Strategic Analysis for FedEx Company - Case Study Example

Name Course Tutor Date: Strategic analysis for FedEx Company Introduction FedEx Corporation which was originally referred to as FDX Corporation is company based on logistics services. It is based in the US and has its headquarters in Memphis, Tennessee. FedEx Corporation was incorporated in 1997 and after the purchase of Caliber; the company began offering additional services on top of shipping. FedEx Company prospects that its own subsidiaries package will continue distributing significant market share. FedEx Express unit is regarded as the leading express transportation provider as it delivers almost 3.5 million packages on daily basis to about 220 territories and countries. The Express sustains a fleet of about 41,000 trailers and motor vehicles and almost 665 aircraft (Birla 112). So as to complement the delivery business for the express, FedEx Ground offers ground delivery based on small-package in North America. FedEx Ground Inc. offers business-to-business ground services as well as package shipping. Other business services including the document related are offered in the FedEx Office stores. Moreover the office stores acts as retail centers for other FedEx units. FedEx does not depend on glide path to maintain market leadership and profit in the industry. On the contrary, the company continuously applies new aggressive marketing strategies, initiatives for strategic management and information technologies to connect better with consumers and minimize operating costs along with improving profitability (Birla 112). Corporate vision and values FedEx Company views worldwide marketplaces basically with expanded access to information, goods and services. The Company is good for businesses, good for individual persons and good for all nations. Countries having levels of access that are higher always have the capital income with higher growth rate. In addition the GDP growth rate happens to be higher too and as the world GDP expand, the global trade is anticipated to rise tremendously in the next three decades. Two decades ago, FedEx Express started operating as all-cargo carrier and currently operates all-cargo flights more than any other airline in the US to and from China. In FY05, The Company initiated the express first direct flight for the industry from China to Europe. The initial phase of a perfect plan that promotes the worldwide connectivity leadership for the company is the westbound surrounding the world flight. This flight will henceforth enhance the service offerings for the company between the rapid growing economies in the two markets. In FY09, the company purpose to open another hub in southern China specifically in Guangzhou Bauyun International Airport (Lehman 312). This will assist the company to server its esteemed customers better in the fast growing markets in Asia-Pacific and China. Besides the company’s vision of improving on the physical access to transport network, another vision focuses on improving access to information. One of the greatest successes for the company basing on technology solutions was the launch of Print FedEx Kinko’s which happens to be a software enhancement to Microsoft Office. The Information Technology organization for the company has started on considering greater things as the major transformations is purposed to assist the company to deliver rapid business solutions while at the same time improving return on benefits. The Corporation’s vision for FedEx is a market where goods as well as information spread quickly and seamlessly. The Company wishes for a world where the raw materials for the businesses are transformed to high- value goods that move rapidly between continents as well as across time zones. The visionary world is one that transportation networks and global information are in a position to overcome distance and time hence generating competitive advantages for the consumers. FedEx corporate values comprise discipline, taking risk, and results orientation. The values are utilized by employees every day in making decision in place of the company. The values suggest priorities for the employees in making right choices over the wrong ones. FedEx actively takes part in political process with the critical goal of protecting and promoting the economic future of the stockholders, employees and that of the entire company. The company is subjected to the extensive regulation from the state and federal levels and also involved in some legislative initiatives of policy areas that can possibly have dramatic and immediate effect in the company’s operations. As a result of the company’s operations and that of the employees, the regulatory and legislative actions are promoted and this leads to enhancing the business objectives. Consequently, FedEx is protected from unnecessary, irrational, or burdensome regulatory and legislative actions at various levels of government (Plunkett 423). Mission The mission statement for FedEx Company is to produce advanced monetary returns for shareowners specifically by offering high value- added transportation, supply chain, business and information services via focused operating companies. The company aims at meeting the customer requirements in