduled maintenance and ly integrated that you are able to pre-book cars, train tickets, bicycles and even parking
dates in case of delays. Generally, improvements are neces- cancelations are also shown spots from one app on your mobile phone. This enables a seamless travel experience
sary to proactively inform customers about potential delays on Rejseplanen.dk. Rejse- across different means of transportation.
upfront, and to inform them of alternative ways of reaching planen.dk is available both
online and as an app.
their destination.

Rejsekortet
Rejsekortet was introduced
in 2011 as an electronic
ticketing card. It is a col-
laboration among all public
transportation operators in
Denmark. It works similar to
the Oyster card that is used
in London. Passengers ”check
in” with the Rejsekort when
they start a journey, and
”check out” when the jour-
ney is completed, and the
price of the journey is auto-
matically calculated and paid
by the account holder.
Easier ticketing across
different means of transportation
Purchasing tickets needs to be a one-stop shop, which
was attempted with the introduction of “Rejsekortet” in
2010. Originally, the plan was that this card should re-
place normal tickets and be the only way to purchase
tickets, but it is now used as a supplementary product.
With Rejsekortet, the Danish transportation system has
taken a big step to integrate the ticketing of different
modes of transportation. However, “Rejsekortet” still fac-
es challenges with a highly non-transparent pricing sys-
tem for customers, a software capacity issue, and a com-
plex ownership structure.

12 DSB - CBS Case Competition 2015 DSB - CBS Case Competition 2015 13
 Train systems of DSB
Map of F&R and Øresund trains S-trains (greater Copenhagen)

Three key train systems in Denmark Skagen

DSB operates three rail systems in Denmark. The S-Trains, which operate in and around
greater Copenhagen, the regional and long distance InterCity trains, which serve and Hirtshals

connect the different regions in Denmark, and the Øresund Trains, which connect Copen-

n
av
sh
g

ik
l
in
hagen with southern Sweden. The different train systems of DSB also cater to different

se

er
al

e
rr

nd

ed
ln

is
jø

Kv
To
Si

Fr
H
customer types. Commuters going to and from work primarily use the S-Trains and the Vrå

regional trains, whereas the long distance InterCity trains in the “East-West” segment
are mostly used by leisure travelers visiting friends and family, and business travelers Brønderslev

going to meetings. Lindholm

Thisted
Sjørring Aalborg Vestby
Snedsted Aalborg
Share of DSB’s total Share of DSB’s total Share of DSB’s Hørdum
Bedsted Thy
Skalborg
Svenstrup

passenger kilometres 2013 number of travels 2013 total revenue 2013 Hurup Thy
Ydby
Støvring
Skørping
Lyngs
Thyborøn Hvidbjerg
East-West 4,9% Uglev
Others 2% Others 7,4% Oddesund Nord
Arden

East-West Others 0,5%

East-West
DSB Øresund 35%

ro
38%

b
DSB Øresund Hobro rd

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ev
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ol
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or
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oh

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iv
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ib
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Sk

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n
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12,7% M R K T G

ri
er
59,0%

up
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Bj

tr
Hjerm Randers Hornslet

ls
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West 21% West S-Train Holstebro Skødstrup
Vemb Hjortshøj
16%

gå
Bur
28,9%

en
um
9,1% Hovmarken

n
st
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p
La

ru
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ul

ad
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g
A

ne
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ar

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rp
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um

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ild
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ng

er
n

g
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bo
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in
ni
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s
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East 18% East 12,8%

k
ke
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er

as

ve æ
rk

Bo
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H
l
H

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Bi

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Lem Aarhus H

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Skjern Viby J Snekkersten

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St æk de
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de
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ib e

er å
o

y
en
Source: DSB Annual Report 2013

u
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Hundested

an
ni rd

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ng

Br

A
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eg
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s
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ec
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en
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ng
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ge
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lli

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øj eh ne
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The S-Train is an urban city-train system operating in the Greater Copenhagen Area.

ls
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ed op
København H

ia
Guldager

r
ic
er
Gjesing

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am g
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in

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r
There are 84 stations on the S-Train network, and at several of the stations you are able

ng
bo

ed

Fr
m

by
up
Spangsbjerg Triangeln

n
di
re

st

je
ør

Bo

Sj
ør

ol
æ

Ri
Ve
Hyllie

Br

Br
Esbjerg

Tj

ru
n

p
to change to local and regional trains that serve the rest of Zealand, as well as long dis-

gs

ru
p
O N Svedala

te

st
de yb

Sl

up
d

Ø
ad

Tå st
Kø nb d
Ko

ag
ns or

dr

re
r a
G
Skurup Ystad

So
el
Ølby

be y
Lu

Ko
e g

rs
Ta

av

ed
Sejstrup
tance InterCity trains that connect Copenhagen with Jutland and Funen. At most sta-

se
ør

rø
u

nh
re und rt
n

H
di

sv
lo
de

a
Køge

av
N us elf
ng

en
v

e
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rs

n
Ka idd

Sk
ko

s
Ej by

Lu
tions, you are also able to change to the local busses in Copenhagen. The S-Train sta-

l
Ribe Nørremark

e
M

-Å
Herfølge

by
Odense Sygehus

ll

f th
Li
Sk Br p

st p
A ed

H m rg

p
To alb d
Fruens Bøge

av
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m u
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ru
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Ribe Tureby

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tions are typically placed fairly close to each other, especially in the city center.

