Fedex Strategic Analysis
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Introduction:
Federal Express Corporation (FedEx) started its operation in March 1973 building a express delivery company to global logistics and supply chain management company. With logistics as a key part of forming a strong strategy formulation FedEx provided their customers differentiating means thus winning a healthy customer loyalty with enormous.
The growth of the express transportation and logistic industry was brought about by three main trends
The globalization of businesses.
Technological advancements and applications innovations.
The changing market demand for more value added service..
Application of new technology to generate process efficiencies, and changing market demand for more value- added services.
Operational efficiencies, reduce costs, and improve customer services is a key point of expansion of express transport industry.
Operate start on Just- in -Time Inventory systems in industries.
FedEx was able to capitalize on all six trends giving maximum priority in technological investment, which ensured a better future for the company to serve its customers
Fedex at a glance:
FedEx is pioneering of the express transportation and logistics industry. By its excellent operation and service 1973,had won over 194 awards, which is till largest in the express industry life cycle.
VISION:
“If were all operating in a day Ð-to-day environment, were thinking one to two tears out. Freds thinking five, ten, fifteen years out.”
Fred Smith, chairman, president and chief executive officer of FedEx Corporation, invented the express distribution in March 1973. FedEx shortened lead times for companies, provided a logistic management service which concerned not only on handling, warehousing and transportation but also inbound and outbound flow of materials within the company as well as the movement of finished goods from dock to dock.
Simultaneously by applying IT to the business FedEx was able to drive ahead from the rest of the industry. FedEx gave away more than 100,000 sets of personal computer loaded with FedEx software, designed to link and log customers into FedExs ordering and tracking system. FedEx was the first to issue its drivers handheld scanners that alerted customer of when packages were picked up or delivered. It was the first
transportation company to launch a website with tracking and tracing capability for the customers. In the year 1979 the company had a centralized computer system Ð- Computer Operation Service Master On-Line System (COSMOS) that was revolutionary.
A few unique systems applications included:
Global Inventory Visibility System
Inventory Management System
Warehouse Management System
Enterprise Resource Planning
Custom Clearance System
Transportation Optimization System
FedEx had a workforce of 5000 people.
In 2000 FedEx served 210 countries (90% of the worlds GDP), Operated 34000 Drop-Off Locations, and managed over 10 million square feet warehouse space worldwide. It had a fleet of 648 aircraft and more than. 60,000 vehicles, with a staff of 200,000. It was the worlds largest overnight package carrier, with a market share of about 30
Percent.
Problem statement:
Overview of FedEx Corporation we get some minor problems which are dissipated below:
Initially, customers associated the FedEx brand with only Transportation.
Fed Ex was trying to promote 5 different subsidiary companies with completely unrelated names and business logos the FedEx banner.
Some Minor Problems:
High capital Investment in the physical transportation infrastructure.
Rising inflation and slow growth rate of US hampered the companys net income.
Global competition was becoming the major threats.
High transportation of DHL UPS may faces to problem of FedEx.
Main Competitors:
Since the entire world was moving towards globalization FedEx started targeting its customers in international market. The Government deregulation of trade in Asia Pacific also created opportunities for FedEx to become Global.
Now with more geographic regions to cover FedEx had to encounter more competitors now. Some of the companys which were posing as threats to FedEx are as follows:
United Parcel Service (UPS) was founded in 1997 to disseminate its logistics software to EC users. In early 1998, UPS formed a strategic alliance with open market a US based provider of internet software, to deliver a complete Internet commerce solution providing integrated logistics and fulfillment. .It was also working with IBM and LOTUS to standardize formats on its website. In 1999 UPS raised $5.47 billion through its initial public offerings,(IPO)The company shipped 55% of goods ordered over the Internet.
In 1993 DHL announced a four year, $1.25 billion worldwide capital spending program aimed at investing in handling systems automation facilities and computer technology. Though the company dominated the UK market it projected an increase in worldwide revenues of 18%, to $5.26 billion. It was 25% owned by Deutsche Post 25% owned by Lufthansa.
TNT launched the worlds first global price checker service on its website that allowed customers to calculate the price of sending a consignment from one place to another to anywhere in the world. Other applications were under development that would allow customers to