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2012

STARTEGIC

MANAGMENT

Module: Strategic Management Coursework

Submitted By: Fariha Farid

BITE ID: 45790

Date: 12th Dec 2012


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Table of Contents

S.No Contents Page No

EXECUTIVE SUMMARY

HISTORYEXTERNAL ANALYSIS

A. Industry Life Cycle

B. Industry Dynamics

C. Porters Five Forces

D. Global Competition

E. National Context

F. Opportunities and Threats

INTERNAL ANALYSIS

A. Competitive Advantage

B. Distinctive Competencies

C. StrategiesD. Four Building Blocks

E. Strengths

F. Weaknesses

G. Image

BUSINESS-LEVEL

A. Business Level Strategy

B. Issues in Differentiation

C. Targeting Customer Needs

D. Market Segmentation

E. Differentiation of Quality

F. Differentiation in World

G. Advantages of Differentiation

H. Impact of Strategy

VALUE CHAIN

A. Value Chain

B. Product Technology

C. Impact of National Context of Industry

D. Response to Differences Among Nations

E. Global Dimensions of Strategy

CORPORATE-LEVEL STRATEGY

A FedEx CorporationB. Horizontal Integration

C. Vertical Integration

D. Fill in the Blanks,

Conclusion

Recommendation

References


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Acknowledgement

This material was produced in the context of a project as part of our

college assessment for Executive MBA

Planned, conceptualised and written under the abled guidance and

teaching of our lecturer Dr.Abhijit Ganguly and Dr Hector.

My thanks are also extended to my friends, team mates and my sister

who have inspired and encouraged me to put pen to paper through close

collaboration and support without which this work and project would not

have been possible.


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Executive summary

Strategic management can be defined as the set of decisions and actions that result

in the formulation and implementation of plans designed to achieve a companys

objective (Pearce, J.A and Robinson, R.B., Strategic management: formulation,implementation and control, McGraw-Hill)

In Vietnam during his combat tours, Frederick Smith CEO of Federal Express got a

swift message in survival from a crusty Marine sergeant. Lieutenant, the sergeant

told Smith, theres only three things you gotta remember: shoot, move, and

communicate.(Fortune, Nov. 1997)

Nearly 30 years on Smith used the same tactics advice in the world of business. An

aggressive shooting strategy adopted by hismanoeuvring of FedEx has helped thecompany to emerge in many coastal areas around the world, such as Asia, and in

addition, a solid foundation and infrastructure has been developed for the future of

the business by constant monitoring and development. His movement led the

company to innovate and develop products with customer needs.

Corporate culture is based on the highest customer service and shows the attitude

of "do whatever it takes to serve customers" from top to bottom.

The use of communication has developed as one of the extreme strengths for thecompany, not only for customers, but also inside. "FedEx has always been a pioneer

in the field of technology and success fedex.com proves it." FedEx was one of the

first to connect to the power of the Internet, by launching its website in 1994 with

introduction of a new package tracking system one of the first true corporate Web

services.Shortly after, FedEx became the first company that allow users to create

their own unique barcode labels supply and demand for courier pickup. FedEx

Ground uses wireless LAN technology to accelerate the movement of information

from ship terminal to a central database.

Although for e-commerce there was no planned strategy solution, decision of thecompany to adapt the organizational structure with systems and processes has

carved a model for building a successful business in the 21st century, which

supports the efficiency of transport logistics, as well as of sales and distribution.

FedEx offers many advantages to its customers.Not only customers are faced with

the choice of the carrier but are also given the choice of means of delivery. To

support the interests of customers on the expertise of their products differentiate its

from its competitors, FedEx created the state of the art technology to monitor and

validate customer shipments. Deliveries are traceable almost from its origin to its

destination with the convenience of your personal computer. In addition, FedEx


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provides important strategic development of the world shipping market. FedEx

strives to develop innovations and listen to the needs of customers.

The company invested significantly in global infrastructure to meet the needs of theircustomers worldwide. FedEx connects some important centers in the world,

accounting for 90% of the gross domestic product in the world. It placed particular

emphasis on achieving a strong presence in the Asian market. Some countries, such

as China, which has been mainly engaged in exporting, are now the largest importer

of goods from around the world. Since 1984, the service expanded more than 300

cities in China. (Business Source Premier)

A cycle of continued success was created by FedEx endless innovation; desire to

fulfill customers needs coupled with strong infrastructure which gives FedExcompetitive advantages in the years to come.

