The FedEx Corporation is a global logistics and transportation enterprise which offers its customers a one stop source for providing the global shipping, supply chain and logistics solutions from the subsidiaries of FDX, RPS and some others also.
Mission, vision and strategies development is very important for a company, because creating and communicating the mission and vision and values will help the organization to achieve the goal and objective successfully. FedEx has also created a very clear mission statement which is as follows:
FedEx Corporation will produce bigger financial returns for its stakeholders through providing a high value added transportation, logistics and related business services through implementing and focusing on operations. The requirements of the customers will be met in the greatest quality manner through appropriate to all the market segments served. FedEx will struggle to develop and combine rewarding the relationships with the employees, suppliers and partners. Safety is at priority in all the operations. The Corporate activities will be conducted to highest professional and ethical standards.
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To become world leader in express delivery and supply chain industry before year 2020.
The strategy development of FedEx is focused on the operation management of the company and is divided in three levels:
The values set the culture of the organization and it is very necessary to set the values of the company and communicated well to the employees. The strategic context of FedEx includes the transportation business nature of the environment, the organization is operating the business well with huge logistics and transportation services. The risk management plans are developed by the company in order to avoid the problems and loss in future.
Stakeholders Mapping is a strategic business tool which helps in identifying and assessing the effect of various individual and group of stakeholders of the company. The stakeholders of FedEx are also assessed and the power of the stakeholders are examined and the relative probability of using the power and the level of interest of each stakeholder. This tool will also help us to identify that which stakeholder has the greatest potential to affect the company and it will help to decide that which stakeholder needs more attention. Shareowners: As of July 14, 2008, there were 18,589 shareowners of record.
The stakeholders are categorized on the rating of the graph and the level of interest of each stakeholder against the power they possess to show their interest. The stakeholders are divided into four broad categories which includes the low interest/low power (A), high interest/low power (B), low interest/high power (C) and high interest/high power (D).
Low interest and low power
Little or no need of attention for the group of stakeholders.
High interest and little power
It is important to keep them informed, FedEx take care of all the stakeholders to be well informed of all the recent activities implemented.
Low interest and unrealized power.
Efforts made too keep them satisfied as they can cause disruption.
High power and high interest.
Need special attention as they have high power to effect the company.
There are two important benefits related to this tool:
This tool tend to categorize the stakeholders and identify the groups who can affect or be affected through the decisions of the company.
The tool helps the company to assess the ways through which the communication can be improved based on the level of interest of the stakeholders.
The SWOT Analysis:
FedEx is worldly brand
It has the largest market share in the airborne services
It has the most efficient service along with 99 percent plus on time service level.
FedEx is the first online tracking products in transit.
One stop shopping.
UPS is the competitor and FedEx has significantly a smaller market share and domestic is 11 percent through RPS.
Always on Time
Marked to Standard
The B2E strategy that was formulated by FedEx did not work and also did not live up to the expectations of the management and the consumers chose the ground instead the air cargo products.
Debt to service was at high level.
The FedEx's operating model posses unpredictability and the quality of the concerns of earnings.
For RPS and FedEx products the cross marketing exists.
In the business of B2B the ground cargo activities have been increased.
The Air cargo freight can grow to 2x-3x in the next twenty years.
There is a growth in the global business economic and enterprise service.
First international mover advantage in China and many other countries also.
Supply chain services globally
UPS has gained success on the domestic air cargo market share.
The trend will continue of increasing the jet fuel prices.
Internet and Broad band, online security and email can lessen the courier need.
Potential threat is emerging, non asset based online providers, Hub Group online cargo companies and Expeditors, Circle, Eagle, CH Robinson.
The rise in the interest expense, somewhat alleviate through fixed debt expense that includes the operating cash need and the repurchase plan of stock.
The domestic growth has been projected to grow at a very low digit rate.
The European contenders and growing airborne are not too far behind.
The investment community has the alternative choice of selecting the UPS.
Industry Life Cycle
FedEx has a wide range of transportation services and the company accommodates a widest range of the shipments. FedEx is the shipping services industry and it is an oligopolistic industry along with few established competitors. The industry of shipping services is classified as in the mature stage of the industry life cycle. The major innovation that has changed and reshaped the industry of shipping services in the world is the Internet.
Customers become more comfortable using the internet and this revolution gave a lot of losses to the industry. But to survive the revolution FedEx introduced the first tracking applications website an provided the customers with a unique bar code in order to individualize the shipments. The shipping industry constantly strived to incorporate the technological innovations in order to meet needs of their customers.
