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BSM 6054 STRATEGIC MANAGEMENT
CASE ANALYSIS
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FedEx 5 Geographical Zones
United States
Asia-Pacific
CanadaEurope, Middle East and Africa
Latin America-Caribbean
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General External Environment
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Political/Legal Factors
Deregulation of airline and trucking
industry
Trade deregulation in Asia Pacific
Chinas entry into WTO
Formation of AFTA
911 terrorism, SARS
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Socio-Cultural Factors
Customers expectation are increasingly on
the rise (customer behavior)
speed and reliability
prefer services/products which are world class
quality but modified to suit the local culture and
custom
Increased urbanization
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Demographic Factors
One third of the worlds population is
centered in China & India
Due to wide income disparity within the
country itself, most investments are focused
on the super-cities like Shanghai, Beijing
etc
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Economic Factors
Fierce competition
Rising inflation and fuel prices
High growth in B2B & B2CUS market saturation
Volatility of major currencies (USD , Euro)
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Industry Analysis
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Threat of New Entrants
LOW
Economies of Scale (truck, airplane, global
network)
High capital requirement
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Intensity of Rivalry Among
CompetitorsHigh
Global competitorsUPS, TNT, DHL (with
equally strong resources)
High fixed cost and high exit barrier lead to
aggressive competition
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Threat of Substitutes
LOW
Minimal substitute products available for
physical goods
Only some documents can be sent by Internet,
Email and Fax
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Power of Suppliers
Depend on type of purchases
HIGH
Aircraft
LOW
IT products
Truck
Maintenances and repairs
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Power of Buyers
HIGH
Intense competition in express delivery industry
Low switching cost
More bargaining power for corporate customers
(e.g. Dell Computers, Cisco Systems)
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Competitive Environment Analysis
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Competitive Environment Analysis
Four leading companies in the international
courier business: DHL, FedEx, UPS and
TNT.
Besides global players, there are local
players like PosLaju who provide services
in Malaysia.
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Even though FedEx pioneered the Web-based
package-tracking system, such systems have
become the industrial norm rather than a
competitive advantage today FedEx need to keep up with latest innovations
eg.e-mail tracking, SMS etc
Technology and innovation are the key factors in
gaining competitive advantages
Competitive Environment Analysis
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Establised in 1969. Taken over by DeutschePost World Net in 2002
Euro 39 billion corporation
Under DHL global brandDHL Express,DHL Freight, DHL Danzas Air and Ocean,DHL Solutions
Four market segmentsMail (DeutchePost), express (DHL), logistics (DHL &Danzas) and finance (Postbank)
DHL
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Established in 1907, and has grown into a US$30billion corporation today
The strongest competitor for FedEx in US
Formed a strategic alliance with Open Market,Inc, to design a complete Internet commercesolution in providing integrated logistics andfulfillment
Work with IBM and Lotus to standardize formatson their websites
UPS is more focused on their core business
UPS
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TNT Logistic Approach
Procurement and Inbound Logistic
Manufacturing support
Outbound Logistic and Distribution
Aftermarket Services
TNT
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Environment Trends
&
Attractiveness of External Environment
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Environmental Trends
Globalization
Intensive use of IT and increase adoption of
e-business
Integrated supply chain management
Outsourcing by customer
Strategic alliance and Mergers andAcquisitions (M & A)
Turbulent changes in business environment
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Summary: Attractiveness of
External EnvironmentGlobalization, advancement in IT and
outsourcing trends by customers have
created boundless opportunities for a
company like FedExGlobal networking
Globalization create more needs
Outsourcing of Supply Chain Management
Strategic alliance with local partner
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Strategic Analysis
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Key Success Factors
Lies in the ability to leverage its:
the expertise of its various subsidiaries.
information and logistics (virtual and physical)
infrastructure,
strong strategic alliances with customers and
suppliers.
effective marketing (branding, pricing)capabilities
supply chain management capabilities
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To achieve above average returns by
offering
High quality of serviceaccurate, fast, reliable
Innovative, value added and extensive service
offerings and supply chain solutions.
Competitive prices
Key Success Factors
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Business Level Strategies
Supported by the core competencies of its various
subsidiaries. Mainly focused on:
B2B segment
-corporate clients
-Supply Chain Management services -integrate its
various suppliers and customers.
B2C-FedEx Home Delivery (new e-commerce
residential service)
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Corporate Level Strategies
On 19 January 2000, FedEx embarked on aworldwide reorganization
-Across 5 geographical zones
-Across 6 subsidiariesTo achieve a single branding system with a single
point of access for customers:
Standardized names of subsidiaries -leverage the
FedEx brand name. FedEx Serviceswas formed- hub for the growing
portfolio of independent FedEx services.