G
Hviding Vojens Højby Haslev
Rødvig
Rejsby Årslev Holme-Olstrup Faxe Ladeplads
Glumsø
Pederstrup
Brøns Ringe Næstved Nord Rønne
Rudme Næstved
Skærbæk Rødekro Kværndrup
Øresund Trains Døstrup Sdrjylland Stenstrup
Stenstrup Syd
Lundby

rg
Bredebro Vordingborg
The Øresund Trains is a regional train network serving the Øresund region. It runs from

bo
Svendborg Vest

er
v

te
Svendborg

le
Visby Tinglev

nd
s
lip

rå
Nørre Alslev

Sø
G
K
Helsingør in Denmark and goes to Malmö in Sweden, from which point trains continue Tønder Nord
Tønder Eskilstrup
InterCityLyn

to Karlskrona, Kalmar or Gothenburg. Padborg

Nakskov
Nykøbing F InterCity
Regionaltog Regional trains
S-tog S-train
Rødby Færge

F&R Trains (Regional and InterCity Trains) Flensburg Andre togselskaber Other railways
Standsning. Se køreplan Stop. See Timetable
The F&R Trains are DSB’s main train system, which connect various cities and regions of Den-
mark. This system is made up of regional trains and long-distance InterCity trains. It can be
segmented into the following three areas: “East”, which covers local and regional travel on East-West - number of passengers, annual level

Number of journeys across the Great Belt

Zealand and Lolland-Falster; “West”, which covers local and regional travel in Jutland and Fu-

Index compared to the previous year

40 120
nen; and finally the “East-West” segment, which covers the long distance InterCity trains that
35 32,7 32,4 32,3 32,5 32,7 33,1 33,8 115
run between Copenhagen-Odense-Århus- Ålborg as well as various other locations in Jutland. 31,0 32,3
bridge (mio. travels).
30 26,9 27,5 28,5 29,4 110
25,7 26,3
25 105
It is expected that the East-West segment will be impacted heavily by track maintenance 20 100
during the next three years. During the maintenance period, it will be difficult to sustain cur- 15 95
rent levels of punctuality and customer satisfaction. Additionally, it is also the East-West 10 90

segment that has been affected the most by the increased competition from cheap mi- 5 85
0 80
cro-cars. This is a key challenge for DSB, because the East-West segment is at the same
2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014
time also DSB’s most popular service, as measured in passenger-kilometers.
DSB Car Bus Flight Train Index Car Index

14 DSB - CBS Case Competition 2015 DSB - CBS Case Competition 2015 15
 Experience of the customer
Increasing passenger growth through bikes – Case of the S-Train
Denmark is a nation of bicycles; therefore, as an attempt to increase passenger growth,
DSB began to offer free bike transportation in the S-Trains. Passengers must still purchase
a ticket, but they can now bring their bikes for free, while it used to cost around 10 DKK. Drivers for customer satisfaction and customer experience
An important part of reaching the political goal of growth in passenger kilometers is un-
The project started in 2010, and has resulted in significant passenger growth in an other- derstanding the customers’ needs and priorities when they travel. Some factors carry
wise stagnating market. The amount of passengers using the S-Train has boomed since more importance than others, and it is especially punctuality and frequency, comfort,
the introduction of the free-bike initiative. Additionally, the majority of the new passen- and traffic information that drive customer satisfaction.
gers in the S-Trains are bringing a bike. Before the initiative was started in 2010, 2 million
annual travels included a bike, and already in 2012, this figure was up to 9 million.
Drivers for customer satisfaction (% of total customer satisfaction)
This is a strong indicator that the option of bringing a bike for free in the S-Train has re-
Safety, Stations
sulted in more people using the S-Train, and this is an example of how the company can & Cleaning Puntuality &
create growth by improving the customer experience. However, these improvements 17% . Frequency
27%
also came at a cost, in terms of modifying existing train cars and other operational diffi-
Product, Price
culties that resulted from the increased number of bike passengers. & Service
15%
Traffic
Information
Comfort 21%
20%
Number of Bikes in the S-train per year
Source: DSB Internal Data, 2014

12,000,000

Punctuality and Frequency

10,000,000
DSB has improved its level of punctuality during the last four years, and the current level
is among the highest compared to its European peers. Often the root cause for delays
8,000,000
involves signaling or planning errors, which are out of the hands of DSB as they are
BaneDanmark’s responsibility.
6,000,000

4,000,000 However, since DSB is driving the trains, it often gets the blame for the delays.

2,000,000 Punctuality of DSB

96% 97%
0 94% 95% 94% 93%
2006 2007 2008 2009 2010 2011 2012 2013 2014 90% 91%

Passenger Growth in the S-trains

2010 2011 2012 2013
8.0
Punctuality is defined as the relative number of trains that arrived at the platform with a maximum delay F&R S-Trains
Passengers with bikes of 5.59 minutes for Long-distance & Regional Trains (F&R), a delay of 2.29 minutes for S-Trains
7.0 Source: DSB Annual Report 2013
Passengers without bikes
6.0 Responsibiliy of delays
Growth in mil of Passengers

3.0
5.0 2.5
2.3 F&R Trains S-Train
4.0 100% 100%
1.0
3.0 80% 80%
4.0 60% 60%
2.0 3.6 3.6
0.3 2.8
1.0 40% 40%
1.3

