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As to all investment strategies, the most concerned thing is risk-return trade-off, it is also exception in IT investment strategies. So if we want to make an investment, must definitely figure out how much money we will spend must definitely figured out, how long we can make a profit, and how big improvements and advantages we can get through this IT investment. In addition, making the IT technology keep ahead is more important, because it is fast to substitute the IT technology. We should spend large amounts of time and research fee in innovating IT technology so that we can make a success in IT investment strategies.
The importance of information system and invest larger amounts of money is early learned by FedEx. So FedEx believes it has the competitive advantage on information system. It is true that FedEx make a big success in information system. However, the importance of the information system in the early 90s was did not realized by UPS. But it does take a long period time, UPS invests significantly in it and ultimately achieves.
I think the FedEx has the better strategy. Firstly, FedEx realizes the importance of IT technology, so a $1 billion annual budget is offered by the CEO to develop it from long time ago. However, its competitor UPS realizes this after than FedEx, although it make up for this gap for a while.
Secondly, keep innovating is the best advantage competition because FedEx can always stay ahead, while what its competitor can do is lifting and follow it. Through the application of new technology, better services can be obtainable by FedEx and products to meet the customers' needs. " Insight" is a good example for that.
Thirdly, not only operational technology is focused by FedEx on developing, but also others technologies such as revenue-generating, customer-satisfaction generating and strategic advantage technology. Through applying these technologies, FedEx can reach diverse development.
Is FedEx's IT strategy a good one for its competitive battle with UPS? Why or why not? Is it a good model of competitive IT strategy for other types of companies? Defend your position.
First of all, a good IT strategy has to undertake five competitive forces that form the structure of competition in it line of business. The organization that effectively overcomes is Rivalry of Competitors, Treat of New Entrants, Threat of Substitutes, Bargaining Power of Customers, and Bargaining Power of Suppliers.
An organization is looking for to gain a competitive advantage on its rivals has to formulate a strategy that tackles all the above mentioned forces and implement five basic strategies that are Cost Leadership, Differentiation, Innovation, Growth and Alliance.
FedEx's strategy is basically a differentiation and innovation strategy. In terms of revenue and customer satisfaction, its line of business is working very well. FedEx' IT strategy is focused on customer based technology and less on operational support technology. Where there is the most revenues come from to cover its $ 1 billion a year budget for information technology. A restless process there is no time for rest is the big challenges in this approach. Once a new innovative and different service or product has been launched, all competitors will quickly follow. So the company has to shoot it service and move on to the next one as FedEx's strategy and then the cycle goes on.
Such a strategy may have been worked very well in the industry with FedEx. On the other hand, it would not necessarily work for other lines of work. This is owing to several reasons. This strategy does not deal with Cost Leadership, Growth, or Alliance strategy are not dealing by this strategy. But there are some need to observe and raised under the control of other risks. If a business has different needs and innovative products, but because of the high cost price, but the product may not see the light.
Use the Internet to discover more about how FedEx is involved in fighting the war on terror, beyond what is reported in this case. For example, FedEx has made some controversial disclosures of customer information to intelligence agencies. Discuss FedEx's corporate responsibility to assist in the war on terror while protecting the privacy of its customers, as well as any other issues uncovered in your research.
FedEx has opened the international portion of its databases, including credit card details, to government officials. It has created a police force recognized by the state of Tennessee that works at the side of the Federal Bureau of Investigation. The company has rolled out radiation detectors at overseas facilities to detect dirty bombs and donated an airplane to federal researchers looking for a defence against shoulder-fired missiles.
Moreover, 250,000 employees is encouraged by the company to be spotters of would-be terrorists. It is setting up a system designed to forward reports of suspicious activities directly to the Department of Homeland Security via a special computer link.
Cooperation between business and federal law-enforcement agencies generally isn't advertised and customers are seldom aware of it. In some cases, people waive their right to privacy when they use a particular company's service. With FedEx, customers consent to having shipments inspected as soon as they hand over their packages and sign the shipping forms.
To orchestrate its deliveries, FedEx has spent billions of dollars over the past 15 years on elaborate computer systems. It compiles troves of data about its customers and the six million packages carried daily across the world, tracking them from point of origin to final destination.
The company also maintains a large global security force, currently 500 strong. Before 9/11, it concentrated on combating employee theft and intercepting illegal shipments of narcotics, explosives or hazardous materials.
FedEx's change in mindset took place within hours of the attacks amid the confusion and frustration that followed. Mr. Smith sent a message to his subordinates "to do whatever it takes to cooperate" with federal agents, says FedEx spokeswoman Kristin Krause. This included opening up FedEx's operations in the Middle East to federal authorities and asking employees there to help investigators.
In December 2001, according to court records in Illinois, a FedEx driver became suspicious after making a series of deliveries of boxes to an apartment complex in suburban Chicago. The cartons were always the same size and shape and came from the same address in Los Angeles. Worried there was something sinister afoot, the driver informed his bosses and FedEx called the police.
With a police officer looking on, FedEx popped the carton. Instead of anything dangerous, the boxes contained several hundred pre-recorded compact discs. Local police launched an investigation that eventually uncovered a CD-bootlegging operation.
The agents cross-reference the information from FedEx's system with their own databases. That helps those flag suspicious packages for a manual inspection and also helps them determine whether credit cards have been used in other suspicious transactions. FedEx and customs officials say the close cooperation allows customs agents do their jobs faster and allows FedEx to avoid shipment delays.