...CASE STUDY FOR FINANCIAL MANAGEMENT CASE 4: The Battle for Value, 2004: FedEx Corp. vs. United Parcel Service, Inc. VALUE CREATION AND ECONOMIC PROFIT I. OUTLOOK OF CASE 4 Case 4 mentions about the competition between two leading companies in package- delivery market. FedEx which is the largest foreign presence in China, with 11 weekly flights, serving 220 Chinese cities, so the company’s volumes in China had grown by more than 50% between 2003 and 2004. UPS which is the world’s largest package-delivery company and dominant parcel carrier in US, serving 200 cities in 2003. FedEx had virtually invented customer logistical management, and was widely perceived as innovative. Historically, UPS had reputation for being big, bureaucratic and an industry follower. Two companies have their own market, an individual characteristics, and inconclusive. Thus, not only based on the development and operation of the two companies, the analysis also relied on the special purpose financial ratios ( especially Economic Value Added (EVA), an effective measure and rapid for firm within an industry) to find which company has more competitive advantage. II. INTRODUCTION 1. FedEx corporation: [pic] FedEx, formally known as Federal Express, started delivering packages and freight on April 17, 1973. The company was...
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...CONTENTS I. Introduction……………………………………………………………………………….2 II. Company Overview……………………………………………………………………..3 Company Background……………………………………………………………...3 Services Offered……………………………………………………………………..4 SWOT Analysis……………………………………………………………………...5 III. Environmental Analysis………………………………………………………...……13 PESTEL Analysis…………………………………………………………………..13 Competition Analysis………………………………………………………………16 IV. Marketing Plan…………………………………………………………………………16 Marketing Goals…………………………………………………………………….16 Marketing Strategies……………………………………………………………….17 Marketing Mix……………………………………………………………………….20 Marketing Budget…………………………………………………………………..22 V. Recommendation………………………………………………………………….…..23 INTRODUCTION The competition in the business arena has been very stiff and complex. In this regard, the organization must be able to utilize a strategy and management system that will enhance the performance of the business so as to outgrow its rivals (2000; 2003). There are certain ways or techniques that can be considered in order to emerge and continue to be competitive within the market place. The marketing concept has been defined as ‘the key to achieving organizational goals’ and the marketing concept rests on ‘market focus, customer orientation, coordinated marketing and profitability’. In a profit making business the firm obviously has to try and achieve this level of customer satisfaction as a way of staying ahead of the competition and making a profit. Traditionally, marketing...
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...Question 1 FedEx strategy for success in the marketplace is customer value proposition through operational excellence. This is supported the services portfolio it provides to its clients. This portfolio aims to “provide [its] customers with convenient, seamless access to our entire portfolio of integrated business solutions” (FedEx Corporation, 2005). Moreover, the fact that FedEx manages its business as a portfolio allows it to attain operational excellence by benchmarking practices in the different business segments and for each business segment to offer value to their own customer base as they are focus on just that market. Question 2 FedEx’s four main business segments are as follows together with 2 examples each for traceable fixed: 1. FedEx Express. Traceable fixed costs are salaries of product or service managers and depreciation cost of its transportation fleet. 2. FedEx Ground. Traceable fixed costs are salaries of its sales people selling its supply chain solutions and advertising expenses for its services 3. FedEX Freight. Traceable fixed costs are depreciation for its freight fleet and salaries of its fleet pilots. 4. FedEx Kinko’s. Traceable fixed costs are depreciation for its office and printing equipment and salaries of its personnel. Two common costs not traceable to the four segments are salary of FedEx’s CEO and CFO. Question 3 Two examples of a cost center are FedEx’s Information Technology department and its call center whereas...
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...FedEx: The World on Time Shipping, Logistics, and Supply Chain Management Indiana Wesleyan University Facilitator FedEx: The World On Time History of FedEx Today FedEx Corporation is the premier provider of shipping and information services worldwide. Headquartered in Memphis, Tennessee, the company functions under the motto "operate independently, compete collectively and manage collaboratively."(FedEx.com, 2011) By operating independently, each company can focus exclusively on delivering the best service for its specific market. In 1965, Yale University undergraduate Frederick W. Smith wrote a term paper about the passenger route systems used by most airfreight shippers, which he viewed as economically inadequate. (FedEx.com, 2011) Smith wrote of the need for shippers to have a system designed specifically for airfreight that could accommodate time-sensitive shipments such as medicines, computer parts and electronics. In August of 1971 following a stint in the military, Smith bought controlling interest in Arkansas Aviation Sales, located in Little Rock, Arkansas. Smith identified the tremendous difficulty in getting packages and other airfreight delivered within one to two days. This dilemma motivated him to do the necessary research for resolving the inefficient distribution system. Thus, the idea for Federal Express was born: a company that revolutionized global business practices and now defines speed and reliability. Federal Express was so-named due to the...