Time Line


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The FedEx Corporation is a logistic company involved in transportation,

E-commerce and business services worldwide.

Frederick W. Smith a Yale University undergraduate in 1965 wrote a paper about

airfreight shippers using the passenger route system, which he regarded aseconomically insufficient. Smith wrote the need for a specific system aimed to

accommodate time-sensitive airfreight such as electronics, computer parts and

medicine.

Smith bought a major stake in the sale of aviation Arkansas, Little Rock, Ark in

August 1971, after a period in the Army. Smith faced tremendous difficulty in

delivering packages and other airfreight within a day or two during the operation of

his new firm. This dilemma encouraged him to do the necessary exploration to solve

the inefficient distribution system; therefore, the idea of Federal Express was

created: a company that reformed business practices globally and now expressesspeed and reliability.

Federal Express was so-named due to the patriotic meaning associated with the

word "Federal," which suggested an interest in nationwide economic activity.

(about.van.fedex.com/fedex-opco-history)

1973 -Operations are relocated to Memphis, Tenn.

1978 - Inventory on the New York Stock Exchange with the ticker symbol of FDX of

Federal Express Corporation.

1981 - Introduction of Overnight Letter, beginning of international delivery with

service to Canada and opening of Super Hub adjacent to Memphis

International Airport.

1983 Without merger or acquisition Federal Express becomes the first U.S.

company to reach revenues of $1 billion.

1984 FedEx Power Ship was launched in Asia Pacific and acquires GelcoExpress International.

1985 Introduction of bar code labeling to the ground transportation industry and

RPS Inc. (now FedEx Ground) is founded in Pittsburgh, Pa.

1986 - A hand-held bar code scanner system the SuperTracker was introduced.

1989 To expand its international venture Flying Tigers was purchased. Robert

Express (now FedEx Custom Critical) began service in Europe.


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1990 -Federal Express becomes the first company to win the Malcolm Baldrige

National Quality Award in the service category.

1993 Making the record of any ground company fastest growth in its ninth year

RPS (now FedEx Ground) surpasses $ 1billion in annual revenue.

1994FedEx officially becomes the brand name for Federal Express.

1995 - FedEx Asia One network is launched in Subic Bay, Philippines.

1999 Launch of FedEx Marketplace on fedex.com, opening of a hub at Roissy-

Charles de Gaulle airport as Euro One Network, and Caribbean

Transportation Services are purchased

2000FDX the Parent company is renamed FedEx Corporation

FedEx Trade Networks is introduced

2003 - FedEx marks a 30-year milestone.

2004 -For US$2.4 billion FedEx Corporation acquires Kinko's, with a new brand

identityFedEx Kinkos Office and Print Centers

2005 - Around the world flights are launched

- A new Asia Pacific hub in Guangzhou, China is established.

2007 - FedEx Express constructs its service abilities in Europe, Eastern Europes,

India, and China

- FedEx became a wholly foreign-owned enterprise by gaining 50 percent

share of FedEx-DTW International Priority.

- FedEx Kinkos introduces Print Online

2011 AFL Pvt. Ltd. and its partner, Unifreight India Pvt. Ltd logistics,

distribution and express businesses are acquired by FedEx Express.

-The operations of Multi Pack in Mexico are purchased by FedEx Express.

2012 FedEx acquires French leading company TATEX.

- A Polish courier company Opek Sp.z.o.o is brought for $ 54 million.

- FedEx acquires, one of the largest transportation and logistics companies in

Brazil Rapido Cometa, for $398 million

FedEx service life cycle.


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http://www.palgrave-journals.com Assessed on 1st Dec 2012

The FedEx Mission Platform

MissionSuperior financial returns, Meet customer requirements, Integration and Safety

Vision

To become world leader in express delivery and supply chain industry before year

2020

Strategy

Operate Independently, Compete Collectively, Manage Collaboratively

Values

People, Service, Innovation, Integrity, Responsibility, Loyalty

The Purple Promise

I will make every FedEx experience outstanding.
http://www.palgrave-journals.com/http://www.palgrave-journals.com/


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Corporate Mission embodies the

philosophy

External Analysis


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A. Industry Life Cycle

Wide ranges of transport and shipment services are offered by FedEx.

FedEx is an oligopolistic shipping service industry with only few reputable and well-

known competitors. FedEx along with its competitors like UPS, DHL and USPS havetheir own low cost operations and brand loyal customers which create significant

obstacles for a new entrant in this industry. FedEx can be categorized as being in

the mature stage of the industry life cycle.