0.0 20% 20%

2010 2011 2012 2013 2014
0% 0%
2010

2011

2012

2013

YTQ
2014
Q1
2014
Q2
2014

Q3
2014

2010

2011

2012

2013

YTQ
2014
Q1
2014
Q2
2014

Q3
2014
Source: DSB Internal Data, 2014

Source: DSB Internal Data, 2014 DSB BaneDanmark External Factors

16 DSB - CBS Case Competition 2015 DSB - CBS Case Competition 2015 17
 Comfort:
The Danes have high levels of expectations regarding their experience with using the
train. They expect a high level of service, clean trains and stations, and the ability to sit
in the train at all times. A high level of service also means being able to utilize the time “We need to be better
spent in the train most efficiently. This could mean the ability to work while sitting in at giving fast and
the train, which is a feature that differentiates the train from other modes of transporta- correct information
tion. Increasing the ability to work in the train is a way to improve the customer experi- to our customers when
ence significantly. DSB has branded this efficient working time as “+time”. unforeseen events occur”.

The expectation of always getting a seat has proved to be a challenge, as there are Susanne Mørch Koch
times during peak hours where high demand means that the trains are full and some - Executive Vice President,
people have to stand. This is not very different from most European countries, but the Commercial and HR
difference is that Danes expect to always have a seat, even in rush hours. If more people
are going to use the train in the future, this will increase the pressure on capacity, mean-
ing that dealing with customer expectations becomes necessary.

Customer’s satisfaction on a scale from 1-10

9,0
9,0
8,5
8,5
8,0
8,0
7,5
7,5 Traffic information
7,0
7,0 Generally, traffic information is functioning well, with a combination of different meth-
ods to inform customers about their travel arrangements that range from updated moni-
6,5
6,5
tor screens on every station, to speakers on the stations and in the train, to digital solu-
6,0
6,0 tions such as the DSB app and the rejseplanen.dk app, where people can get information
5,5
5,5 about how to most efficiently get from one destination to another across different
2011
2011 2012
2012 2013
2013 2013
Q2 2013 2013
Q3 2013 2013
Q4 2013 2014
Q1 2014 2014
Q2 2014 modes of transportation.
Q2 Q3 Q4 Q1 Q2
Source: DSB Internal Data, 2014 On Time Delayed
Traffic information works relatively smoothly when there are no delays in the system;
however, once unforeseen delays occur, the quality of traffic information decreases sig-
nificantly. Due to the complicated and interconnected nature of the railway infrastruc-
ture, the delay of one train affects several other trains in the system. In these cases, it
becomes a challenge to communicate alternative routes to the passengers, and so when
these unforeseen delays occur, the customer satisfaction rate drops significantly.

The upcoming track maintenance projects that are planned for the next three years again
underline the importance of being able to provide fast and accurate traffic information in
cases where unforeseen delays occur. This communication will provide a way to improve
the customer experience when the delays occur, as well as minimize the impact and has-
sles that track maintenance inflicts on passengers. Providing traffic information is carried
out jointly between DSB and BaneDanmark, and therefore cooperation between the two
is very important. However, as DSB and BaneDanmark have different success criteria, their
goals are not always aligned, and this has in the past created some conflicts of interest.

In many cases, the train is not the only mode of transportation the passengers are using
to reach their destination. Solutions such as rejseplanen.dk help passengers get a more
seamless travel experience across different transportation modes. However, the cus-
tomer experience can still be improved by better integration between using the train and
a car, bike, bus or other forms of transportation.

18 DSB - CBS Case Competition 2015 DSB - CBS Case Competition 2015 19
 Customer segmentation Customer segments

Motivated heavy Motivated medium Motivated light Motivated non users

users
Young persons and
Key characteristics of DSB’s customers singles. Lives in the
capital region, and uses
Every day, 500,000 customers are traveling with DSB; out of these travels, 300,000
monthly train passes.
take place in the Copenhagen area. DSB’s customers differ a lot in terms of travel pur-
Believes that taking
pose, motivation for using public transportation as well as the frequency with which the train is efficient
they use the train. Some people need to take the train every day to work or school, and flexible.
while others only use the train occasionally. As the national train operator of Den-
mark, DSB effectively regards the entire Danish population as its potential customers.
15 % of DSB’s
In order to better understand these customer groups, DSB has divided its customers customers
into three different groups based on their travel purposes: commuters, leisure travelers 9 % of Danes
users
Women and singles.
Lives in the capital
region and Aarhus, and
uses different public
transportation types in
their spare time. Cares
about environmentally
friendly transportation.
15 % of DSB’s
customers
9 % of Danes
users
Lives in Jutland more
Elder and married than 2 kilometers away
persons. Lives in larg- from the nearest train
er cities outside the
station and work. Take
capital region. Have a
the car or the bus.
high income and are
wellestablished. Likes
relaxed social sur-
roundings.
33 % of DSB’s
customers
19 % of Danes 13 % of Danes

and business travelers.

