FedEx is a transportation corporation started in 1973, who came in to the industry with a very different approach and tried to outperform their competitors. In fact there were quite successful to a large extent in doing that. This paper contains discussion about the various strategies they have used to do so, as well as the end results. It also contains analysis on how they have made changes to their strategies as there were changes in the Information technology or Economic environments.
“Strategy defines how all the elements of what a company does fit together.” (Porter, 2001)
Having a vision for a company is quite different from having a strategy. Vision is the aims or objectives we have for our business that we would like to achieve over a period of time and Strategy is the design or steps that we use to achieve those objectives. FedEx started in 1973 with a vision to gain the market share by targeting a niche market and providing them with a different service. They want to use the 3 factors which they thought are going to be very helpful to make them succeed.
Advances in IT
Application of new technologies for process efficiencies
” (Ali and Pauline, 2000)
With the implementation of IT and the boom to the internet, they made sure they had the proper use of their Value and Supply chain, thus transforming and making a huge success in the Logistics industry. In this paper I am going to discuss as in how they have managed to achieve the success as well as the mistakes they have made after the success.
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Having a Strategy is one of the most important parts of being successful in a business, as sometime that is what leads to the success. Strategy defines the goals for the organisation over a long period of time and helps the organisation in achieving them. “Strategy is the direction and scope of an organization over the long term: which achieves advantage for the organization through its configuration of resources within a challenging business environment, to meet that needs of markets and to fulfil stakeholder expectations” (Johnson and Scholes, 2008)
“Strategy can be defined as the rules and actions used to steer a business towards making much more money” (Richard Koch and Peter Nieuwenhuizen, 2006)
2.1 Need for Strategy
There is a definite need for organisations to have a Global Corporate Strategy, as it not only directs them towards achieving the goals they have, but will also help them in achieving them in a planned way.
Some of factors or concepts that organisations depend on while designing their Strategy are
What are the goals and aims of the business?
How can they face the competition?
What does the consumers, employee, management and all the stakeholders expect from the organisation?
What are the resources available?
2.2 Porters Generic Strategic Framework
According to porter, having a strategy is nothing but making sure the expenses and the cost of production are lower than the sale price, thus making a profit on the initial investment. “In other words the firm may choose to provide products at the lowest possible price, or seek to provide products which although perhaps more expensive are differentiated on the basis which the customer finds important. He has identified the three strategies as overall cost leadership, Differentiation and focus.” (Mario’s I. Katsioloudes, 2002)
The Generic Strategy framework – Adapter from (Michael E Porter, 1985)
Being Different from the Competition as well as being a Cost Leader is what FedEx has achieved from the time it has started. With the vision they have for company they have started the business different to what their competitors were offering to the consumers. Even though they have started the business targeting a Niche market that were willing to pay a premium to get the goods delivered the next day, FedEx were able to transforms from a focussed Strategy to more of a Differentiation and Cost effective Strategy.
2.3 Strategic Vision behind FedEx Corporation,
The aim of having a strategy is to gain advantage over the competition and thus getting the market share to make profits. “The goal of strategy is to achieve a superior long-term return on investment and Economic value is created when customers are willing to pay a price for a product or service that exceeds the cost of producing it.” (Porter, 2001) Under the leadership of Fred Smith, FedEx not only made sure it had a strategic vision, but it also proved that with by using proper techniques it can grow and gain the market share. “Strategy is the direction and scope of an organization over the long term: which achieves advantage for the organization through its configuration of resources within a challenging business environment, to meet that needs of markets and to fulfil stakeholder expectations” (Johnson and Scholes, 2008)
“Human resource management is responsible for how people are treated in organizations.
It is responsible for the bringing people into the organization, helping them perform their work, compensating them for their labors and solving the problems that arise” (Cherrington 1995, p.5).
2.4 STRATEGIC ADVANTAGES FOR HR PLANNING
There are a number of more specific reasons for resorting to HR planning exercises at the level of the undertaking, reasons that can make the exercise essential. These are:
1. To establish the best cost balance between plant and manpower utilization.
2. To determine recruitment, level wise and occupation wise
3. Ensure that we do not inherit surplus manpower hired on account of an incompetent CEO.
4. To provide a basis for management development programs
3 STRATEGIES FOR HUMAN RESOURCE
This is the very basic function of the human resource management dept. The first step in the development of a concerns personals activity is to employ the right type of person to operate the organization. Employing people are one of the most critical step in establishing and growth of business. Recruitment is the major step in the total staffing process. Recruitment is the process of searching for prospective employees and stimulating them to apply for jobs in the concern.