In mature industries to intensify the competition "companies tend to recognize their

interdependence and try to avoid price wars." (Hill Jones, p.57). In case of the

mature industries the intimidation for strong rivalry between the recognized

companies is reduced with a stable demand.

A trickle down influence is created with the unpredictable economic condition,causing a decrease industry demand throughout, therefore a price war breaks

among the companies in an effort to make money, and so, unpredictable future

events can lead to break down on price leadership.

B. Industry Dynamics

Being a dynamic and energetic industry the shipping service industry meets a variety

of needs of its customers. Business like Global Corporations, Industries, E-

Commerce organizations, individuals as well as small businesses needs atransportation industry to deliver their packages or documents around the world;

these services however can vary in their nature. Being a large company IBM

Corporation for example needs a shipping company Like FedEx to transfer their

products, and there shipping demands needs specific circumstances which are

provided by their service provider, FedEx Corporation. Discounts are given to IBM on

shipment of large quantity and also FedEx helps in transfer of customs documents

internationally.

Internet a major revolution in the past era has changed the world and reshaped

many businesses has also influenced the shipping industry. With the use of

information technology and internet the customers no longer need to queue but can

simply order a pick up on internet, and also can check the shipment status at any

time.

This appears to be the most reputable way of doing business in the present era by a

shipping industry. However, many of us are not familiar with the fact that FedEx was

the first shipping industry that introduced the tracking application by providing

customer specific bar code for each shipment in 1994,which enables customer to

stay in touch with their shipment throughout its journey. Todays technology gives usthe wireless option to do the same job. However FedEx offers its customers the


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wireless technology for gaining access to their package tracking data through its

web enable devices. These devices or personal data assistance (PDAs) enables

customers to access tracking information from virtually anywhere and anytime.

(About FedEx, Wireless Solution)

To meet the customers refined needs the shipping industry like any other business

needs to constantly endeavor latest technological revolutions.

In the transportation industry FedEx is not the only company that implements the

latest technology in their business but one of their major rivals UPS, is also trying to

accomplish the higher standards by using this new technology. UPS delivers more

customized and reliable services solutions to its customers by using the latest

technological system. These developments include the facility to handle unique

delivery orders to offer more customized time commitments and to allow customers

to make in-transit changes on package deliveries. Innovation is apparent not only inFedEx but also in its competitors like UPS business strategy. As UPSs specified in

its press release: These flexibilities correspond to todays complex global supply

chains that demand speed and frequent changes.

http://faculty.poly.edu/~brao/fedex_case.htm : Accessed on 5th Dec2012

C. Porters Five Forces
http://faculty.poly.edu/~brao/fedex_case.htmhttp://faculty.poly.edu/~brao/fedex_case.htm


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As various shipping services are provided by FedEx Corporation applying Porters

Five Forces model to such an industry is not an easy task. I applied and surveyed

Porters five forces to only two FedEx divisions FedEx Express the worlds largest

express transportation company and FedEx Ground second largest in delivery of

small-package ground delivery to UPS in North Americas.

Porters Five Forces

Graph 1: Porters five forces model FedEx Corporation

D. Global Competition

New Entrants: LOW

Economies of Scale (truck, airplane,

global network)

High capital requirement

Power of Suppliers:

Depend on type of purchasesHIGH : Aircraft

LOW : IT products

Truck

Maintenances and

repairs

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)

Industry Rivals: HIGH

Global competitors UPS, TNT, DHL (with

equally strong resources)

High fixed cost and high exit barrier lead to

aggressive competition

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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Package delivery service faces competition worldwide. FedEx Corporation faces

competition not only with major international companies like UPS, DHL, and USPS

but also with many small and regional companies. Due to financial crises many of

the small companies are either merging into big companies or making alliances with

them. So the competition is not becoming global because of this shakeout andconsolidation.

E. National Context

FedEx functions as a complementary industry for a large number of other industries.

FedEx Ground operations are greatly influenced by the local circumstances while

changing global environment affects the FedEx Express.

Factor Endowments: A wide range of innovative factors are used by FedExCorporation in United States. To manage its complex hubs the organization uses the

Logistics as one of the main advanced factor while physical infrastructure includes

airports, roads and ports.

Local Demand Conditions: As the customer demand increase so the

companies thrive to upgrade their services to meet the needs of the customers.