Travel purposes
Commuters
People who are traveling to
and from work or school.
People with this travel purpose
typically travel using a month-
ly commuter card ticket. In
addition they travel relatively
short distances, typically from
smaller cities to larger nearby
cities. Commuters use the train
almost every day.
Leisure travelers
Leisure travelers include peo-
ple traveling to visit friends
and relatives in other parts of
Denmark, as well as people
traveling to go to concerts,
to go shopping or for similar
purposes. This group often
travel longer distances using
the InterCity or regional trains.
Leisure travelers use the train
with medium frequency.
Business travelers
Business travelers are people
traveling with work related
travel purposes, that do not
directly include traveling to
and from the regular place of
work. Travel purposes include
meeting with clients or going
to congresses or seminars. The
business travelers normally
have a lower frequency for
using the trains.
Unmotivated heavy
users
Lives in the capital
region, uses monthly
train passes and are
digital savvy. Finds it
stressful to travel with
trains and need their
personal space.
5 % of DSB’s
customers
3 % of Danes
Source: DSB Internal Data, 2012
Unmotivated
medium users
Creatures of habit, that
lives in the capital region
and Aarhus. Finds it
difficult to travel with
train and gets annoyed
by waiting time. Believes
in the prejudices about
DSB, for instance that
they are always delayed.
5 % of DSB’s
customers
3 % of Danes
Unmotivated light Unmotivated non
users users
Lives in smaller cities Men and pensioners
more than 2 kilometers that lives in Jutland.
away from the nearest Would never consider
train station. Finds taking the train.
public transportation
limiting in general, and
love their car.
28 % of DSB’s
customers
16 % of Danes 28 % of Danes

Commuters account Leisure travelers account Business travelers ac-

for 56.2% of journeys
on the F&R trains and
58.3% on the S-Trains.
for 37% of journeys
on the F&R trains and
38.5% on the S-Trains.
count for 6.8% of jour-
neys on the F&R trains
Key figures for customer segments
and 3.1% on the S-Trains.
Share of revenue Share of travels

Source: DSB Internal Data, 2014 Motivated heavy users = 52 % Motivated heavy users = 56 %

Unmotivated heavy users = 20 % Unmotivated heavy users = 23 %

In addition, DSB has also divided the entire Danish population even further into eight
Motivated medium users = 11 % Motivated medium users =8%
segments. Six of these segments contain DSB customers, while the last two segments
Motivated light users =8% Motivated light users =8%
contain non-users. The segments are based upon the frequency of usage (ranging from
heavy users to non-users) and on their motivation for taking the train (motivated and Unmotivated light users =5% Unmotivated light users =4%
unmotivated users). The motivation of users is determined by their predisposition to- Unmotivated medium users =3% Unmotivated medium users =2%
wards public transportation with train, as well as how they experience traveling with
Total Passenger Revenues: 4.771 million DKK Total travels: 182.595 (in thousand)
public transportation.
Business travellers Leisure travellers Commuters

The figure shows that motivated heavy users and unmotivated heavy users have 79% of Source: DSB Internal Data, 2012; DSB Annual Report 2012

the total travels, and constitute 72% of the revenue. This shows that the heavy users are
using the train considerably more often than the other groups, and it also shows that
heavy users pay a lower average price per travel than medium and light users. Further,
motivated users are using the train more frequently than unmotivated users across the
different groups, and the travel purpose varies across groups as well. Possible solutions
to increase passenger growth can therefore be to: 1) Motivate the unmotivated users to
increase their frequency, 2) Get medium and light users to use the train more frequently,
and 3) Get non-users to start using the train.

20 DSB - CBS Case Competition 2015 DSB - CBS Case Competition 2015 21
 Product portfolio

A large and complicated product portfolio DSB Revenue Breakdown (2013)

is non-transparent and inefficient
DSB solves an important task in society by providing frequent and reliable transporta- Other
tion in all regions of Denmark. DSB is required to ensure a certain number of departures Orange 3% 5%
at all stations, even the small and unprofitable ones, and for this service they are com- DSB 1' ticket 5%
Standard
pensated from the government with an annual traffic contract payment. This again 28%
Reserved Seat 5%
shows that several bottom lines exist in railway transportation. It might not be profit-
able for DSB to stop at a certain station, but when seen from the perspective of society 65+ticket 5%
as a whole, it can still be beneficial, and therefore DSB is subsidized through traffic con-
tract payments. The biggest contributors to DSB’s revenue are passenger revenue and Rejsekort 9%
traffic contract payments from the government.
Youth ticket
12%
Commuters 9%
DSB Revenue Breakdown (2013)

Youth Card Vouchers

9% 10%
Leasing of trains Passenger
2% revenues
Source: DSB Internal Data, 2013
Repair and 44%
Maintenance of Trains
3%
Sales from shop
7% Digitalization of Sales Channels
Traffic contract DSB has traditionally sold tickets mainly through manned ticket booths at the stations.
payments DSB has since 2008 focused both on improving the user experience and reducing costs
44%
through increasing the degree of self-service. Today, passengers can pay for their tickets
Source: DSB Annual Report 2013 online or through a ticket machine, a manned ticket booth, the DSB app, text-messages,
or by Rejsekortet. While mobile purchases account for most of the transactions today,
manned ticket booth sales still constitute a significant amount of the transactions.