the best quality manner properly to specific market section served. The company strives to expand relationships that seem mutually rewarding with its partners, supplies, and employees. In all its operations, the company considers safety as the first consideration and wishes to conduct the corporate activities in the highest professional and ethical standards. FedEx managers builds an environment that creates commitment, enthusiasm as well as positive attitude from the employees and the focus is primarily in the achievement of personal goals as well as those set for the company (Gerstein 1). Objectives The management policy strives at maximizing profits by using the best business methods for pricing their services. The company offers many services to various people including FedEx First Priority and FedEx Express Saver among others. The company strives at attracting customers by utilizing detailed and unique tracking system as well as having a good reputation. Stakeholder mapping The mission statement for FedEx Company ought to be relevant to every stakeholder. The stakeholders are the people who have interests that are influenced by the behaviour of the organization. The company’s stakeholders include the shareholders, employees, suppliers, customers as well as the government. To successfully balance the interest of the stakeholders, FedEx managers are responsible for the performance of the organization. Top managers are given credit for either failure or success of the Company as they have control over the behaviour of the stakeholders though the failure or success of the organization is also influenced by environmental factors. Obviously, FedEx could not be successful as it is today if it were not for its CEO and founder Smith Frederick. Managers in addition link the employees to the culture of the Company. The culture includes beliefs, values, and assumptions concerning proper behaviour shared by particular members of the Company (Lussier 46). To ensure long term benefits for all stakeholders, the Board of Directors for FedEx has implemented certain guidelines to guide in the fulfilment of the company’s longstanding goal of offering effective governance for corporate business. The guidelines are assessed occasionally and modified appropriately to make sure that there is effective functioning of the Directors. The guidelines are included in the board responsibilities, board composition, board operations, board committees, and management reviews. The company has adopted the discipline of collaborative leadership which is new in the organizational world. The company has realized that this is the era of alliances and hence has broadened the aspect of leadership as is what matters in any company. The US Postal Service and Federal Express created a strategic alliance where by the USPS distributed FedEx package particularly to homes in the nation while FedEx delivered Express mail, Priority, and first class around the world. This creates a comparative advantage for the company but what is needed is sharing of information between the managers to create unprecedented trust. This is one way that FedEx has attempted to satisfy the needs of all its stakeholders (Linden 41) Role of Stakeholders The shareholders have a role of signing the association memorandum and participate in electing the board of directors. They do propose shareholders resolutions and also purchase upcoming shares issued by FedEx. The employees play a role of executing duties according to the direction of the management of the company. They serve the customers and perform other obligations for the Company. The company's office suppliers play an important role in giving support to the operations in the company by providing services, commodities, solutions and ideas to help the company deliver to the customers daily. The independent suppliers offer maintenance services to the company. The customers benefit from the goods and services offered by the company and through the current technology, the customers can get convinient and fast services hence maximizing profits for the company. The government play a role of ensuring that FedEx Company abide to the business regulations and guidelines (Linden 41). Domestic and global strategies FedEx Corporation offers strategic leadership and a financial reporting that is strengthened for the FedEx companies, managing a wide portfolio of business, transportation, and e-commerce services. FedEx Corporation has formulated clear goals along with strategies for the future. The company is focusing on five main growing strategies and seeks to grow internationally, in the core package business and in the supply chain capabilities. In addition the company focuses on growing through technology, e-commerce, alliances, and new services. The company has expanded its market strategy in China where it announced to introduce three flights in the country in March 2010. As a result the company will have a 26 weekly flight to the country and this will be the highest number among the cargo carries based in US. To share in fulfilling the rising and falling demand of China for cargo transport internationally, FedEx Express has speeded up steps to increase its businesses in China. With the acquisition of a fifty