FedEx Express was founded as Federal Express by Fred Smith in Little Rock in 1971. The initial problem was that the local airport did not support the company enough and the original founders moved the company to Memphis and to Memphis Airport. The company then, started to operate by having twenty five different destinations in the US and by operating fourteen planes. The services provided at that time were: overnight and two-day package and envelope delivery services, as well as Courier services. 1976 was a capstone year for the company as it was saved and turned to profits.
During January 1998 the company acquired Caliber systems Inc. and then it changed name to FedEx Corporation. By this strategic alliance, FedEx started offering a wide range of services besides express shipping
In order to focus and centralize on sales, marketing and absolute customer service they formed a new subsidiary named FedEx Corporate Services and began operations in June 2000. The years followed gave the company an advantage of various acquisitions and strategic alliances which gave the company a different role, different positioning and different size and action plan. The first fact was the acquisition of Tower Group International which then was the leader in International logistics and trade information technology. The second fact was the acquisition of World Tariff which then was a customs duty and tax information leader. The above mentioned acquisitions formatted a new company named FedEx Trade networks and are the largest customs entry company of the North America.
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During 2004 FedEx Corp. acquired Kinko Inc. Two months later, Kinko's was rebranded as FedEx Kinko. For FedEx, this acquisition meant expanded retail access to all of the 1,200 FedEx Kinko's stores in operation at that time enhanced FedEx document management services and a broader reach to customers of all sizes. Following the acquisition, all U.S. FedEx Kinko's locations offered new or expanded FedEx shipping options for greater customer convenience.
In 2004, FedEx Corp. acquired Parcel Direct, a leading parcel consolidator, and later rebranded it FedEx SmartPost. The acquisition complements the FedEx alliance with the U.S. Postal Service and provides customers in the e-tail and catalog segments with a proven, cost-effective solution for low-weight, less time-sensitive residential shipments.
In 2006, FedEx Corp. acquired ANC Holdings Limited, a United Kingdom domestic express transportation company. The company acquired was based in the UK and all its business were there. These acquisitions gave FedEx the ability to entry the UK market.
In 2007, FedEx Corp. acquired Tianjin Datian W. Group Co., Ltd.'s 50% share of the FedEx-DTW International Priority Express joint venture and DTW Group's domestic express network in China. FedEx then launched a domestic express service serving the Chinese market.
FedEx Mission, Strategy and Values
In order to thoroughly understand and assess the company's corporate-level strategy, it is of imperative importance to firstly present the company's mission, strategy and values.
As is stated in the company's website, FedEx's mission is to "produce superior financial returns for shareowners by providing high value-added supply chain, transportation, business and related information services through focused operating companies. Customer requirements will be met in the highest quality manner appropriate to each market segment served. FedEx will strive to develop mutually rewarding relationships with its employees, partners and suppliers. Safety will be the first consideration in all operations. Corporate activities will be conducted to the highest ethical and professional standards." (FedEx, 2010)
As is stated in the company's website: "The unique FedEx operating strategy works seamlessly - and simultaneously - on three levels:
Compete collectively by standing as one brand worldwide and speaking with one voice.
Operate independently by focusing on our independent networks to meet distinct customer needs.
Manage collaboratively by working together to sustain loyal relationships with our workforce, customers and investors." (FedEx, 2010)
As is stated in the company's website, the values of the company are:
"People: We value our people and promote diversity in our workplace and in our thinking.
Service: Our absolutely, positively spirit puts our customers at the heart of everything we do.
Innovation: We invent and inspire the services and technologies that improve the way we work and live.
Always on Time
Marked to Standard
Integrity: We manage our operations, finances and services with honesty, efficiency and reliability.
Responsibility: We champion safe and healthy environments for the communities in which we live and work.
Loyalty: We earn the respect and confidence of our FedEx people, customers and investors every day, in everything we do." (FedEx, 2010)
The main strategic goal of FedEx as stated by the company's CEO, Frederic Smith, is to further expand the company's business, via strategic acquisitions and collaborations, thus surpassing the current global financial turmoil and therefore providing its shareholders larger equity. Due to the magnitude of FedEx's operations, it would be impossible to assess the company's strategy implementation without having a complete environmental and competitive force analysis.