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...Product A number of products are offered including • FedEx Express is the second largest civil fleet around the world providing services across U.S. mainland, Puerto Rico, the Dominican Republic, and other Caribbean islands. • FedEx ground provides services around America and Canada. • Home delivery and smart posts are also offered. • FedEx trade networks provide custom and insurance. • A toll free help line is provided to the customers at FedEx TechConnect. • Other products include FedEx Supply Chain Services, FedEx Corporate Services, FedEx Office and Print Centers, and FedEx Ship Centers. •Customer care centers are always alert for criticism. Price • FedEx offers its discount program on FedEx ground specifically. • Pick up services are provided with $6 as its additional cost. • FedEx Ground will provide pickup service to business locations, upon request, for an additional charge of $6 per week. Placement Mainly located in United States and is catering the services with in America and Canada but also approaches to the destinations worldwide through its air fleet. Promotion • FedEx campaigns runs in the print media throughout the year. • Spends heavy amounts on Commercial ads, that’s why high quality ads are formulated and remembered for years like John Moschitta ad. • The company ahs been a chief and sometime sole sponsor of motor sports, football and a number of sports being played at a junior level. • One major reason of its success is political lobbying...
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...Goal Setting in an Organization - FedEx Name: Institution: Date: Introduction FedEx express is a renowned company whose headquarters are in the US (Berkeley, 1962). Since its inception, the company managed to move greater heights, thus becoming a giant in the provision of freight, and other carrier services. However, these great achievements did not originate from a vacuum, but through the firm’s concerted efforts. As such, this research paper provides an insight into one of the company’s organizational behaviour process. Main Body Like other multinationals, FedEx Express Corporation does not operate in a vacuum, despite its major success story. The firm does not operate in a vacuum because various external factors affect its operations. Some of the external factors include political factors, labor pressures and technology shift. Technologically, since the inception of freight and carrier services by different companies, things have not been stagnant. For example, with the inception of modern technology FedEx Express embraced many changes in its operations. Some of the new aspects adopted by the corporation include online booking of freight, and other cargo delivery services (Berkeley, 1962). Through this platform, the customers are able to book for transportation of their goods, and other services online, anywhere across the globe. Further, through this platform, the clients are able to verify the status of their various transactions within a short time,...
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...TABLE OF CONTENT 1.0 Introduction 2 2.0 Measurement of Success 2 3.0 Reasons Behind FedEx Corporation’s Success 4 3.1 Excellent and Leading Service Quality 4 3.2 Effective Employee Management 4 3.3 Intended Acquisition Strategy 5 3.4 Sustained Innovation 5 3.5 Global Reach and Further Expansion 5 3.6 Pursuance of International Market Dominance 5 4.0 Justification of FedEx Corp. Success 6 4.1 Value Chain Framework 6 4.1.1 Support Activities 6 4.1.2 Primary Activities 7 4.2 VRIN Framework 7 4.2.1 Value 7 4.2.2 Rarity 8 4.2.3 Inimitability 8 4.2.4 Non – Substitutability 9 4.3 International Strategy 9 5.0 Contribution of Leadership 11 5.1 Traits Theory of Leadership 11 5.2 4E’s of Leadership 11 5.1.1 Envision 11 5.1.2 Enable 12 5.1.3 Empower 12 5.1.4 Energise 12 6.0 Challenge for Future Success 13 6.1 Intense Competition 13 Reference List 14 LIST OF FIGURES Figure 2.1: Annual Financials of FedEx Corp…….……………………………………………………………………2 Figure 2.2: FedEx Market Share…………………………………………………………………………………………….3 Figure 2.3: Air Freight & Logistics Market Growth…………………………………………………………………3 Figure 2.4: Customer Satisfaction Benchmark……………………………………………………………………….4 Figure 4.1: Porter's Value Chain Framework………………………………………………………………………….6 Figure 4.1.2: FedEx Primary Activities……………………………………………………………………………………7 1.0 Introduction According to Amsler et al (2010), the market of shipping and transport logistics has become a leading...