percent share with DTW Group, the company will have created a joint venture with the Tianjin Group hence opening routes for the company to expand domestic and international express business in China. The company has integrated environmental practices in the daily practices and continuously come up with goals that focus on increasing effectiveness and reducing waste (Johnson &Weinstein 253). There is a very good reason to belief that FedEx shall capitalize successfully on the international trade growth. Its major international express service which happens to be revenues from international priority service has shown a 14% compound growth rate for the past 8 years. The company takes time to incorporate gained network carriers into the current ones so as to raise the volume shipped to meet revenues expectations. The company has formed strategic contacts with local carriers to minimize risks on poor returns. The company once announced on opening a branch in China specifically in Huzhou, the other cities in the country. The rapid growth of this market has been a reflection of the Company’s goal of expanding its developing markets internationally. FedEx has formed a healthy relationship with Holland and this will help the company form a good presence in Europe hence offering comprehensive supply chain and logistic solutions. In the list, Asia happens to be the fastest growing international areas for FedEx and also serves as a significant part of the Company’s global strategy (Press Release). Changes in the business environment There are so many uncontrollable factors that may affect the external business environment of FedEx hence affecting its success. First and Foremost is the competition from other companies such as DHL, UPS and TNT. It is well notable that FedEx and UPS hold the air and ground superiority as they offer similar services but they have corporate philosophies that oppose each other. All the four companies have struggled to get the global domination for the Logistic Market. With the current high competition, it remains unclear whether Fed Ex will succeed in dominating the global logistics for the global economy. Customers hold the power for FedEx Company as they affect the performance of the organization through the use of its services. If the company fails in improving its services, then this will lead to decreased value for the consumers. FedEx matches its services with that of UPS so as to retain its customers (Lussier 53). Secondly, lack of health benefits for both male and female may affect the entire operations for the company. As a result, the company was not among the top 50 Companies in the 2007 release and it is still not clear whether the benefits will apply before 2012. Though the company offered the benefits in selected cities like California, to fully qualify in the best list category, the company has to offer spousal health benefits effectively. The company may be influenced by the shareholders, suppliers, labour force and the society at large (Williams 1). Competition Federal Express and UPS are very competitive and this has been their primary core business overlap. UPS is encroaching on the primary specialty for FedEx Company, ground delivery, while on the other hand FedEx is turning to UPS’s all night delivery turf. Besides FedEx, UPS is also regarded as one of the biggest international courier company globally. However, with the expansion of the delivery market based on ground parcel in 2003, FedEx has significantly increased its presence in the US (Gomez 1). In FedEx, demand is driven by manufacturing output as well as consumer spending. The individual company profitability is highly based on efficient operations. The advantage of the large companies is on description relationship, access to drivers, fleet size, and purchasing of bulk fuel. Small operations in the company can compete efficiently by offering quick turnaround, transporting uncommonly sized goods or serving a local market. FedEx is labour intensive with$145,000 as the annual revenue for each employee. Truckling competes with other modes of cargo transportation such as air, rail and water. Conversely, the focus on intermodal transportation indicates that these forms of delivery are frequently more complementary rather than being competitive (Gomez 1). Key success factors The FedEx business key success factor is technology. Definitely, this is what keeps the company running and eventually creates money for the company. Secondly marketing happens to be another key success factor. Customers need to be familiar with the names and services of the carriers so that they can develop trust in the quality of the services offered. More globalization of the parcel carrier leads to better success of the company in terms of making international deliveries. International deliveries are generally costly and as a result there are a few carriers that offer global delivery services. FedEx Company is involved in international deliveries hence creating a competitive advantage for the company. The customer service for the company is of the highest degree as the carriers keep the customers satisfied with the type of services they provide. As a result, the customers are ever coming back to use their services (Butod 1). The