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This assignment is talks about case study of Corporate Strategy in FedEx Corporation. FedEx Corporation is a global transportation and Logistics Company that offers customers total solution for global shipping, logistics, and supply chain.
First parts of the assignments talk about strategic vision and visionary leadership behind FedEx Corporation that mission of achieve the objectives of the company with proving customer opportunity. And transportation and logistics infrastructure at FedEx generally described in this case study. Facts given in the case study based on virtual information infrastructure of the company has been elaborated apart of that. All above mention cases critically illustrated with value chain and supply chain analyses of the global transportation and logistics industry. The mergers and acquisitions that company has linked in achieving desired goals of the company was discuss In the middle of the document. Bottom of assignment evaluating benefits and limitations of merger and acquisition strategies that used in global transportation and logistics industry
A person call in 1973 Frederick W. Smith founded an express transportation company named as Federal Express. During his college years, He wrote a Yale term paper on this idea, Which is about a reliable, overnight delivery service needed for a service-oriented economy in future United States. His professor thought it would never work. And offered amark 'C'. Fortunately for Frederick Smith, he didn't take it to heart and ended up building that company he dreamed of.
. He started Federal Express with over $80 million, He could use his family money, money from investors and bank financing.
Federal Express became successful so quickly because all their competition became weaker at the same time.
Today, Federal Express has over 143,000 workers worldwide, and delivers more than 3 million express packages to 200 countries daily. One major change has affected Federal Express. In January of 1998, Federal Express changed to FDX Corporation.
The express transportation and logistics industry
Using examples from FedEx Corporation and your own research on the Global Transportation and Logistics Industry, critically evaluate the:
Strategic vision and visionary leadership behind FedEx Corporation.
Statements of vision and mission, as statements of an organization's central values, are considered foundations for the development of student learning outcomes. Mission statements describe the core functions of the organization while vision statements describe the ideal outcome of that work. In relation to higher education, they generally serve to communicate what is valued and sought after in the educational experience
FedEx Vision Statement
At FedEx the vision statement is "Leading the way"
The Mission Statement of FDX is "to produce superior financial returns for stockholders, by providing high value-added logistics, transportation and related information services through focused operating companies". This mission statement focuses on three aspects.
To bring returns to stockholders.
adding value above and beyond their service of transporting an object from one place to another.
Transportation and related information services through focused operating companies".
Their focus of operations will be logistics, transportation, and related information.
'Service' standard is 100 percent customer satisfaction. The goal is much like any other company's goal, 'Profit' and long-term viability. FDX was governed by this philosophy. FedEx has enhanced information management in terms of being able to identify the critical factors involved with success of an e-business. It has successfully transformed from a conventional business into an advanced e-business in its network economy. FedEx has succeeded in several areas including: visionary leadership in the application of new technologies, defining the information infrastructure, integrating internal processes, and aligning the organizational structure for maximum benefits. FedEx's key strategy was customer service and for its customers to adapt into its new information technology. FedEx harnessed its new technologies and extended the electronic business to all of its customers. FedEx has developed this technology and made it possible for its customers to connect with them in any way the customer chooses. The restructuring of FedEx addressed many processes but in particular the integration of logistics as well as supply chain management proved to be most successful. The enabled FedEx to cut inventory levels, reduce costs as well as shortening order-cycle time. This is a key for FedEx to improve the quality of service they provided to their customers.
FedEx Express invested heavily in IT systems and with the launch of the internet in 1994, the potential for further integration of systems to provide services throughout its customers' supply chains became enormous. FedEx has now built a powerful technical architecture that had the potential to pioneer the Internet commerce.
To satisfy worldwide demand for fast, time-definite, reliable distribution, Federal Express continues to build and refine a uniquely integrated, all-cargo express network. This network relies equally on transportation infrastructure, information technology and dedicated Federal Express people for its seamless global operation.
Most carrier firms emphasize the same strategic dimensions and use similar strategies and that once common strategy that is the carrier business is the high investment in research and development in order to develop better technologies. In the business, firms with the best technology tend to have a higher market share and this can be seen as a competitive advantage.
Federal Express Five-Point Strategy
Federal Express has five strategies that govern business tactics. These are to improve service levels, lower unit costs, establish international leadership and sustain profitability, get closer to the customer, and maintain the People-Service-Profit Philosophy.