These demands need new innovative methodologies and broad range of

technologies.

http://www.theferrarigroup.com/supply-chain-matters/2009/09/18/air-freight-as-a-leading-indicator-of-

economic-recovery/

Assessed on 4th Dec 2012

F. SWOT Analysis


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G: PEST Analysis


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Internal Service Quality

5C Frame work

A. Competitive Advantage


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The competitive advantage of FedEx as compared to its competitor, the UPS is low

in the shipping industry as their return on investment is below the industry average.

A Model of Competitive advantage

Source: http://www.quickmba.com/strategy/competitive-advantage

Assessed on 2nd Dec 2012

B. Distinctive Competencies

Resources

Cost Advantage

Or

Differentiation Advantage

Capabilities

Distinctive

Competencies Value

Creation


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FedEx mainly possess existing rather than distinctive competencies. The

proficiencies which facilitated FedEx to become the leading express organization

globally are its ferocious assurance to innovation, technology, brand equity and

strong infrastructure.

With the express package delivery FedEx is the name that comes first to the

customers mind. A quote from allaboutbranding.com says it all, FedEx is a great

brand. Great brands provide a source of identification. These brands differentiate

great brands and cement their leadership credentials assurance of quality.

FedEx infrastructure is its next prevailing competency. FedEx has spent a hugh

capital to build globally network of hubs, trucks and airplanes. So FedEx is in a

position to harm any new entrant by just cutting down its prices.

The third competency for FedEx is its devotion to innovation and implementation of

latest technologies. This obligation of better serving the customers keeps FedEx

Express as the leading giant worldwide. This dedication is not a new thing as

Frederick Smith of FedEx said in 1979 The information about a package is just as

important as the package itself.

FedExs vision guides its strategies. The motivation to be the world leaders has

leaded them to their core existing competencies. UPS were world leaders in the

shipping industry before 1980s but changes in the Motor carrier Act and Staggers

Rail Act in early 1980s paved the way for FedEx to compete with UPS in manyfields.

C. Strategies

FedEx current strategies are the fruit of its distinctive competencies which were built

over a period of three decades. During this period FedEx has expanded its global

network by offering fastest delivery time, like by starting the next day delivery to and

from Taiwan on 2

nd

September 2003.Similar FedEx entered the Iraq market byoffering door-to-door pick-up and delivery service. This characteristic aptitude of

offering services where no one else has gone makes it difficult for its competitors to

move into this shipping market

Other strategy aspect of FedEx is its involvement in the latest technology which they

achieved by establishing the FedEx Technology Institute at the University of

Memphis in 2003. FedEx is the only firm that offers its customers automated and

package tracking option.

D. Four Building Blocks


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The evaluation of FedEx against the four building blocks i.e. quality, efficiency,

innovation and customer satisfaction does not give it a competitive gain against its

competitors like UPS. The reason being that FedEx has invested such a hugh capital

that their ROIC is not as decent as UPS.

E. Image

To big organizations like FedEx and UPS the element of image is very essential for

their survival. In well-developed industries image becomes the key differentiator for

the purchase decision.

According to Forbes magazine (Jan 02), Being most admired is all about delivering

what you promise to multiple audience, and thats something FedEx has down

pat...FedEx has successfully transcended its image as simply an air express carrierfor business to become a one-stop shop for any shipping need.

Positive market campaign through advertisements reinforces the image of FedEx

Corporation in the competitive industry. While image is further build by extending

hands into the community projects. FedEx further improved their image by

introducing steps to reduce their carbon emission and energy consumption.

http://www.admadness.co/2011/06/fedex-advertising-hits-the-nail-on-the-head-again

http://www.admadness.co/2011/06/fedex-advertising-hits-the-nail-on-the-head-againhttp://www.admadness.co/2011/06/fedex-advertising-hits-the-nail-on-the-head-again


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BUSINESS-LEVEL

A. FedExs Business Level Strategy

A distinctive business strategy is setup by FedEx on the basis of its strength inlogistics and technological innovation. FedEx sets a standard which is difficult to be

followed by its competitors. Being labelled as Innovators FedEx has to convey this

message to its customers that they provide only high quality of services. FedEx like

its rivals is capable of fast delivery but they are more customers friendly. FedEx

home delivery (new e-commerce residential service) is one of the other business

strategies which separate it from its rivals.