DSB expects that the degree of self-serving customers will increase drastically in the fu-
DSB has a large product portfolio, and offers everything from regular tickets, to a youth ture. This will happen through increased sales through digital solutions, and result in a
card, to a “65 ticket” for people over the age of 65. In total, DSB has had around 200 dif- gradual closing of manned ticket stores.
ferent products, which created a rather non-transparent ticketing system for customers.
It carries high administrative costs to maintain a large number of products, and DSB has
therefore initiated a process of limiting the number of product types. They removed 90
product types from 2012 to 2014, and expect to continue to reduce the number of prod- Revenue split on sales channel transactions, 1H 2014
ucts by removing additional products within the next couple of years.
Rejsekort,
10% Mobile,
The figure shows that 92% of the revenue comes from nine product types, which indicates 27%
that DSB has a lot of products that don’t generate significant sales. Therefore, moving for-
ward, DSB needs to figure out which products are necessary to foster future passenger Online,
growth, and how they can simplify their product portfolio without compromising import- 13%
ant target groups such as the elderly or students. Additionally, this is an area in which the
political influence is sometimes high. An example of this is the case of the tip-up seats.
Ticket store,
25%
Vending Machine,
25%
Source: DSB Annual Report 2013

22 DSB - CBS Case Competition 2015 DSB - CBS Case Competition 2015 23
 Rush hour capacity limitations
Large demand fluctuations throughout the day
In addition to being subject to infrastructural constraints, DSB also has a difficult chal-
lenge in handling the peak capacity demand that occurs during the morning and after-
noon rush hours. The morning rush hour is the point during the day with the highest de-
mand; therefore, it is this peak demand that defines the total capacity requirements of
trains that DSB needs to own and operate.
In addition to this, the marginal capacity used during peak hours can only be utilized
during those peak hours, and is therefore excess capacity during the rest of the day. This
results in extremely high marginal costs for operating additional trains during rush hours,
as they can only generate revenue during a small portion of the day. Therefore, the solu-
tion to reduce overcrowding during rush hour is not to schedule more trains.
100
Possible solutions to reduce capacity issues
Two overall solutions have been identified to mitigate the rush hour capacity issue, and
they are as follows. The first thing is doing nothing and staying with status quo; this will
result in an increasing number of passengers having to stand up in the trains. The big chal-
lenge here is that passengers in Danish trains expect to be seated, even though they are
traveling in the peak periods, and therefore this solution entails a large gap between the
level of service customers expect and the level they receive.
The second solution is price differentiation, where tickets for the trains in the rush hour are
more expensive. This leads to price-sensitive passengers moving away from these depar-
tures, which again reduces demand and leads to less crowded trains. Price differentiation
is already used heavily in Sweden and UK and to some extent in Germany as well. The dif-
ficulty in Denmark, however, is that the government so far has restricted the amount of
price differentiation that DSB is allowed to do, with the exception of the DSB 1st class
tickets, which can be sold at a 60% higher price. In the future, though, it is expected that
DSB will be given more leniency in using price differentiation to influence passengers’
choice of trains. This will be done through requiring that passengers not only have a ticket,
but also a seat reservation in order to board specific trains during rush hour.
15

Revenue per passenger (DKK)

80 14
Utilization (%)

60 13

40 12

20 11

0 10
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
Hour of the day
Revenue per passenger Utilization
Source: DSB Internal Data, 2012

Another issue that is connected to the peak demand spikes is the revenue per passenger
generated during this time. The majority of passengers using the trains during rush hours
are commuters on their way to and from work; these commuters typically pay a very
low price per train ride through a monthly commuter card, and, additionally, they re-
ceive tax deductions for commuting. Therefore, contrary to what you should expect, the
lowest average price per passenger is actually during periods with the highest demand.

Consequently, the cheapest tickets are sold to the trains that are the most costly to op-
erate (the ones with the highest marginal costs). This is illogical and completely oppo-
site to what can be seen in the airline industry, for instance, where tickets are much
more expensive for peak departure times. This is because it has been politically decided
not to price-differentiate on different departures during the day, and therefore this is a
factor that DSB just has to accept for now.

24 DSB - CBS Case Competition 2015 DSB - CBS Case Competition 2015 25
 +Time

Travel time as efficient working time

A key advantage that train travel has over other forms of transportation is the fact that
travelers can work comfortably and efficiently. In a train, travelers have a table, Wi-Fi ac-
cess, plenty of legroom and access to power outlets for charging laptops. This is a huge
advantage over for instance cars and even airplanes.

In a train, work can occur from the moment a traveler sits down in the train until the train
arrives at the destination, while in a plane, because of restrictions during travel, waiting
time and boarding procedures, it is not possible to get as much efficient working time out
of the same amount of travel time. Train transportation has this very unique competitive
advantage, and it is one that DSB is actively trying to promote to its customers. However,
plenty more work can be done in this matter.

Today, the Internet connection in the trains is still not good enough to ensure a seamless
and trouble-free connection throughout the entire duration of the travel, and this is espe-
cially true in lesser-populated areas. This is an area that DSB has focused on; however,
this factor is dependent on the underlying telecommunications infrastructure being devel-
oped, and it will cost up to 400 million DKK, depending on the degree of investment. This
process will require significant negotiation with the telecommunication companies regard-
ing how much they must invest in access networks, and would take at least two years to
implement. Therefore, other initiatives to increase the quality of “+time” onboard the
trains should be thought out as well.

This “+time” advantage is very unique for trains, and there is a large potential to use this
further in the positioning of train transportation.

Previously, DSB had a sales cart that went through the trains, where customers were able
to purchase snacks and drinks. However, this ended up being a very unprofitable service,
as it was too costly to operate compared to what DSB earned in revenues, and therefore it
was abandoned in 2014. DSB still serves breakfast to its first class customers.

”Basically you have to ask yourself the following question

— what would make you take the train more often?”