Integrated Supply chain management
Supply chain management
An Introduction to Supply Chain Management "Supply chain management--delivering the right product to the right place, at the right time and at the right price--is one of the most powerful engines of business transformation."Supply chain management is a concept that is well known and well used throughout the business world today. It has brought along many changes in business that have produced long term benefits for companies and, most importantly, consumers. A supply chain is a network of facilities and distribution channels that give a company the ability to receive materials and supplies, manufacture goods, and distribute goods to wholesalers, retailers, and customers. Supply chains exist in both manufacturing and service industries. Supply chains come in two basic formats: single stage, and multi-stage. A single stage supply chain is typically found within a company and incorporates every function performed by the firm. Some of the processes involved with the single stage supply chain include: the flow of raw materials or sub-assemblies, manufacturing, inventory control, distribution, the handling of funds and working capital, and equipment management.
Transportation and logistics infrastructure within Fedex Corporation
The transportation and logistics industry is critically important to our economy and society, as noted in Appendix A. Usually taken for granted, transportation and logistics are responsible for "movement" - not only the movement of goods and people, but also the exchange of ideas and technology. Without transportation and logistics, we would all remain inescapably in conditions similar to those experienced by our prehistoric ancestors. It is difficult to imagine that at one time, a person's entire universe was limited to an area bounded by how far that person could walk. Human inventiveness eventually emerged to give us means of transport, first by beasts of burden and then by crude vessels. These modes of transportation were continuously improved upon, but only over the centuries.
Transportation was revolutionized by the invention and application of the engine, first steam powered and later fueled by various derivatives of petroleum. Air travel, introduced in the early 20th Century, created yet another leap in transportation capabilities. Throughout this period the time required for moving between two distant points has continuously decreased, literally from months to hours. The growing ability to move people and products has allowed mankind to open up new territories and establish full communication between different regions and societies. This increasing interconnectedness has indelibly shaped our way of life. Improvements in logistics have been accomplished in parallel with advances in modes of transportation. The field of logistics has become increasingly sophisticated and has come to encompass all aspects associated with the flow of physical materials, both within and between firms. The fundamental parameters of logistics are speed, reliability, distance and coverage.
Performance in each of these areas has improved steadily over time, particularly with the introduction of advanced information technologies. One of the central forces behind the efficiency and productivity gains witnessed over the past two decades has been the injection of logistics systems, such as "just-in-time" inventory control, into companies' operations.
Those efficiency gains, costs savings and additional sales are all translated into bottom-line gains for businesses, their shareholders and their customers. FedEx has helped companies introduce the new, "demand/pull" approach to supply chain management, moving beyond the old,"supply push" business orientation. FedEx integrated supply chain services have generated major savings for its customers.
Virtual information infrastructure at Fedex Corporation
Every business today competes in two worlds: a physical world of resources that managers can see and touch and a virtual world made of information. The latter has given rise to the world of electronic commerce, a new locus of value creation. We call this new information world the market space to distinguish it from the physical world of the marketplace. Companies tend to adopt value-adding information processes in three stages. At this stage, managers use large-scale information technology systems to coordinate activities in their physical value chains, in the process laying the foundation for a virtual value chain. In the second stage, mirroring capability, companies substitute virtual activities for physical ones; they begin to create a parallel value chain in the market space. Finally, businesses use information to establish new customer relationships. At this third stage, managers draw on the flow of information in their virtual value chain to deliver value to customers in new ways. In effect, they apply the generic value-adding activities to their virtual value chain and thereby exploit what we call the value matrix. As companies move into Federal Express is in a period of transition. The rapid growth in technology, coupled with a flourishing economy, which has shifted the traditional delivery patterns, has presented the company with some of the toughest issues it has faced since it was established. The advent of electronic mail, the fax machine, and the Internet are just a few examples of the innovations that challenge Federal Express' dominance of the express-distribution industry.
Federal Express was among the first express transportation companies to realize the benefits of technology. As early as 1978, just five years after it began operations, the company pioneered the first automated customer service centre.
To provide real-time package tracking for each shipment, FedEx uses one of the world's largest computer and telecommunications networks. The company's couriers operate Super Tracker hand-held computers, to record the transit of shipments through the FedEx integrated network.
FedEx Business Link is the first offering in a strategy called the virtual enterprise suite, which will streamline the order management process and combine the global reach of the Internet with FedEx's worldwide transportation and information networks. This initiative will enable businesses to reach new markets and serve their customers more effectively.
"FedEx Business Link solves one of the key limitations of electronic commerce by linking the automated order and fulfillment system to the delivery of the product to the end customer," said Laurie A. Tucker, senior vice president of Logistics, Electronic Commerce and Catalog Division for Federal Express. "With FedEx BusinessLink, a company of any size can become a global marketer and create new sales channels without the need to invest in additional customer service and warehousing. It also provides a cost-effective, low-risk method to meet customer demand while minimizing inventory."