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...How does POSLAJU allow Logistics practitioners to send a parcel locally or overseas? This question basically requires us to identify and explain how the parcels are delivered to their specific destinations inside and outside of the country. PosLaju is offering a few types of services to their customers ranging from Next Day Delivery, Same Day Delivery, Time Certain Services, Borneo Economy Express and Putrajaya Express for the domestic market. For the international market, the options provided are the International Delivery, Time Certain Service Singapore, PosLaju International Premium, and Pospriority Express. We will first start to talk about domestic delivery. Domestic delivery only includes in-country deliveries. Firstly, we have to select which type of service that we want to choose. If it is an urgent parcel, then we can opt for the same day delivery where the company ensures the parcel will be delivered on the same day. If the parcel is not so urgent, we can opt for the next day delivery or other services available. The next step is to get our packages ready for delivery. The packages have to be packed only in white papers and in good manner. Any packages not up to the standard will be rejected by PosLaju. Then, we can proceed to the nearest post office to drop the packages. In the office, we will have to fill up a form to identify the receiver and the sender. Phone numbers have to be included because it is very crucial for the office to call you if something happens...
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...need of management experience. In this analysis, we will delve deeper into each of the dynamics within Porter’s 5 Forces to form an opinion of why the industry is attractive to be in and then discuss how competition greatly increased during 1988-1989. In the air express industry, where customers can ship their packages over long distances via airplane, there is high rivalry because the firms competing in the industry all do the same service. Since there is little differentiation between firms, each firm must battle for customers by either providing better or new services, integrating new competencies into their business processes, or doing business at a low price to create bigger economies to scale which will then cut down operating costs. Firms who want to compete provide aggressive products like next day delivery; integrate new business practices like owning and operating a fleet of jets with company employees; or undercut the competition in viscous price wars. Thus, rivalry with the industry is high. Supplier power is medium to high in the air express industry because firms in the air express industry require precious resources and rely on the...
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...Air Cargo Management-13 Yoon Seok, Chang School of Air Transport, Transportation & Logistics, KAU Email: yoonchang@kau.ac.kr 1 Why Use 3PL’s? • Save time – Don’t need to invest in: Trucks, Training, Development • Narrow your focus – Allows you to focus on your strengths • Reach more customers more effectively – Can ensure delivery times – can help a company run leaner Types of 3PL Providers • – – – – • Transportation Based Services extend beyond transportation to offer a comprehensive set of logistics offerings. Leveraged 3PLs use assets of other firms. Non-leveraged 3PLs use assets belonging solely to the parent firm. Examples: FedEx Logistics, UPS Logistics Financial Based – Provide freight payment and auditing, cost accounting and control, and tools for monitoring, booking, tracking, tracing, and managing inventory. – Examples: Cass Information Systems, CTC, GE Information Services, FleetBoston Types of 3PL Providers • Warehouse/Distribution Based – Many have former warehouse and/or distribution experience. – Examples: Exel, Caterpillar Logistics, IBM • Forwarder Based – Very independent middlemen with forwarder roles. – Non-asset owners that provide a wide range of logistics services. – Examples: AEI Types of 3PL Providers • Information Based – Significant growth and development in this category of Internet-based, business-to-business, electronic markets for transportation and logistics service Levels of Outsourcing • Transactional...
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...the past decade” (2). Companies in the industry provide an express delivery mail service; however, services are not limited to physical delivery. In addition, companies provide tracking and warehousing services, as well as shipment-related logistics consulting. The market is dominated by three main competitors: FedEx, UPS, and Airborne Express. Together, these three companies hold upwards of 85% of the market share. Using Porter’s five-force analysis, we can identify the illicit reasons behind the relative attractiveness of the express mail industry. Threat of New Entrants In 1995, FedEx had more than $7,600 million in assets (16). UPS and Airborne Express show similar numbers. Human assets deployed vary from company to company, “but the basic infrastructures and activities” are similar (3). In all three of the companies, the cost of fixed assets is incredibly large. The infrastructure requires massive hub facilities, airplanes, and vans, to get packages from point A to point B in short time periods. For instance, FedEx’s Superhub in Memphis had “2.4 million square feet of floor space and gates for 147 planes” (3). We can assume that such high fixed asset costs would lead the industry’s doors relatively shut to new entrants. Technology also forms a barrier to enter the industry. The industry’s current competitors use tracking and global positioning systems to gain a competitive advantage. New entrants would be faced with the challenge of developing or purchasing rights...