FedEx being a global company, a separate HR dept works out for this function. Given below is the process of their recruitment-
Inviting the application
Screening and selecting the appropriate applications
Interviews (both HR and operation)
induction and orientation
Right remuneration should be given to employees according to their services rendered to the organization. For deciding fair remuneration following points should be considered:
1) Job evaluation and job analysis.
2) Merit rating of employees/ performance appraisal.
3) Incentive schemes
4) Profit sharing
Being a job requiring high level of skills and motivation, FedEx keeps a constant eye on performance of employees to fix remuneration.
Promotion, Transfer & Termination:
Promotion and transfers are essential features of human resource management. For increasing the skills and high level of efficiency, it is essential to frame proper promotion policy. Systematic promotional programmers should be arranged which are based upon seniority, qualifications, period of service, experience, etc.
Transfer involves shifting of an employee from one job to another job without changing responsibilities and remuneration .In order to adjust existing staff internal transfers are essential. Within various departments of FedEx and within various group companies, transfers take place.
Rewards & Incentives
Almost 50% of all FedEx spending goes to employee pay and benefits.
Employee compensation is structured to acknowledge individual effort, stimulate new ideas, encourage outstanding performance and promote teamwork. All of these factors are reflected in the employees’ Compensation and Rewards.Â
4 HUMAN RESOURCE MANAGEMENT
Â Â Â Â Â Â Â Â Â Â Â Human Resource Management is considered as the philosophy, policies, procedures and practices that are connected to the administration of the employees of an organization. It is connected and related to the administration of the employees of a company. It has a great contribution in successful process of attracting, developing, motivating as well as maintaining a high-performing workforce that helps to add to the competitive advantage of the organization (Sims 2002 pp. 2 – 3).
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Â Â Â Â Â Â Â Â Â Â Â Furthermore, HR has a great impact with the institution and the implementation of the different policies, programs and procedures that can affect the success and failure of the performance, competences as well as the loyalty of the entire workforce of the organization. Because of the policies and procedures, individuals are being attracted, retained, motivated as well as developed in order to perform the work of the organization. This is due to the fact that through these policies and procedures, the organization will seek to mold as well as shape the actions of the employees in order to operate successfully. Thus, comply with the different public policies, offer high quality of employment that will help to improve and maintain the position of the company in the market by the process of reinforced ability to compete and serve (Clardy 1996, p. 1).
Â Â Â Â Â Â Â Â Â Â Â Above all, the process of incorporating the top management’s goals to the HRM practices and policies will help to bring out as well as reward the different types of behavior that are important in achieving the strategy of organization. The effectiveness of the HRM practices can help to improve the competitive advantage in creating both the cist leadership and differentiation (Sims 2002, p. 5).
5 Strategic Human Resource Management
Â Â Â Â Â Â Â Â Â Â Â Â The main goal of the strategic human resource or SHRM is the improvement of the way HR are managed in strategic manner in the organization, with the connection to the definitive goal of the improvement organizational performance, that are judged by its influence on the corporate strategy of the company, and the concern of the customers and shareholders (Brewster & Mayrhofer 2000, p.6).
Â Â Â Â Â Â Â Â Â Â Â HRM can help to determine the HR needs in order to support the strategic objectives as well as to ensure that all of the employees are selected, trained, evaluated as well as rewarded in ways that helps to achieve the objectives of the business. In addition, the strategic HRM is a linear, balanced process that begins with the identification of the goals that will server as guidelines in the HR practices. Above all, the integration of the HR programs with the goals of the entire organization can help to increase the value of the organization (Burke & Cooper 2004, p. 92).
6 FedEx Express and Strategic Human Resource
Â Â Â Â Â Â Â Â Â Â Â Â One of the most important strategies of the company that made them different from their competitor is their superior customer service and effective and efficient on-time deliveries. On the other hand, since the same basic and vital technologies are also available and offered in other competitors such as UPS and DHL, the workforce of FedEx is considered as the crucial competitive advantage for the company (Ahmed & Ullah 2006).