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Corporate Level Strategies
FedEx Services
-Combines sales, marketing and technology support for
the FedEx family
-A single sales force cross-sells a wide portfolio ofservices and pricing schemes.
- Provides customers with a convenient, single point of
access to the full range of FedEx services.
-Provides customer service, invoicing, claims andtrace functions
- common toll free number and website www.fedex.com
http://www.fedex.com/http://www.fedex.com/7/27/2019 Fedex Sample
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Core Competency- Tangible
Financially strong- USD21 billion turnover and operating margin of 6.4%
in FY02
Logistics infrastructure
-Airplanes (648), vehicles (60,000), warehouse(10million square ft), capacity to handle 3.3 milpackages every night and lift capacity of 26.5 milpounds daily.
State-of-the-art information infrastructure- Handles 60 million transactions a day in 1999, savingFedEx the cost of its many customer service employees.
Strong staff (200,000 employees)
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Core Competency- Intangible
FedEx brand name-reputation for speed, reliability and innovation.
Services: overnight package delivery, 10:30 a.m. next daydelivery, Saturday delivery time-definite service for freight,
money-back guaranteesBusiness concepts:express distribution, customer logisticsmanagement , supply chain management
-strong presence and acceptance worldwide.
Intellectual capital-5000 IT personnel with capacity to develop,maintain and upgrade its in-house software and ITinfrastructure.
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Core Competency- Value Chain
Won over 194 awards for operational excellence
since 1973.
First global express transportation company to
receive simultaneous system-wide certificationISO 9001 in 1994
System innovations - COSMOS, Powership Plus
Single point of access, customer service, invoicing
-provides cheaper, faster and more efficient value
added services
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Innovative and creative spirit
-First to introduce various innovative services
Flexibility and vision to shape the industry
Trendsetter -not just to prepare for change but toshape change on a global scale.
All these efforts strengthen and increase the value
of the FedEx brand name- translates to aboveaverage returns and a sustainable competitiveadvantage.
Sustainable Competitive Advantage
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Strengths Extensive use of IT and new technological devices First mover advantagesworld leader in
overnight delivery
Integrated logistic and management servicesprovider
Key partnership with big corporations
FedEx trade namewell recognized
Strong resources
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Opportunities
Globalization and trade deregulation create
new business opportunities
Deregulation of airline and trucking
industries
Outsourcing trends by customers
Continuous growth in B2B and B2C
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Threats
Fierce competition
Innovation is easily imitated by competitors
Terrorism and SARSRising inflation and fuel prices
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Vision, Mission, Objective
&
Strategy Recommendation
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Vision, Mission & Objective
Vision
To become world leader in express delivery andsupply chain industry before year 2020
MissionTo provide quick, reliable delivery of
packages/documents and integrated supplychain management services through innovative
technology, efficient operation, and well-established global network at competitive
prices
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Vision, Mission & Objective
Objective
To increase the current revenue of US$21
billion to US$45 billion and the operating
margin of 6.4% to 9.0% in year 2008
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Strategy Recommendation
Business Level
Integrated Cost Leadership and Differentiation Strategy
Global key account management
Key partnerships with major customers
Advance IT devices providing real-time information
Continuous innovations and first mover advantages
FedEx Online
Continuous improvement of organizational operation and cost
reduction program E.g. Spent US$1.1 billion in 2002 for purchase of fuel
Purchasing policy of 2-3 suppliers or use fuel saving vehicles
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Strategy Recommendation
Business Level
Market Penetration Strategy
Increase market share by aggressively targeting at
fast developing countries like China and membercountries of AFTA
Reduce its dependence on US market sales (more
than 60%)
Reduce the risk of fierce competition with UPS inUS market
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Strategy Recommendation
Corporate Level Restructuring Strategy
Optimize FedEx Express and FedEx Grounds operation
Consist more than 80% of total sales for FedEx
E.g. same pick-up team for customers
Improve synergy among subsidiaries
Leverage the existing resources among subsidiaries
Shared activities, exchange of competencies (knowledge, staffs,
success stories)
Regularly assess the current and new locations for office andwarehouse and take advantage of different time zone in different
countries to shorten the lead time for deliveries
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Strategy Recommendation
Corporate Level
Financial Strategy Sell and lease back of aircrafts: 648 aircrafts with value of
US$5.8 billion
Huge fund for business expansion, tip-top condition ofaircrafts, tax advantages, no problem with old aircrafts
Concentric Diversification Outsourcing trend of supply chain by customers is on the rise
Demand Responsive Model
Innovative technology and information system
Part of re-engineering strategy to turnaround the FedExServices into profitability
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Strategy Recommendation
Corporate Level
Cooperative Strategy
For minor areas, form JV, partnerships or
subcontract the delivery services to local postalcompanies or couriers to capture the business
opportunities
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