B. Issues in Differentiation

To differentiate from rivals in shipping industry is very difficult as customers are very

price conscious. They usually are not brand loyal as they might like to use the

services of cheaper courier. Their aim is just to deliver their parcels on low cost, fast

and efficiently on time. They are not bother about how advance the company is in

technology and innovation. Affordability is the main concern of these customers. So

to be the leader FedEx needs to differentiate itself from their rivals in every aspect of

the business so that the customers recognize them as reliable industry.

C. Targeting Customer Needs

To meet the need of the customers FedEx have six different divisions in its

corporation. As different customers have specific need each amenity covers a

particular sector of the market. By targeting different market sections FedEx tries to

satisfy the psychological needs of the customers who need guaranteed delivery

within time specified period. Different services may be required by the customers at

different times so FedEx will always be there to serve them.


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Case Profile - FedEx

http://image.slidesharecdn.com/fedex Assessed on 3rd Dec 2012

D. Market Segmentation

FedEx is formed of different business units which work collectively as a whole unit

under the banner of FedEx Corporation. These units concentrate on single marketand operate independently rather than focusing on the whole market. This gives

FedEx a competitive edge over its competitors.

FedEx Express is the industrys global leader which provides rapid, steadfast and

time-definite delivery. FedEx Ground supplies small package, less time-sensitive

service to business. FedEx Home Delivery is dedicated to residential services and

operates from FedEx Ground. The third unit FedEx Freight is responsible for delivery

of heavy packages across whole length of haul. Under it also works the FedEx

Custom Critical unit which specializes in time-specific customer critical shipment. To

meet the demand of the international customers FedEx Trade Networks works toprovide support to the international market and hence international trading. Lastly

FedEx Supply Chain Services operates to provide customer satisfaction by co-

ordinating the movement of good.

FedEx Express and Ground are the profitable segments of the company and

responsible for the major part of the FedEx business. FedEx conceits itself mainly on

FedEx Express which gives a good successful picture of the company.

It becomes clear that FedEx markets itself according to the demands of the

customers and not by demographic areas.
http://image.slidesharecdn.com/fedexhttp://image.slidesharecdn.com/fedex


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E. Differentiation of Quality

To meet the demands of its customers FedEx invested hugh capital in building its

infrastructure. The transportation system and logistics play an important role in

running the business and are the main functional units. There is good coordination

among different functional units of the company which results in smooth running of

the business and hence this forms the basis of good quality service to the

customers.

F. Differentiation in the World

In US FedEx is often compared with UPS, while FedEx has made every effort to

differentiate itself from its competitors. The market value of the UPS in US is more

because of its pricing while FedEx is recognised globally for its services. FedExresources allow them to run their business on much higher grounds than its rival, but

with future globalization of the big businesses its competitors will try to overcome this

differentiation. FedEx has 600 aircrafts in its fleet and has hubs all over the world,

the quality which will be very difficult to overcome.

FedEx strategies keep them apart and different from their competitors. This helped

them to make large customer base. Being labelled as innovators it is easy for FedEx

to set up new hubs and package tracking systems.

G. The Impact of their Strategy

The same strategic dimensions are used by most of the businesses and the one

common strategy is the investment of hugh capitol in research and development to

develop better technologies. The firms using the latest and better technology tend to

have better market share nationally and internationally and this gives a competitive

advantage to the company.

The major competitor of FedEx, UPS took some years to build an infrastructure totake control of the domestic ground market in US of which now it holds major share.

While at the same time FedEx started looking for ways to expand themselves

internationally and build an infrastructure for competency in that market. The

installation of the international hubs puts FedEx one step ahead of their competitors

and thus gives them a competitive advantage.

For any company the prominent growth opportunity is the international market place.

FedEx entered the global market with the introduction of FedEx Express which is

known for its fast and reliable transportation service. FedEx is a recognised leader in

the global economy and offers its customers more options and limitless places. The


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second thing which goes in the favour of FedEx is the E-commerce. Customers can

purchase any product from the internet and it can be shipped anywhere in the world.

Fig: Acer and FedEx: Stream lines returns [2]

(Source: http://www.fedex.com/us/solutions/downloads/acer.pdf)



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VALUE CHAIN, TECHNOLOGIES, GLOBAL

STRATEGY

A. Value Chain

Value Chain has primary and support activities.

Primary Activities:

Inbound Logistics: the products that need to be shipped are handling and

stored.

Operations: Value chain analysis, financial analysis, logistics, shipping of

products, handling and checking orders.