A fundamental rethinking of the entire global supply chain is under way. Businesses worldwide are rationalizing their supply base while simultaneously becoming more flexible. Nimble companies will continue to reposition themselves in the market by arranging virtual relationships, creating new delivery channels for competitive advantage, and conducting business
Information Technology Operations - responsible for deploying and operating all computer network infrastructure. The technology proving ground will provide speed to market and economic value for the enterprise through technical innovation.
The new model will result in higher productivity. Realizing that the older more traditional systems were good for their time, ITD executive management realize that the organization must reinvent itself (a process they feel is iterative and often) if Federal Express is to remain a ranked player in the 21st century. The managers believe that by constantly inventing systems that increase quality, service and speed to market will be automatically affected which will, in turn, ensure Federal Express' market leadership.
Connecting Federal Express' fast-moving physical network of planes, people, packages, and customers is an even faster-moving network of information technology that literally supports every move Federal Express makes. Much of that technology functions behind the scenes, enabling Federal Express to gather and process a vast amount of real-time to effect faster, more accurate, more efficient delivery operations. However, there is another side to Federal Express technology that is much more visible. Every day, more than a million Federal Express customers process their shipments using Federal Express electronic shipping solutions-and they use those same tools to connect directly with Federal Express for critical shipping information with which to manage their business. Both uses of technology-internal and external-result in superior service for customers, and are among the company's greatest competitive strengths.
In today's networked world, companies are looking for ways to be more innovative and responsive. They need to have greater control over orders, know how those orders are progressing at every stage, and be able to process it all faster than their competitors. For many customers, the answer to improved speed-to-market cycle time is deeper technology integration with Federal Express. Many companies are using Federal Express-developed technology to receive orders, manage inventory, fulfill orders, track those goods in transit and manage returns in one integrated information loop. In addition, providers of enterprise resource planning software are building a connection to Federal Express right into their applications. This means, for example, that customers who use an application to add efficiency to their manufacturing, sales or distribution process can access Federal Express shipping and tracking directly-without having to rekey fulfillment information into a different system. Embedding a direct connection to Federal Express saves time, reduces error and makes shipping information available immediately. Customers have a complete solution-including delivery-from one source.
The FedEx Corporation has made enormous strides in technology and is setting the industry standard for efficiency and customer service. FedEx has sought technological advances in response to customer needs, and has excelled in anticipating and projecting demands of an environment that would depend and thrive on information. The technology FedEx has developed enables customers and support personnel to have wireless access to essential information system's networks anytime and anywhere. FedEx was the first to integrate wireless technology more than two decades ago, and continues to develop and lead the industry in developing innovative wireless solutions.
FedEx has long been in the forefront in recognizing the potential of the Internet to provide fast, easy and convenient service options for its customers. In 1994, the FedEx Web site was launched with a bold package tracking application that was no doubt one of the first true corporate Web services. FedEx became the first transportation company with a web site offering a feature that allowed customers to generate their own unique bar-coded shipping labels and contact couriers to pick up shipments. The web site today handles over 1.1 million package-tracking requests daily. More than 2.5 million customers connect with the company electronically everyday, and electronic transactions account for two-thirds of the five million shipments FedEx delivers daily. The web site is acclaimed in the business community for its speed, ease of use and customer-focused features.
Global distribution involves managing not only the movement of goods, but also the flow of information and finance that moves with the goods. A FedEx supply chain solution is a streamlined organization and that one core competency leads to another it is a continuous flow.
Branding and business structure up until 19th January 2000
Using information from the case study and your own research, critically evaluate the benefits and the limitations of Merger and Acquisition (M&A) strategies in the Global Transportation and Logistics Industry.
Discuss how Fedex Corporation managed the acquisition of Caliber Systems in 1998, and determine whether or not the acquisition of Caliber System was a success or failure.
The transportation sector is challenged by globalization, consolidation and the need for faster, more visible and more flexible supply chains. In response, astute providers are now seeking a more agile transportation enterprise. By adopting a service-oriented, alliance-based strategy to reach that objective, service providers can gain a competitive edge in today's transportation sector.
FedEx Corporation was founded as FDX Corporation in January 1998 with the acquisition of Caliber System Inc. by Federal Express. With the purchase of Caliber, FedEx started offering other services besides express shipping. Caliber subsidiaries included RPS, a small-package ground service; Roberts Express, an expedited shipping provider; Viking Freight, a regional, less-than-truckload freight carrier serving the Western United States; Caribbean Transportation Services, a provider of airfreight forwarding between the United States and the Caribbean; and Caliber Logistics and Caliber Technology, providers of logistics and technology solutions. FDX Corporation was founded to oversee all of the operations of those companies and its original air division, Federal Express.