Thus in the following sections, preceding the strategy assessment, a presentation of the major factors that affect the company will be performed.
Porter's 5 Forces
Risk of new entry by potential competitors (moderate to low)
The barriers of entry are very high in this industry, due to the high level of resources needed to enter the industry.
Bargaining power of buyers (high)
The bargaining power of large buyers in courier and transportation services industry is high. Cost associated with switching from one courier and transportation service to another is very low. Therefore, buyers can turn to a courier provider that offer faster service, lower price, or service innovation with ease.
Bargaining power of suppliers (very low)
The supplier power within this industry is fairly low. Large courier and transportation services provider can affect prices of supplies, like packaging materials. This is because they buy in large quantities and can turn to different suppliers easily.
Threat of substitute products (low-moderate)
This is a weak to moderate force in this industry. Businesses and individuals that wish to ship cargo and packages can do it with other modes of transportation such as trucks, trains and boats. However, the customers that use air freight transportation usually desire convenience, speed, and low cost.
Extent of rivalry between established firms (High)
This is a strong force in this industry because the competitors use price cuts to compete each other. There is a low cost and ease to switching brands, and the companies in this industry diversify and acquire other companies for strategic growth and synergy.
In order to thoroughly assess the industry and analyze the strategic positioning of the company, the presentation of the main competition is of imperative importance. The top companies that are engaged in the specific industry and compete "head to head" with FedEx are UPS, DHL and TNT.
Company Analysis, FedEx
In order to fully understand the competitiveness of the company and in order to be able to thoroughly analyze the strategy of the company, we must present the competitive strengths, weaknesses, opportunities and threats, of the company that enables us to understand and thoroughly assess the company's position in the market and also provides the capability to understand the conditions of the industry thus enabling the creation of a realistic strategic plan for the future.
The Brand Name
Magnitude of Operations
On Line alliances
The Rise of China
Increase in Oil prices
Strategy Implementation, Analysis and Assessment
Based on the above analysis of FedEx, it is easy to reach to a full assessment of the company's corporate level strategy. As observed to the environmental analysis, the company is engaged in a fiercely competitive environment that, without the proper management, may lead to unwanted results.
Today, FedEx Corporation is the premier provider of shipping and information services worldwide, and its companies function under the motto of "operate independently, compete collectively and manage collaboratively". Moreover they have a strategy that each company of the FedEx group should operate independently in order to have special focus on customer's special needs. They also believe that competing collectively under the FedEx banner ensures that all of the companies benefit from one of the world's most recognized brands.
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Moreover, as it is also demonstrated in the above sections, the main goal of the company is to achieve high shareholder returns by providing its customers top quality services and products. The company manages to implement its strategy, as mentioned, by fully utilizing its human assets and by extending its operations to their full potential.
Though seemingly a simple corporate level strategy, aggressive expansion may be proven a very challenging issue, especially in an era of economic crisis. FedEx implements this strategy by closely following its values of providing high quality services and with the motto of "The Long Future". This future targeted, promises higher returns for the company's shareholders and a broad view of the "Big Picture" which is a future of the industry ruled by FedEx.
Moreover, the company faces, besides the fierce competition and the hostile competitive forces, the ongoing economic crisis that strongly affects its financials. By analyzing the parameters presented in the previous sections, it is clear that the company bases its strategy to its people; FedEx tries to place its management teams in a position that will enable them to lead the employees to a prosperous future for the company always based upon the ideals of the leadership.
Furthermore, as mentioned in the analysis section of the paper, FedEx is one of the leading companies in the Parcel industry; despite that, as one may easily observe, the company does not only operate based solely on its delivery capabilities via its massive fleet of airplanes and automobiles. As one of the few companies in the world that still has strong ties with its founder (Fred Smith is still the CEO of FedEx), the company has the controversial combination of a massive corporation combined with a family business, a combination that is easily observed from the company's implementation of its strategy.