Outbound Logistics: receiving payments and transporting products.

Marketing and Sales: Making people feel satisfied and comfortable with the

product by developing a positive image of the product.

Services: Customer satisfaction the main objective.

Support Activities:

Procurement: Purchasing assets, trucks, aeroplanes.

Technology development: Financing in innovation, research and

development, IT and e-commerce.HR Management: Hiring, training and development of employees

Firm Infrastructure: Management, planning, legal support, law and

government regulations which are necessary for the support of value chain.

http://www.google.co.ukAssessed on 3rd Dec 2012
http://www.google.co.uk/http://www.google.co.uk/


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http://mediebevaegelsen.dk/ugens-top-fem-medierAssessed 3rd Dec2012

Overnight

transportation

and delivery of

packages
http://mediebevaegelsen.dk/ugens-top-fem-medierhttp://mediebevaegelsen.dk/ugens-top-fem-medier


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B. Product Technology

Product technology dominant all businesses in transportation in which FedEx

operates. Internet is the prominent technology that is used by FedEx in handling its

operations.

FedEx has always been a technology trailblazer, and the success of fedex.com is

testament to that. FedEx was the first to develop its Web site in 1994.Daily around

2.3 million customers connect to its web site which is known for its speed and

customer focused features.

The Web Marketing Association praised fedex.com as the "Best Transportation Web

Site" and e-Week saluted it as a top e-business innovator.

FedEx Solution is an example of another latest technology used by FedEx which is a

selection of various electronic tools.

C. Impact of national context on the industry

Shipping industry and in particular FedEx depends to a greater extent on the national

context. The market value of FedEx is improving as it is expanding its horizon

without any limitations. The economic downturn in America has led it; to bring

changes in its foreign policies. These changes will help FedEx and the other

shipping industries to turn to the foreign markets.

D. Response to Differences among Nations

The opportunity of growth with globalization will help FedEx to reach its goal of brand

building and standardizing its products in the new and diverse market.

To overcome the barriers of governmental rules and regulations in different countries

FedEx designed an online business planning tool FedEx Global Trade Manager to

help the international customers to obtain the necessary information about the feesand charges for overseas shipping.


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E. Global Dimensions of Strategy

Global strategy shadows every dimension of FedEx. Therefore FedEx is divided into:

FedEx 5 Geographical Zones:

United States

Asia-Pacific

Canada

Europe, Middle East and Africa

Latin America-Caribbean

Global Factors:

Globalization leading to more integrated markets

Borderless business transaction

The basic concern of any customer in any part of the world is timely delivery of their

product whether individual or business. This consistency does need FedEx to tailor

their services. This helps FedEx to establish there successful pricing strategy instead

of raising the cost of their services. In this way they can use their resources to

upgrade their technology and to focus on time-sensitive ability to deliver.

Another part of global strategy is having only few locations as the main centre for

managing the operations, like Hong Kong for Asia-Pacific Network and Miami and

two cities in Mexico for Latin America-Caribbean Network

In short, low cost, standardized service and few key locations internationally to serve

210 countries show the FedEx global strategy is on the right track.


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CORPORATE-LEVEL STRATEGY

A. FedEx Corporation

FedEx Corporation offers the main strategic leadership as well as the main financialliability for all the company. FedEx is currently divided into different units which run

independently but mould the entire services to meet the customers need. The main

motto of the company is Operate independently, compete collectively. The decision

making ranking at FedEx Corporation is as follows:

FedEx Express EMEA abridged organization chart.

http://www.palgrave-journals.comAssessed on 2nd Dec 2012

FedEx reorganized world-wide on 19th January 2000 with 5 geographical

zones and with 6 subdivisions.

For customers to have a single access point a single brand system was

created.

Standardized names of subsidiaries -leverage the FedEx brand name.

Establishment of FedEx Services-hub for the growing portfolio of independent

FedEx services.
http://www.palgrave-journals.com/http://www.palgrave-journals.com/


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FedEx Services

Further support for the FedEx family was provided by combining marketing,

sales and technology.

An extensive range of services and pricing schemes was set up by single sale

force.Customers were provided with single point of access to all range of FedEx

services

Helps customers in invoicing, tracing of packages and also claims.

Websitewww.fedex.comand common toll free number for all the services.

B. Horizontal Integration

Horizontal integration is merger of similar companies and procurement sought out bythe industry leaders. It is a way of trying to increase the industry value of the

company by lowering the price, increasing the product value and bargaining power of

the company and managing industry rivalrys. FedEx from as early as 1980s has

been involved in this.