Â Â Â Â Â Â Â Â Â Â Â The overall HR strategy of the company focuses on the process of building a committed, competent as well as customer-oriented workforce.
Â Â Â Â Â Â Â Â Â Â Â Training is considered as the most important events at FedEx, in order for the company to meet their goal of 100% customer satisfactory. It has a promotion from within policy. It undertakes as well as arranges extensive training for all of the employees as well as the managers that covers the quality management, leadership concepts as well as the philosophy of the company (Ahmed & Ullah 2006).
Â Â Â Â Â Â Â Â Â Â Â The retention of talents is also one of the most important strategies of the company. It has a turnover rate of 1%, having to show that they have the most effective way of keeping their employees. The main reason behind the said success is that the company is offering high career opportunities, the result of the policy that employees are being promoted from within. Because of the said policy, the company had been able to recognize the efforts of its people through awards, open communications as well as other incentives. Employee retention is directly connected with the recruitment and employee relations of the company. They influenced each other. In the case of Federal Express, it begins its retention efforts by the process of centralizing its recruitment efforts. By doing the said activity, the company had been able to maintain and retain their employees, and improves their skills, by making sure that each and every employee is receiving proper training in terms of job performance skills (Denton 1992). It helped the productivity of the company, by making sure that all of its employees are experienced and knowledgeable.
Â Â Â Â Â Â Â Â Â Â Â Â Like any other companies, Federal Express Corporation believes that people is its greatest asset. The main focus of the company is to promote a good working environment where in all of the stakeholders will feel respected, satisfied as well as appreciated. The main thinking of FedEx is that there people are the primary entity in the value chain, that is why it is important to focus on the employees first.
Â Â Â Â Â Â Â Â Â Â Â The People-Service-Profits policy is being implemented by asking as well as answering different basic questions, such as what are the expectations and things that must do. The company tries to spend times in order to answer the questions for their personnel by extensive orientation programs that will show and define the entire values of the company (Denton, 1992).
Â Â Â Â Â Â Â Â Â Â Â Above all, the company strictly implements their promotion from within and with connection to the progression policy. It also uses Information Technology or IT in order to implement an extensive job posting system that will enables the employees to be informed regarding the different opportunities. When a specific position is open and available, notices are all posted in the entire vicinity of the company in order to inform the employees (Denton, 1992)
Â Â Â Â Â Â Â Â Â Â Â It had been showed that FedEx has a strong relationship with the most important entity or stakeholder, the employees or human resource. The company had been able to retain their talents that helped them to maintain productivity, thus maintain competitive advantage of FedEx. There are different aspects that must be maintain and done such as the career development. This is an ongoing, formalized effort of the organization that aims on the development and enrichment of the human resource of the company that will target both the needs of the employees as well as the entire organization (Denton 1992).
Â Â Â Â Â Â Â Â Â Â Â Another important thing that must be considered is the internal communications. By doing this, the company will be able to maintain their direct and sound relationship and communication with the employees that will enable them to know what are the employees’ needs and demands that will help and push motivation.
Even though there were major dips in the profits I personally feel FedEx having the advantage of the Brand name behind them would be and should be able to gain the advantage back on its consumers and adding on to that “the company anticipated having to spend 100 million dollar over the changes they have made and the new method they have implemented” (Ali and Pauline, 2000)
Even though it was a major mistake not to include their acquisitions in to their brand as and when they were acquired, as well as merging the subsidiaries who were in to the same logistics business was a huge mistake that should never be done and especially considering the fact that FedEx is a huge corporation, it learned it mistake and hopefully will be able to achieve what Smith has mentioned before the rebranding in 2000 (Ali and Pauline, 2000)
Organizations are driven by human capital and it is crucial to have a scientific look at this factor of production. Human resource is a key economic resource, and a scare one. It therefore demands the same attention a company gives to planning sales, investment or profits. It is this fact that has led to the development of manpower planning among an increasing number of business organizations. For the company, the returns from manpower planning can be measured in term of higher efficiency and productivity as a result of better utilization of its manpower resources and the elimination of waste in recruitment, training and other personnel schemes. The benefits to the individual employee and the country are not less important.
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