While researching the company, one may observe that besides its goal to produce revenues, the mission and vision of FedEx strongly resemble the ones that an idealist new entrepreneur would have. In these terms the company, places great value, in order to achieve its goals, to its leadership, its management and finally its teams.
In order to have a thorough analysis, each of the important elements must be presented and critically evaluated separately, thus providing the "Whole Picture" regarding the means used by the company in order to implement its corporate level strategy.
The following critical analysis focuses to each of the three elements that are of critical importance for the company's strategy implementation. Each one of these elements plays a role of the foremost importance for FedEx, thus enabling the company to achieve its strategy in the most effective way.
The leadership of the company utilizes a combination of methodologies in order to achieve its strategy. By providing a hybrid objective-achievement type of motivation to its middle management teams combined with a high level of a variety of incentives, the company manages to keep the middle level management functional with a quality-based operational perspective.
As previously mentioned, FedEx strategy implementation is characterized by a combination (one could say Fusion) of methodologies applied by the company's leadership, in order to maximize the effectiveness of the employees. The argument that FedEx also combines still the characteristics and the values of an idealist is clearly depicted to the Mission, Strategy and Goals Statements presented in the previous section.
More specifically, the company's mission statement clearly demonstrates the value that the company places to its customers and to its employees. Moreover this statement clearly demonstrates the qualitative point of view that the company has regarding all of its products/services. The mission statement provides a "mirror" regarding the leadership of the company.
This depicts the aspirations of the Leaders of the company regarding its position in the corporate world. In these terms, the mission statement further supports the argument that despite its size, FedEx still remains in the eyes of its founder "His Company" not in egotistical terms, but rather in a more "spiritual" and philosophical way. His ideals are depicted in this mission statement, that in its turn depicts the "place" of the company in the world; a company that "looks after" its employees and its customers.
The company's strategy statement demonstrates the value that the company places to the corporate-level understanding of its mission and strategic positioning. It is clearly deduced from the strategy statement of the company that the leadership places great value and effort in having all of the company's teams and divisions operating under a common and clear set of values and in understanding the company's future aspirations.
Moreover, this strategy also demonstrates the "fusion" type managerial methodology that the company follows in order to achieve its goals. The uniformity of the departments as well as the collaborative spirit that the strategy of the company promotes, further demonstrates the desire of the company's leadership to unite its employees in a family manner, in order to achieve the future strategic goals of the company. Moreover, under this observed uniformity, one can easily understand the "aggressive" expansion strategy that the company follows.
This type of strategic positioning, combined with the company's acquisitions and rapid expansion, clearly leads to the conclusion that the leadership of the company, together with the top level management, aims towards a very prosperous future for FedEx, a future that is purchased via uniformity and motivational ideals.
Finally, the company's values statement clearly demonstrates the core values that the leadership and top level management of the company shares with its employees. By clearly communicating the importance that the values of the company have, the management aspires to bind the employees under a common vision and a clearly stated set of values, that places them into the front-end of the company's mentality.
This fact clearly demonstrates the value that teams have for the company, in order to achieve its strategic goals. Moreover, this fact further supports the previously stated argument that the company still follows the ideals of the entrepreneur that created it.
Values such as "Integrity, Responsibility and Loyalty" clearly demonstrate the "Romantic Spirit" of the leadership of the company. While reviewing leadership theories, one may assume that the correct leader is the one that "keeps it real" and leads a company through logic; the leadership of FedEx provides a different argument; the correct leader is the one that unites the employees and makes them feel like family.
A correct leader is an idealist that needs loyal and honest people working with him and not for him. Despite that argument, by no means this means that this type of leader does not follow reason. It would be safe to assume that the company's leadership combines "rationale" and "emotion" in a way that perhaps in the future may proven to be the definition of the "Ideal Leader".
The company's top management, as observed, clearly leads by providing to all of the employees a clear perspective of the company's future strategy. By using its human assets, the top management binds the employees of the company as a team and communicates its future aspirations. This is the philosophy also depicted to the middle-management of the company.