Susanne Mørch Koch - Executive Vice President, Commercial and HR

26 DSB - CBS Case Competition 2015 DSB - CBS Case Competition 2015 27
 The stations

The stations as focal points Commercialization of stations

It is not just the trains and the tracks that are an integral part of the railway infrastructure;
the train stations also play a huge role in serving the customers, even though this role has
changed in recent years.
Traditionally, train stations served as waiting rooms, cargo storage and ticketing venues;
however, this stems from a time when train schedules were unreliable and trains were fre-
quently delayed. Today, passengers expect the train to arrive according to the schedule,
and thus plan to arrive at the train station just a couple of minutes before scheduled de-
parture times. Furthermore, tickets are currently purchased online or through apps and
ticket machines. This has reduced the demand for waiting space and manned ticketing
booths at most stations throughout Denmark, and therefore it has also rendered the sta-
tion buildings largely empty and without any role to fill.
However, the stations are a still part of the overall travel experience when traveling with
trains, and therefore the train stations also remain a heavy factor in determining customer
satisfaction. DSBs stations vary a lot in terms of design and maintenance and there is a
high degree of local adaption and customized solutions on the stations. This makes it
more difficult to operate them in an efficient manner and to use a one-size-fits-all solution
in developing the stations.
Another key question to answer is how DSB can commercialize the now empty space in
unused station buildings. Previously, DSB has tried to commercialize some of the areas
in the buildings by renting space out to shops such as 7-Eleven and other convenience
stores; however, this has only proved feasible in the largest of DSB’s many stations.
Elsewhere in Europe, commercialization is a lot further than it is in Denmark. For exam-
ple, the Dutch national train operator, NS, has created an independent company solely
to operate and maintain the train stations in the country; this has led to a higher degree
of commercialization.
Therefore, DSB has much to learn from comparing themselves to other European rail op-
erators. Commercializing the stations is complicated by the fact that 101 of DSB’s sta-
tions have preservation status, and cannot easily be modified or torn down. Another
complicating factor is that ownership of the stations is shared with BaneDanmark and
local municipalities. This complicated ownership structure inhibits development of the
stations, as no one has the clear overall responsibility.
Responsibility of the stations

Currently, DSB has 298 stations located throughout Denmark, and they differ a lot in
terms of size and urban location. The 20 biggest stations, for instance, account for more
than 50% of the total number of passenger departures, and the two largest — Copenha-
gen Central Station and Nørreport — alone account for 18% of all boardings.

Boardings per day (2011)

80.000
The two largest stations, Nørreport and Kbh. H,
account for 18% of all boardings
The 20 largest stations account
for 50% of all boardings
60.000

The 20-100 largest stations account

40.000 for 40% of all boardings

The remaining 200 stations account DSB Banedanmark Other: Municipality, Regional
for 10% of all boardings traffic companies, ect.
20.000
Source: DSB Internal Data, 2013

It is important to consider how to continuously increase the customer satisfaction of the

0 stations; for instance, through increased safety, improved traffic information systems, ac-
1 50 100 150 200 250 298
cess to wireless internet and other comfort measures that increase the ability to work at
Source: DSB Internal Data, 2011 the stations.

28 DSB - CBS Case Competition 2015 DSB - CBS Case Competition 2015 29
 Reputation

Reputation as an obstacle in a world with constant dilemmas DSB is also in the paradox situation that they are among the top three operators in Europe
Every year, more than 18,000 articles about DSB are published in the Danish media, when it comes to accuracy and timeliness, and DSB’s customer satisfaction, contrary to its
making DSB one of the most discussed and talked about companies in Denmark. Addi- image, is high compared with DSB’s European counterparts. However, more than 75% of
tionally, a lot of attention comes from politicians and other participants in the public de- Danes still want more liberalization of the Danish railway system, which is higher than in
bate actively commenting on the management and the operation of DSB. Combined countries where customer satisfaction of the national railway company is lower.
with the fact that almost everyone uses DSB from time to time, this has the result that
everyone in Denmark knows and has an opinion about DSB.
Satisfaction with railway system Attitude towards increased liberalization
Therefore, the image and the branding of DSB is also hugely important, as this has been an Positive Negative Positive Negative
area in which DSB has been facing some tough challenges. There is very little understanding
in the general public about DSB and how the company operates, and what it actually takes DK 64% 21% DK 70% 20%

to operate a national railroad system. People tend to blame DSB every time something goes NL 64% 23% DE 75% 18%
wrong with the trains, though 65-70% of delays are caused by either unforeseen events or
by errors on the tracks or the signaling systems, which are managed by BaneDanmark. FR 59% 22% EU 71% 21%

A top-of-mind survey of the Danish population reveals that many people associate DSB UK 55% 27% UK 71% 21%

with delays and other things that negatively impact reputation. However, data also
EU 46% 36% FR 66% 27%
shows that the image of DSB is better among the customers who regularly use DSB than
among the people who only use DSB occasionally. DE 45% 34% NL 46% 52%

Source: “Rail Competition, Special Eurobarometer 388” European Commission (2012); BCG analysis
Top of Mind - When you think about DSB
what is the first thing that comes to your mind?
DSB is in the position in which the customer satisfaction among its customers is at par or
Trains / Operating Trains 23,8%
better compared to other European operators; however, at the same time, the image of
Delays / Waiting time / Slow 17,6%
DSB in the general population is suffering compared to other Danish companies.
Train Travels / Public Transportation 10,7%
Expensive Tickets 8,7%
Troubled Economy / Economic Chaos 7,1%
Bad Quality / Poor Customer Service 5,6%
Reputation Score (RepTrak) of selected companies
100
Scandals / IC 4 / Rejsekort 5,2%
90
Bad Image 3,4% 80
Red Trains / S Trains 2,9% 70
Old / Worn Down / Maintanance 2,9% 60
State Owned 2,0% 50
40
Trains on Time 2,0%
30
Comfortable Transport / Good Customer Service 1,9%
20
Pleasant Experiences 1,6% 10
Monopoly 1,4% 0
Source: RepTrak: Tracking af DSB’s