company adapts very fast in addressing a new market opportunity and according to the company’s CEO the coming of the internet led the system to a standardized and low cost inputs. The company takes advantage of any opportunity and this widens the portfolio through geographical acquisition and extensions and product extensions and this is what has made the company to reach this far (Pellet 1). SWOT Analysis FedEx has a number of strengths on the fact that it leads in the market as the best company offering logistics services. It is ranked as the leading company in International Air Express Industry. The company had a head start for the business and can clear customs at a faster rate hence preventing delays in the shipments process. The company however has two major weaknesses that are associated to the major competitors, growth demand and in its operations. The company has opportunities in expanding its business in more countries and also in buying more trucks and planes to distribute more packages faster. Moreover the company has opportunities in starting on distributing additional heavy weight cargo along with improving ground delivery. Finally, the company’s other opportunities are in upgrading logistic and distribution services. The company faces threats from the competitors who offer faster travel time at better prices. Secondly, FedEx faces a threat if customers stop buying its products. If it happens that there is a rise in the gas prices, this may have great impact on the products’ prices (Bustod 1) Strategy formation and measurements FedEx Corporation ought to have a basic function of binding the Nation together through a business that corresponds to the people. Consequently, the company shall provide reliable, prompt as well as efficient services to esteemed customers hence rendering good services to the people. The success of the company can be continued if FedEx keeps cost down so as to compete against competitors like DHL, UPS and TNT. This entails utilizing the latest technology so as to increase the transactions speed. It is always important to focus on customers as they influence the entire operations for an organization. FedEx hence needs to keep their customers happy by allowing brand loyalty so as to prevent them from turning to other competitors. The company will have to comprehend what it takes to be competitive and meet the marketplace needs as it attempts to exceed the set tough targets. The company needs to listen to the consumers and focus on diversifying in parts where the major competitors are close in manoeuvring. The company should take advantage of the technology as it helps in attracting customers as well as creating revenues for the company. The company ought to focus more on innovation strategy as it allows the company to grow and prosper under all the environmental challenges, weaknesses, and threats (Hartline 504). Conclusion With the outstanding mission of producing high financial returns, FedEx strives to offer competitive, reliable, air, global as well as ground transportation of goods at incredible speed. If the company continues to work in developing outstanding relationships with partners, employees and supplies and in addition sustaining professional and ethical principles, more is expected in future. Its core competencies help the company to put it ahead of its competitors and as a result of the company’s loyalty; it does better in its operations. The achievement of the company is also linked to the company’s practice of setting high expectations for its performance. Works Cited Birla, Madan. FedEx delivers: how the world's leading shipping company keeps innovating and outperforming the competition. New York: John Wiley and Sons, 2005. Butod, Marivic. A critical analysis and evaluation of FedEx Corporation. April 28, 2009/ July 10, 2010 from. Gerstein, Julie. Sample Corporate Mission Statements. 2010/ July 10, 2010 from. < http://www.247advisor.com/artman/publish/sample-corporate-mission- statements.html> Gomez, Timothy. FedEx Express And Competitors. 2010/ July 10, 2010 from. Howell, Marvin. Actionable performance measurement: a key to success. New York: American Society for Qualit, 2006. Johnson, William &Weinstein, Art. Superior customer value in the new economy: concepts and cases. New York, CRC Press, 2004. Hartline, Michael. Marketing Strategy. New York: Cengage Learning, 2008. Latin America Logistics. UPS, FedEx, DHL & TNT - Who Will Dominate the World Of Logistics. 2008/ July 10, 2010 from. Lehman, Carol. Business Communication. New York: Cengage Learning, 2007. Linden, Russ. The Discipline of Collaboration. Leader To Leader Journal.No. 29, Summer 2003. Lussier, Robert. Management Fundamentals: Concepts, Applications, Skill Development. New York: Cengage Learning, 2008. Pellet, Jennifer. Finding the secret sauce for success: the recipe, says FedEx's Fred Smith, is equal parts savvy and intuition.October, 2004/ July 10, 2010 from Press Release. FedEx Expands South Korean Flights. January 7, 2004/ July 10, 2010 from. Plunkett, Jack. Plunkett's E-Commerce & Internet Business Almanac 2007. California : Plunkett Research, Ltd., 2007. Williams, Steve. FedEx to Deliver Same-Sex Partner Health Benefits in 2012. 2010/ July 10, 2010 from. Read More