As the corporate structure moves downwards, so do the ideals and values of the leaders of the company towards the people that manages the teams. As theoretical terms are combined in the way that FedEx is strategically positioned, it is rendered virtually impossible to identify clearly a management methodology that is being used and practiced by the middle-level management of the company.
Despite the fact that if one desires to identify and isolate any theoretical management methodology that is being applied, while looking to the "whole picture" this could be proven a mistake. The management of the company follows the example of the company's leadership; that is lead, or in this case manage by example with an ideology that could easily be characterized as "romantic" but also with a rationale that manages to lead the company to the direction visualized by its leadership.
Due to the success of the company, it is easy for one to speculate, that this type of methodology may be proven to be, besides confusing for the "outsiders", also beneficial for the company. Middle-Level managers, follow this methodology and manage the employees with an abundance of communicated goals regarding the future of the company. In that way the team binding is of high level and the communication channels within the ranks of the company remain open and well monitored. FedEx by utilizing this methodology manages to position itself in a highly competitive environment and manage to survive.
Furthermore, by closely following the leadership of the company, the middle-level management also follows the company's philosophy, which finally becomes imprinted into their consciousness. In that way, the managers remain motivated and manage, in their turn, to motivate the lower level employees. This is, one may argue, a very successful tactic utilized from the part of the company's leadership, due to the fact that it keeps both the management and the lower level employees motivated, thus creating motivated, motivational managers that achieve their long and short term goals and that making possible for the company to thrive.
Motivated teams, also play a very important role for the achievement of the company's strategic goals. Uniform teams with a high level of functional competition amongst their members, have equal significance for FedEx and can be proven to be the company's competitive advantage, besides its global presence.
The importance of highly motivated lower level employees and teams, for the leadership of the company can also be viewed by the statement of the company's founder, CEO and President, Mr. Smith that: "Putting our team members' interests first, was arguably the best business decision we ever made." (FedEx, 2010). The aforementioned statement clearly depicts the value that the company's teams have, in terms of achieving the long term goals, or "The Long Future", as stated.
The implementation of the company's strategy is, as observed, based to the functionality and effectiveness of the people that are employed by the company. Either the Top, Middle or Lower level management, or even low level employees, all of the people employed by FedEx have a clear perspective of the future path and strive to achieve the best for the company.
The leadership of the company bases its efforts to the synergy of its teams; they provide incentives to its employees that go far beyond MBO. The company, uses its human asset, not only by providing to its teams the capability of not only participating to the company's strategy, thus being able to fully grasp the company's strategic positioning, but also by providing to its employees the means to achieve their best potential in each respective area of expertise.
The fact that the company was only slightly affected by the recent economic crisis (as observed by the graph in Appendix 1.), further supports the argument, that the management fully utilizes its teams in order to achieve the company's strategic goals.
Besides the economic and theoretical facts that provide proof of the importance of the teams, for the company to achieve its goals, another statement coming from the owner of the company, further supports this argument and stresses the importance that teams have for the company; Mr. Smith states that: "We tell our employees what we've always told them, 'You're not delivering sand and gravel. You're delivering someone's pacemaker, chemotherapy treatment, or the brief that decides the case.'"
This statement, inarguably, depicts the value of the people for the company; as previously mentioned, the leadership of the company combines the characteristics of an ideologist; in these terms it is obvious that teams are formed in the company and are provided with not only the sense of belonging, but also with a high level sense of commitment and importance that comes from the top management. Theoretical/Traditional means of motivation include monetary rewards, vacations and other tangible means; as observed here, FedEx's leadership, places such trust and value to the members of its "family" that one could say, that it provides to them an incentive so important that the members of the teams feel the responsibility to perform at their greatest potential.
This tactic observed by FedEx further stresses the importance and the investment of the company towards its employees. A fact that if carefully evaluated and assessed poses the greatest achievement of the company and its greatest asset in achieving its corporate level strategy.
In order to evaluate the corporate level strategy of the company, a critical assessment is of great importance; in this section there will be presented, a critical evaluation of the company's corporate level strategy, based on the analysis preformed in the previous sections. In these terms, in addition to the critical evaluation of the means that the company utilizes to achieve its corporate level strategy, there will also be an evaluation of the significance of these means both in practical terms and in theoretical terms.