Originally called FDX Corp., FedEx Corp. was formed in January 1998 with the acquisition of Caliber System Inc. Through this and future purchases, FedEx sought to build on the strength of its famous express delivery service and create a more diversified company that included a portfolio of different but related businesses. Caliber subsidiaries included RPS, a small-package ground service; Roberts Express, an expedited, exclusive-use shipping provider; Viking Freight, a regional, less-than-truckload (LTL) freight carrier serving the Western U.S.; Caribbean Transportation Services, a provider of airfreight forwarding between the U.S., Puerto Rico, the Dominican Republic and the Caribbean Islands; and Caliber Logistics and Caliber Technology, providers of integrated logistics and technology solutions. These companies, along with worldwide express shipping provider Federal Express, composed the original FDX Corp.
American Freightways was acquired by FedEx Corporation in 2001. By combining Viking and AF, FedEx Corp. created FedEx Freight to offer one-stop shopping for LTL customers who require top-quality, highly reliable regional freight service. In June 2002, FedEx re-branded AF and Viking as FedEx Freight to accelerate growth of regional LTL freight business through a common branding system. Through a comprehensive network of service centers and with timely, accurate information systems, FedEx Freight is committed to delivering reliable, responsive LTL service throughout the U.S. and beyond.
Fedex Customer Critical
In 1998, FedEx Corporation acquired the parent company of Roberts Express, Caliber System Inc. Roberts Express became FedEx Custom Critical in 2000, aligned with one of the world's most recognized brands. Later that same year, FedEx Custom Critical acquired Passport Transport, which moves high-value, classic, specialty and modern cars.
Events leading up to the January 2000 reorganization
Using appropriate examples from FedEx Corporation, critically evaluate FedEx's financial and non financial performance in the context of developments in the "internal market and e-tailing" up to the January reorganization.
According to a November 1997 article in Fortune, FedEx had been engaged in e-commerce since the 1970s with its COSMOS and DADS systems. Its PC-based automated shipping system, known as FedEx Power Ship, had first been implemented in 1984. The company's handheld bar code scanner system, known as Super Tracker, had been in place since 1986. "Smith figured out two decades ago that FedEx was in the information business, so he stressed that knowledge about cargo's origin, present whereabouts, and destination, estimated time of arrival, price, and cost of shipment was as important as its safe delivery. He has therefore insisted that a network of state-of-the-art information systems-a sophisticated laser scanner, bar codes, software, and electronic connections-be erected alongside the air and vehicle networks." By the late 1990s, more than 60 percent of clients were using FedEx desktop terminals and software to create their own labels and send electronic messages to the firm when their shipments were ready for pickup. Eventually, FedEx was able to use this information technology to determine the profitability level of each customer and negotiate price increases with those who actually had been costing the firm money. The firm also began offering supply chain consulting services, helping clients to streamline order fulfillment processes electronically.
In 1994, FedEx launched its Web site, which allowed clients to track package shipments online. Software known as FedEx Ship permitted shipment processing via desktop terminals. It was two years later that FedEx made its first major move toward conducting operations on the Internet. The company released its first version of FedEx Internet Ship, the first service that permitted clients to manage shipping via the Internet. Internet Ship also allowed users-both shippers and recipients-to access shipping information via the Internet and print shipping documentation. FedEx began offering e-business tools related to FedEx shipping and tracking processes in 1997. One year later, the firm launched FedEx Logistics to oversee its growing supply chain services operations.
Despite the firm's early e-business savvy, most analysts believed that rival UPS had gotten the upper hand in Internet-based shipping. This partly was because it focused on deliveries to residences, which began dramatically increasing as businesses and consumers alike started to purchase everything from books and CDs to computers and software on the World Wide Web. Hoping to compete with UPS and its leading domestic ground delivery service, FedEx paid $2.4 billion for Caliber System, a trucking company with a fleet of 13,500 trucks, in January of 1999. The deal was designed to strengthen FedEx's small foothold on the business-to-business ground shipping market and also allow it to launch business-to-consumer delivery services. FedEx established FedEx Home Delivery to handle its new residential ground delivery operations. The firm also established the FDX Corp., a holding company under which was placed the FedEx air shipping operations, as well as Caliber and RPS, a former Caliber unit that was the single largest ground shipment rival of UPS. Online holiday shopping, which accounted for $650 million in 1997, grew to roughly $4 billion over the holiday season of 1999. At that time, FDX handled shipping for only 10 percent of all goods sold online, compared to the 55 percent handled by UPS, which had forged alliances with the likes of e-tailing giant Amazon.com. The FedEx Marketplace was designed that year as a hub for e-merchants using Federal Express shipping.
Fedex is company that has strong strategic vision and visionary leadership in doing entire operations. Fedex keep on follow up on new technologies that helps in achieving desired objectives of the company while delighting customer expectation. With the mergers and acquisitions company was able to stay at the competitive edge as market leader