In order to survive in the industry FedEx has implemented many strategies in order to achieve the success and satisfy the customers.
PESTEL ANALYSIS OF FEDEX
Particularly in UK the express and courier services are of fundamental importance for the efficiency and growth of the economy of UK. The geographical position is away from the centre of the continental Europe and the delivery services are fast and effective and also essential for the businesses of UK who are involved in the international trade. Regardless of the recent global economic slowdown, the express and the courier service had a 3 percent growth rate among the year 2001 and 2002 with a turnover of the market of around £4.2bn.
Since the sector of the courier service has outperformed the express logistics sector in terms of the growth of the turnover. The demand of the express and courier services has been derived from the manufacturing and services industries of businesses. Consequently the economic performance of the industries has affected strongly the success of the express and courier industry. The technology advances and the increase in the use of the e-commerce has combined with the express and the courier sector commitment to start investing the Information Technology sector and have also saved the industry from the adverse effects of the current global slowdown.
Although the increased measures of the security for the air cargo has increased the costs for the air cargo operations of the sector. The logistics sector of the express logistics sector through the value added services, has charged much better than the industry of the road cargo. However the push of the government measures in order to tackle the environmental pollution and congestion have also increased the cost for the greatly road based express logistics sector.
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In the terms of short and medium, the express and courier industry is likely to grow slowly, in line with the UK economy. An increase in the use of the internet shopping services will boost the demand of home deliveries. Although the problems of congestion of the roads of UK and the skies also including the range of the new environmental controls can currently being introduced for the road transport and will be likely to develop the extra costs for the industry.
FedEx has committed to provide the connections globally and minimize the environmental impact. The company has also integrated the responsible environmental practices to implement in the daily operations and the goals are set continuously and the challenge is to increase the efficiencies on continuous basis and reduce the harmful waste.
The legal issues are very less with FedEx as it has implemented all the necessary legal requirements for the safety of the employees as well as benefit of the company.
Porter's Five Forces
Threat of New Entrants
LOW- Economies of scale (airplane, truck, global network)
High Capital requirement.
Threat of Substitutes
LOW- Minimal substitutes products are available for the physical goods
Only a few documents can be sent through Internet, Fax and email.
Bargaining Power of Suppliers
It depends upon the kind of the purchase
LOW- Information Technology products, truck, maintenance and repairs
Bargaining power of buyers
HIGH- Intense competition in express delivery industry
The switching cost is low
More bargaining power for the corporate customers for instance Cisco systems, Dell computers.
Potential Competitive Threats
HIGH- Global competitors, TNT, UPS, DHL (all have equal strong resources)
High fixed cost and high exit barrier lead to the aggressive competition.
Graph 1: Porter's five forces model - FedEx Corporation
LOW to MODERATE
- Shipping - commodity
low switching cost
- FedEx, UPS, DHL
Strategic Management Process
The strategic management process which should be considered by the organization in order to implement the strategic management the steps are as follows:
Step 1: Define the Business and Its Mission
Step 2: Perform External and Internal Audits
Step 3: Translate the Mission into Strategic Goals
Step 4: Formulate a Strategy to Achieve the Strategic Goals
Step 5: Implement the Strategy
Step 6: Evaluate Performance
FedEx has developed the services and has been known as the innovators, it has divided its services in the following segments:
FEDEX EXPRESS SEGMENT
FedEx Express (express transportation)
FedEx Trade Networks (global trade services)
FedEx Supply Chain Systems (logistics services)
FEDEX GROUND SEGMENT
FedEx Ground (small-package ground delivery)
FedEx Smart Post (small-parcel consolidator)
FEDEX FREIGHT SEGMENT
FedEx Freight LTL Group:
FedEx Freight (fast-transit LTL freight transportation)
FedEx National LTL (economical LTL freight transportation)
FedEx Custom Critical (time-critical transportation)
FEDEX SERVICES SEGMENT
FedEx Services (sales, marketing and information technology functions)
FedEx Office (document and business services and package acceptance)
FedEx Customer Information Services ("FCIS") (customer service, billings and collections)
FedEx doenot have any competitive advantage in the shipping industry as their return on investment is below the industry average. The average return on investment is around 12 percent.
FedEx has very strong existing competencies and does not possess the distinctive competencies. The existing competencies include the strong infrastructure, brand equity and the fierce commitment to technology and innovation.