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...fourteen small jets at its disposal, FedEx today has more than 560 aircrafts – making them the largest all-cargo air fleet in the world. The total daily lift capacity of their fleet exceeds 26.5 million pounds. Within 24 hours it travels approximately 500,000 miles. With the 2.5 million miles the FedEx Express couriers log a day; it is equivalent to 100 trips around the earth. A need that already has been identified rarely provides companies with big business opportunities. The greatest opportunities arise when you detect a completely new need that your customers didn’t even recognize themselves until you offered a solution to them. That is the success story of FedEx with its overnight delivery system. The company was named “Federal Express” because of the intended associations with the word “Federal” since it expressed an interest in nationwide economic activity. Another trace to the name is the proposed contract with the Federal Reserve Bank, which the company hoped to attain at that time. Although the proposal was denied, the name “Federal Express” was chosen since Smith believed it was a particularly good one for their purposes. It draws public attention to the business and facilitates name recognition. While the ability to identify an unidentified need provides a great business opportunity, it tends to remain useless if a company fails to come up with a new and innovative way of meeting it. The delivery of a new service can be quite tricky. FedEx solved it brilliantly by its hub-and-spoke...
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...transporting goods and services. The businesses that can leverage technological advances are in a position to garner market share and add value to their shareholders. FedEx has become a world leader in the parcel delivery business. The name FedEx evokes thoughts of getting packages to customers the next day. FedEx now is used as a verb to tell customers that a shipment will be sent so that it is received the next day. Delivering a product on-schedule is the result of multiple business processes working seamlessly to create a Value Chain that yields a firm greater profit over costs (Dess, Lumpkin, & Eisner, 2007). A primary activity of the Value Chain is Supply Chain Management (SCM). Supply Chain Management is the oversight of materials, information, and finances as they move in a process from supplier to manufacturer to wholesaler to retailer to consumer ((2006). Supply Chain Management Retrieved April 24, 2007, from http://searchcio.techtarget.com/sDefinition/0,,sid19_gci214546,00.html ) Running the full spectrum of products and services, companies rely on sound SCM procedures and techniques to move goods expediently, i.e. Levi promising next day delivery of Dockers to a retail store, or the Department of Defense shipping needed equipment to front line soldiers in the Global War on Terrorism. FedEx is in the business of providing businesses the ability to manage their supply...
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...Fedex AnnuAl RepoRt 2011 poweRFul, lonG-teRM tRendS in GlobAl tRAde Revolve ARound Fedex. The global shipping arrow poinTs up We’ve reached a tipping point in how the world works. The largest economy in the world is no longer the economy of any one country — it’s the economy of global trade of goods and services. Value: $18.3 trillion in 2010. At FedEx, our job is to facilitate these transactions, the heart of commerce, by providing access — moving goods across the global supply chain. Macroeconomic trends that drive global trade continue to intensify: > Production of high-tech and high-value-added goods continues to rise. > Global sourcing and selling are increasing. > Supply chains are accelerating. > E-commerce is expanding. Manufacturing and emerging markets, including China, India and Brazil, are leading the charge. Thanks to the disciplined execution of our long-term strategies, FedEx is at the center of these powerful global trends: 2-2.5x 50% 30% The percentage of global GDP represented by total trade in goods and services in 2010, which continues to grow.2 The amount by which we expect global trade to outpace projected annual global GDP growth of 3.3% from 2010 to 2015. The percentage emerging markets are expected to contribute to global GDP by 2013.1 4x The amount the international express market is expected to grow as part of the total air cargo market — from 3.7% in 1991 to 17.7% in 2015.3 Scan to see videos and more. fedex.com/annualreport 2011/mobile 1...
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...Federal Express Corporation (Fedex) was established in 1973. Since then, Fedex had become a global logistics and supply chain management. The company had invested heavily in information technology systems. It had a powerful technical architecture that had the potential to pioneer in Internet commerce. However, there are some difficulties, the company’s logistic and supply chain operations have trouble to keep up the company’s image, The transportation volume growth was slowing down because the competitive industry was too intense. In early 2000 The company announced major reorganization within the entire Fedex family. Each five subsidiary companies was to function independently but to compete collectively. In order to analyze the situation carefully an external and internal analysis of the company and industry must be done so a complete picture of the industry could be understood. External analysis: Determinants of threat of new competitors: The global express transportation and logistic industry has a very high barrier to entry because it requires enormous capital resources, economies of scale and brand identity. We can write a Custom Research Paper on Fedex for you! Large firms have a cost and performance advantage in the industry. All of the established firms had a very strong foothold in the global market as they have established brand identities. There are economies of scale in the industry: firms have to be big enough to provide services in many countries...
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