Lego

Novo Nordisk

Danfoss

A.P. Møller Mærsk

Google

Grundfoss

Falck

Carlsberg Group

Matas

Novozymes

Apple

Bang & Olufsen

Siemens Wind Power

Coloplast

IKEA

Coop

Microsoft

Dansk Supermarked

Arla Foods

JYSK

Vestas

H&M

Nordea

The Coca-Cola Company

JP/Politikens Hus

Danish Crown

Shell Denmark

PANDORA Group

Berlingske Media

ISS

Telenor

Superbest

TDC

DSB

Aldi

Saxo Bank

Telia

McDonalds

BP

Danske Bank
Others 3,0% Omdømme Q3 2014, DSB Internal Data

Reputation on a scale to 100 Source: Reptrak Pulse 2013

53 52 51
48 49 47
44 As if this was not enough, DSB also has a set of built-in dilemmas in its operations,
39
which often result in bad publicity situations and a worsening of its image. For example,
if DSB has to wait for passengers who are arriving late for a train, delays for the next 10
trains in the chain can occur; however, if DSB does not wait and instead leaves right in
2011 2012 2013 2014
front of a person who is on the platform, it is perceived as indifferent and inconsiderate.

Source: RepTrak: Tracking af DSB’s Omdømme Q3 2014, DSB Internal Data User Non-user
Therefore, ways in which DSB can improve its image among the Danes are important to
consider, because an improved image would likely also result in higher passenger growth.

30 DSB - CBS Case Competition 2015 DSB - CBS Case Competition 2015 31
 Closing statement

On track towards the future

At the moment, DSB is emerging from a successful turn-around, and the focus now has
to be on growing the top line. DSB is the national railway operator of Denmark, and as
such it carries a huge responsibility of always providing reliable and efficient rail trans-
portation. DSB launched a new strategy in 2014. The core of this new strategy was get-
ting back to basics, putting the customer experience in the center of priorities, as well as
rebuilding DSB’s image.

However, this challenge is complicated by a series of factors that characterize the envi-
ronment in which DSB has to navigate. The infrastructure sets out certain limitations of
operation, and the political ownership also plays a large role in determining the possibil-
ities of DSB. With the strategy in place, it is now time for execution, and Mr. Pastwa is
now focused on how to achieve the political goals for passenger growth in the future.

“I see DSB as the main pillar of the Danish

public transportation system, now and in the future.

In order to reach the political growth ambitions, DSB needs

to continue to grow its passenger base in the future, while still
navigating within the political and operational constraints.

I believe the key to this growth is focusing on

continuously improving the customer experience”.

Stig Pastwa - Acting CEO

It is in this context that you are asked to develop a three-year business plan for how
DSB should increase its passenger growth and, in a higher extent, become the backbone
of the Danish public transportation system. This goal could be achieved by either focus-
ing on a few key elements within the case, or by encompassing several elements and
connecting them in a large and holistic business plan. Just remember that it has to fit in
with the overall strategy of DSB and the context of the Danish market.

Good Luck!

32 DSB - CBS Case Competition 2015 DSB - CBS Case Competition 2015 33
 Appendix 1: Glossary Appendix 2: Company overview

Passenger kilometer: Unit of transportation measure. Calculated by multiplying the A complex organization
number of travels by the average distance traveled. DSB is divided into the following nine divisions: Strategy, Safety & Environment, Corpo-
rate Secretary and Legal Affairs, Communication and Branding, Finance, Commercial,
DSB Youth Ticket: Discount ticket for people aged 16-25 and students Human Resources, Operations, and Maintenance.

65+ ticket: Discount ticket for people aged 65+

Board of Directors Internal Audit
DSB 1’ ticket: Tickets for people who want extra service, complementary access to the
Remuneration Train and component Audit
internet, and access to a designated area. Up to 60% higher price than regular tickets. Committeee Committee Committee

Orange tickets: Discounted tickets for people traveling the East-West route at non-
peak hours, and excluding Fridays and Sundays. Must be reserved in advance, and has up Chief Executive Officer Customer ambassador
to 60% discount compared to regular tickets.

Safety, Emergency Management, Corporate Secretariat

Modal share of transportation: Percentage of travelers using a particular mode of
Occupational health & Environment & Legal affairs
transportation.

BaneDanmark: Independent company responsible for the Danish railway infrastructure Strategy Communication & Branding

and partly responsible for the stations.

Arriva: Denmark’s largest bus operator with city and regional busses throughout Den-
Finance Commercial Operations Maintenance Human Resources
mark. Also operates local trains in the western part of Jutland. Owned by Deutche Bahn.

Copenhagen Metro: Operates Copenhagen’s metro in the central Copenhagen Area.