The strategies which are currently being used by FedEx are to build the distinctive competencies that they have omitted in the past three decades. FedEx has continued to offer the faster delivery times and expand the global network. The another phase of the strategy that is being pursued by FedEx is the technology front. FedEx has also offered much automated and packaged tracking options.
The strategic Analysis
Key Success Factors
The expertise of various subsidiaries of the company.
Logistics and information infrastructure.
Strong strategic alliances with suppliers and customers
Effective marketing capabilities.
Supply chain management capabilities.
Four Building Blocks
The four building blocks of FedEx competitive advantage are:
FedEx's Business Level Strategy
The strengths of FedEx are its logistics, technological innovations and operations which pursue the differentiation business level strategy. FedEx has worked to stand apart from the competitors through developing the effective level of services. FedEx is clearly known as the innovator as they provide a high level of quality.
Targeting Customer Needs
FedEx understand better the needs of its customers and it has divided itself into six various segments, FedEx Ground, FedEx express, FedEx custom critical, FedEx freight, FedEx supply chain services and the FedEx trade networks. All the segments differently.
FedEx has divided into various business units in order to serve the customer needs better. FedEx has a goal to independently operate and compete collectively.
VALUE CHAIN, TECHNOLOGIES, GLOBAL STRATEGY
The FedEx value chain can be seen and started with the pick up of the packages. The employees of company gather the packages from various locations such as drop boxes, businesses and residences. It makes easier for the customer. FedEx also have the money back guarantee for the people who did not receive their packages on time therefore FedEx create value and assure the timely delivery of the packages.
Customer service is the primary activity of the customer service. The after sales service and support is provided through this function and FedEx also provides the customer service during the process of delivery that the customer can track the product while it is on route.
FedEx have the largest fleet of airplanes, automobiles and the employees for an enormous infrastructure of the company. The infrastructure tends the FedEx to produce the reliable delivery service. FedEx also execute very confidently the time restricting packages delivery services and also provide the guarantee that their packages will arrive on time exactly at the time the customer wanted.
Global Dimensions of Strategy
FedEx pursued the global strategy along with the service they provide and it is highly believed that they are implementing the right strategy.
As FedEx is the delivery service and the industry is working with the global standards and there is no need to customize their services for all the countries they are doing business with and also this is consistent with the global business model. To review, the company is implementing the global strategy appropriately and they have implemented the low cost structure and also executed the standardized services globally in around 210 countries.
In order to understand the corporate level strategy of FedEx it is very important to know that which industries they are currently competing with. Currently FedEx includes six independent business units FedEx Ground, FedEx express, FedEx custom critical, FedEx freight, FedEx supply chain services and the FedEx trade networks all the sectors competes in different sectors of the transportation industries so that the services of the FedEx can be tailored and the customer needs can be best fit in. The parent company the FedEx corporation offers all the strategic leadership and also the financial accountability for all the business units. The business model which will be followed at the FedEx corporation
The note is the horizontal integration which has been recently been implemented by FedEx. The horizontal integration is a particular way to try to increase the profitability of the corporation to reduce the cost, increase the value of the product offering, managing the rivals of the industry and increasing the value of the product offered and the bargaining power of the customer.
Mergers and Acquisitions
There are many economic benefits of the company that includes the rewards of the company mergers and acquisitions of the industry. Horizontal integration is predominantly known as similar to companies merging together and the acquisitions which are sought by the leaders of the industry.
The vertical side of integration is integrating the strategy of attack through FedEx will be very aggressive. The biggest structure of the infrastructure of FedEx which includes the cargo planes, holding hubs and the delivery trucks have a strong competitive positions in the shipping services industry.
In order to implement the new strategy in the organization we need all the important resources which includes the human resource, financial assistance, plans, goals, objectives, mission and vision and also proper communication to work as a team. FedEx has the biggest advantage in terms of a team that are the people of FedEx around 290,000 strong worldwide. All the employees are completely committed and motivated to achieve the common goal.
In large organizations following are the strategically levels and the roles and responsibilities are divided and allocated accordingly. The employees are further divided into sections so that proper strategies can be developed and implemented.
In small organizations the roles and responsibilities are divided in much more appropriate manner as there are less divisions than the large companies.
There is a connection among the that how we treat the customers and how we treat our own team members. This is the reason that FedEx is regarded consistently as the best places to work at.
For instance the past fiscal year FedEx has made the Fortune's best places to work at and the most admired places lists. FedEx has been ranked as the number one in providing the customer services.