The purchase of Flying Tiger air fleet and American Freight are the example of this.

C. Vertical Integration

The strategy of vertical integration of FedEx is very aggressive. Having a very stronginfrastructure gives FedEx a competitive edge in the shipping market. As they control

most of the distribution channels they still purchase from independent suppliers.

Most of these suppliers give maintenance services and some provide them with

packaging services.

D. Fill in the Blanks

FedEx need to consider some fill in the blanks strategies which depend on existing

competences like:

Increasing their ground service abilities.

Paying attention to recyclable material for packaging which will reduce their

material cost and will show the public that they are concerned about the

environment.
http://www.fedex.com/http://www.fedex.com/http://www.fedex.com/http://www.fedex.com/


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Conclusion

Over the past 30 years FedEx has been a company which has changed the way we

view express transportation and delivery services.

FedEx a leader in the shipping industry has a basic purpose is to bind the world

together through business. FedEx is known for its innovation, keeping its cost down,

using latest technology to speed up the transactions of goods.

To beat its rival FedEx has to understand that meeting the demands of the market

place is essential. This can be achieved by setting tough targets for the future and

then trying to achieve them. FedEx have shown how strategy helps in decision

making and brings better results for the company.

FedExs mission is to produce outstanding financial returns through its operational

companies by providing shareholders with, high value-added supply chain,

transportation, and business and related information services.

FedEx strives to provide reliable, competitive, global, air and ground transportation of

priority goods at a remarkable speed. FedEx will continue working to develop

outstanding relationships among its employees, partners, and suppliers, while

maintaining ethical and professional principles within its corporate staff, keeping

safety the first consideration in all operations

FedEx has based its strategic mission on three distinct levels. First, by focusing on

its independent networks, FedEx will operate independently to meet its customers

every need. Secondly, offering its services worldwide with the same mission, FedEx

competes collectively to achieve the same goal. Lastly, FedEx management strives

to develop mutually rewarding relationships with its employees, partners and

suppliers.

FedEx has a number of core competencies that continue to put it above its

competitors. The company has built a corporate culture around these major

strengths It strives to maintain loyalty to its customers while working to go above and

beyond what the customers needs are. Another core competency is FedExsexpectations of its members to display honesty, integrity, ethical behaviours,

personal accountability and freedom to perform FedEx has continued achievement

of its goals by setting high expectations for performance.


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32

Strategy Recommendation

Business Level

Integrated Cost Leadership and Differentiation Strategy

Global key account managementKey partnerships with major customers

Advance IT devices providing real-time information

Continuous innovations and first mover advantages

Continuous improvement of organizational operation and cost reduction

program

o Purchasing policy of 2-3 suppliers or use fuel saving vehicles

Market Penetration Strategy

Increase market share by aggressively targeting at fast developing countries.

Reduce its dependence on US market sales (more than 60%)Reduce the risk of fierce competition with UPS in US market

Corporate Level

Restructuring Strategy

Optimize FedEx Express and FedEx Grounds operation

o Consist more than 80% of total sales for FedEx

o E.g. same pick-up team for customers

Improve synergy among subsidiaries

o Leverage the existing resources among subsidiaries

o Shared activities, exchange of competencies (knowledge, staffs,

success stories)

o Regularly assess the current and new locations for office and

warehouse and take advantage of different time zone in different

countries to shorten the lead time for deliveries

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 of aircrafts, tax

advantages, no problem with old aircrafts

Concentric Diversification

Outsourcing trend of supply chain by customers is on the riseDemand Responsive Model

Innovative technology and information system

Part of re-engineering strategy to turn around the FedEx Services into

profitability


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References

Anonymous. About FedEx. FedEx Historical Timeline. Retrieved December 6, 2012.

http://fedex.com/us/about/today/history/timeline.html?link=4

Anonymous. About FedEx. Wireless Solutions. Retrieved December 6,

2012.http://www.fedex.com/us/about/technology/wireless.html

Anonymous. About UPS. Company History. Retrieved December 1st, 2012.

http://www.ups.com/content/us/en/about/index.html

.@About FedEx: Technology@ copyright 2003. December 1st, 2012.

.Author unknown. Chapter Thirteen: Marketing channels and logistics

management@. Copyright 2001 Harcourt Inc. November 22nd, 2012

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