Movia: One of Denmark’s largest traffic companies and operates busses and local trains
in the Greater Copenhagen Area.
Midttrafik, Sydtrafik, NT: Local traffic companies.
Nordjyske Jernbaner, Lokalbanen, Midtjyske jernbaner: Local train operators.
Strategy: This division works as a cross-sectional unit, and deals with the corporate
strategy and business development of the company. The key challenge for this unit is to
figure out what strategy DSB should follow to reach the goal of passenger growth in
2030, and how the different divisions should interact to reach that goal.
Safety & Environment: Potential train accidents can cause tremendous damage due to
the speed of the trains, and the many people they carry. Ensuring that the trains are as
safe as possible and potential safety mechanisms are in place in case of an accident are
therefore very important. The main challenge for this division is to ensure that safety is
not compromised when the number of passengers is growing towards the 2030 goal.

Corporate Secretary and Legal Affairs: The political interests still play an important
role for DSB, and this division discusses and negotiates the traffic contract between DSB
and the government. The traffic contract determines the role of DSB, what they can le-
gally do, and what obligations they must follow. This division must manage the rela-
tionship with the government, and ensure DSB can operate as effectively as possible
given their ownership situation.

Communication and Branding: DSB has a less-than-perfect reputation and it suffers

from a series of widespread misperceptions among the general public — an example of
this is the myth that DSB is “always late”. Factually, DSB has a punctuality that is well in
line with contractual obligations, and is on par with European peers. The main challenge
for this division is therefore to improve the image of DSB.

34 DSB - CBS Case Competition 2015 DSB - CBS Case Competition 2015 35
 Appendix 4: Financial Highlights

Finance: DSB returned to profitability in 2013, and it is important to ensure that while
new initiatives must be put in place to gain passenger growth, the company still stays
profitable to satisfy the owners. It is also Finance that handles the large property port-
folio (e.g., maintaining stations), and IT/digitalization.

Commercial: The commercial division must figure out how to get more people to use
the train, and more specifically which segments to focus on, how to reach them, and
with which tools. The challenge is to find out what services people find valuable, and
how much they are willing to pay for these. It is also the role of Commercial to continu-
ously find ways to improve the customer experience. In addition, Commercial has the re-
sponsibility of developing the stations of tomorrow.

Human Resources: Gearing the organization for the new strategy is important, and the
Human Resource division’s main challenge is to ensure that the organization is suited for
implementing the new strategic initiatives.

Operations: Managing a railway system is a complex task. This is further complicated by

the fact that it is not DSB who owns the tracks, because the ownership of the infrastruc-
ture was separated into a different company, BaneDanmark, in 1997. Coordinating with
BaneDanmark is therefore important moving forward, especially because the expected
passenger growth will require even better integration. Today, DSB’s operations are basi-
cally split into three different train types: the S-Trains (S-Tog) - a suburban train in the
Greater Copenhagen Area, and the regional trains (F&R Tog) - which are trains that con-
nect different cities in Denmark, and the Øresund Trains. This division is also responsible
for purchasing new trains. The process of purchasing trains is complex, and takes up to
10 years from the time the need is identified to the time the trains are ready and have
passed all safety checks.

Maintenance: Maintenance is important to ensure the longevity of the trains, and there-
fore a key task is to ensure that all trains, both new and old, are kept in good condition
at all times. A main challenge is to ensure the new IC4 trains are up and running, and
ready to take on the expected passenger growth, as it is not possible to purchase new
trains in the next couple of years.

Appendix 3: Price examples

Distance Travel Time Price

Copenhagen - Århus 2t49m DKK 382
Copenhagen - Odense 1t15m DKK 276
Copenhagen - Aalborg 4t19m DKK 431 Source: DSB Annual Report 2013, p. 20

Copenhagen - Roskilde 25m DKK 96

Copenhagen - Nykøbing Falster 1t43m DKK 171
Copenhagen 2-Zone Ticket (1hour) N/A DKK 24
Copenhagen 2-Zone Monthly Card N/A DKK 365
Copenhagen - Roskilde Monthly Card N/A DKK 1.195

Source: rejseplanen.dk

36 DSB - CBS Case Competition 2015 DSB - CBS Case Competition 2015 37
38 DSB - CBS Case Competition 2015 DSB - CBS Case Competition 2015 39
Case Writers
Abel Chernet
Mads Schou-Andreasen

Thanks to
On behalf of the CBS Case Competition 2015, the case writers wish
to thank the following people for their invaluable inputs throughout
the case writing process:

The Case Company:

Everyone at DSB, and especially:
Stig Pastwa, Acting CEO and CFO
Susanne Mørch Koch, Executive Vice President, Commercial and HR
Steen Schougaard Christensen, CEO of DSB Vedligehold A/S
Anders Egehus, Executive Vice President, Operations
Lars Kaspersen, Director of Communications and Branding
Thomas Thellersen Børner, Vice President of Corporate Secretariat
and Legal Affairs
Jesper Andersen, Chief Strategy Officer
Clarissa Eva Leon, Strategy
Søren Damm, Communication
Jesper Lok, Former CEO of DSB

Mentoring:
Mads Peter Langhorn, The Boston Consulting Group
Mads Wadstrøm Christensen, The Boston Consulting Group

Case Testing:
Theis Malmborg
Katja Eberhardt
Andreas Justsen
Jannika-Maria Graff
Finn Jannick Schmidt
Sarah Landsted

Inspiration and support:

The Organizing Committee 2015

Case Video:
Copenhagen Film Company

Graphic Design:
MindMovers

Disclaimer:
The information presented within this case is the responsibility of
the writers alone. DSB is subsequently not responsible for any
statement regarding its business put forward in this case. This case
cannot be used as a supporting source outside of CBS Case Compe-
tition 2015 and may not be publicly quoted without the written
consent of the authors.