Based on the aforementioned elements it is obligatory to present a practical evaluation of the results that the company's Implementation has. Firstly the company, by following this aggressive strategy manages to overcome several obstacles that the competitive environment poses and manages to be in the top positions of the industry. Despite the fact that, as presented, the company's revenue stream seems to suffer from the economic crisis, the long term goals set by the leadership, combined with the commitment of the company's employees, pose a positive indicator for the company's future.
However, due to the high probability of entering into a larger economic crisis, which seems to have a higher possibility of occurring according to global financial analysts, the company should, since the increase of sales in the markets that FedEx already has presence seems to be an unrealistic target under the conditions, focus its efforts to confront the recession by cutting down the operational and fixed costs.
To achieve that, a re-evaluation of the actual needs of the company in personnel and means of transporting the goods around the globe is vital. After that it should adapt in the new situation by decreasing respectively its ownership in the above two factors that form the company's fixed cost.
In order to balance the decreased sales within the US -which will face a difficult situation in the case of a new economic crisis- the company should examine very carefully new possible markets among the developing countries and try to enter there (with physical presence) that the recession will have less effects comparing to the developed world.
In these terms, the company should slow down further expansion abroad, try to make deals with oil companies and forecast from which competitors it could gain market share in the near future. Moreover FedEx should try to attract those customers immediately, before the new crisis occurred, thus having an advantage over the competition.
Moreover the company could utilize the structure that it has already established in order to gain a larger market share from its competitors. By communicating its values and ideals and by having its employees as "advocates" that will increase the public's positive opinion for the company, FedEx will be able to create a competitive advantage not easily imitated by the competition.
Besides the aforementioned practical recommendations, which occur by evaluating the current corporate level strategy, there are several other elements that are of significant importance. The means utilized by the company's leadership in order to achieve the corporate level strategy are clearly combining theoretical methodologies with elements of a more practical nature, as previously mentioned; a fact that renders difficult to distinguish where these elements separate. This methodology is primarily used by the founder and CEO of the company, Mr. Smith, that besides utilizing practical elements of the Science of Management, he also incorporates intangible elements that promote loyalty and motivation throughout the company's employees.
In these terms, based on the analysis performed in the previous sections, one may conclude that FedEx is a corporate behemoth, which utilizes its assets in their foremost potential. In these terms, we can inarguably say, that the company has a clear global, corporate level strategy that is communicated throughout the ranks of the company.
Though the most important element of the analysis does not lie to the application of theoretical methodologies taught; the most important element of the analysis lies to the fact that a corporation of such magnitude, manages to imprint to the minds (and hearts) of its employees a set of values and ideals that distinguish this company from all others, in its industry.
The fact that the leadership of the company, besides the size of FedEx, manages to keep the dynamics of a family business, poses a real-life lesson of how a company can be successful by utilizing Ethos and Pathos; two ideals that seemed forgotten in an era of cold calculations and strictly followed methodologies. These ideals are depicted throughout the analysis, despite the fact that they are not clearly stated, and pose the back bone of the elements analyzed.
Ethos is observed in the way that the company's sets of values, in terms of loyalty and integrity. These two ideals have little theoretical impact, though for this company, they show the Pathos of the company's leadership to achieve its goals. Thus Pathos is observed in the "aggressive" strategy that the company follows; but not aggressive in terms of "destruction to the competition" but in terms of passion for the job; a passion that is viewed to the employees of the company, from its leadership throughout the middle management and to its teams and lower level employees.
Concluding, one observes the fine "mix" of theoretical terminology such as MBO, Leadership and Teams, with more abstract terms such as Loyalty, Ethos and Pathos; a fine "mix" of very important elements that, through the company's success, demonstrates that in order to achieve the goals set and in order to be able to accurately, strategically position the company needs not only practical and tangible elements that produce numerical variables, that in turn may be analyzed and evaluated, but also intangible elements, like the passion of the employees (an element that goes beyond the theoretical grasp of motivation) that provide the company with perhaps the most difficult to imitate competitive advantage.