...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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...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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...head: FedEx FedEx Brandy Craig Indiana Wesleyan University ACC 549 Dr. Peter McDaniel August 10, 2014 FedEx Company Overview FedEx begins their mission statement by stating that they will “produce superior financial returns for its shareowners by providing high value-added logistics, transportation and related business services through focused operating companies” (Mission Statement, 2014). FedEx is one of the largest domestic and foreign shipping companies in existence in the economic world that we know today. FedEx began its journey in 1971 when it was founded by Frederick W Smith in Little Rock, AR (Acquisition History, 2014, para 1). They went global in 1984 when they purchased Gelco Express International, a “worldwide courier with service to 84 countries” (Acquisition History, 2014, para 2). In 1989 they purchased Tiger International Inc., a flying full-service, cargo airline company (Acquisition History, 2014, para 2). Nine years later, in 1998, they really started growing. FedEx created the company FDX in which they later renamed as FedEx Corporation (Acquisition History, 2014, para 4). It was in 1998 that FedEx Ground and FedEx Freight both took off. Not only did they service customers through the air as an express service but they also were able to sufficiently service customers across the US by the use of trucks making it much more economical and affordable (Acquisition History, 2014, para 4). From 1998 FedEx Corporation...
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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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...[pic] Introduction FedEx Corporation (FedEx) is a US based company mainly engaged in offering logistics solutions. The company, through its subsidiaries, provides transportation, e-commerce and business services under the FedEx brand. The major benefit of using the company is its ability to provide “day-certain” service to every business address in the US and Canada, as well as provide “time-certain” delivery to those areas within one to three business days. The company was founded in 1973 by Frederick W. Smith, whose vision was to provide overnight delivery services for his clients. The company is divided into eight major divisions: [pic] The mission of FedEx is to provide superior financial returns for shareowners by providing high value-added supply chain, transportation, business and related information services through focused operating companies. Customer needs will be met in the highest quality manner appropriate to each market segment served. FedEx strives to develop gratifying relationships with its employees, partners and suppliers. Safety will be the first consideration in all operations and all activities will be conducted to the highest ethical and professional standards (FedEx Corporation – Financial and Strategic Analysis Review, 2011). FedEx’s vision is a world where goods and information move quickly and seamlessly. The company’s goal is to connect the world in such a way that consumers will view them as a provider of convenient...
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...States” (1). Since then, shipment volumes have only risen, at a rate of “15-20% per year for 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...
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...Accounting Information Systems ACC 210 August 30, 2012 Michael Wells FedEx Corporation is one of the leading logistics service companies in the world. As its global presence increases and technology becomes more accessible and powerful, FedEx must stay ahead of the curve to keep customers satisfied, and competitors on their toes. In the past 10 years FedEx has made much progress in automating many of their information systems such as invoicing and accounts receivable. They also led the industry in providing online services to their customers, and high-speed mobile devices to their couriers. One of their most notable technological advances was their development of DirectLink. FedEx created DirectLink, a powerful electronic data interchange (EDI) enabling software, to allow customers to download invoices, create reports, export data, and remit payments. Customers can still pay their bills online, over the phone or the traditional way by mailing in payments; however, FedEx encourages customers to sign up for DirectLink because of many advantages it offers (FedEx, n.d.a). DirectLink allows customers to download bills, remit payments online and manage their own account, which is extremely efficient for the customers and the company. For one, electronic invoicing allows FedEx to save money on printing and postage costs. Electronic payments also save time and create less manual work for the company. The AIS validates records and processes payments. With...
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...FedEx Corporation Strategic Audit May 14, 2004 MGMT 449 Prepared by: Clement Chen Lisa Duong Hideo Yang Marny Susanty Mario Vellandi Andrea Betro Forward: This company for this case analysis was chosen by me, Mario Vellandi. I found FedEx interesting because they are one of the top four logistics companies in the world with 2002 group revenues of $24.2 billion. Since I was studying the transport industry, I found them to be an excellent company to analyze while in Strategic Management. Research Process To prepare for this case, I had performed primarily all the research for this case. This process involved first going to the firm’s SEC filings on its website, then downloading the .rtf version of its 2003 10-K, and the following 10-Qs and pre-announcements. After having read and highlighted some 65 pages and notating applicable data for each section of the strategic audit, I copied the data into individual Word documents titled after each respective category. I also utilized company info from the investors section of its site. Next I used the standard and news search functions of Google, among other sites, by combing the term fedex with a combination of various business terms such as competition, weaknesses, swot analysis, and commercials. I had also used combinations with competitors’ names and specific business functions. Next, I had used the advanced features to limit my searches in two ways: by data type, and by domain extension. I found relevant existing secondary...
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...STRUCTURAL TRANSFORMATION THROUGH E-BUSINESS FedEx CORP.: FedEx Overview Founded in 1973 by Fred Smith From an express delivery company to a global logistics and supply-chain management company 1998 acquisition of Caliber systems and development of a powerful technical architecture FedEx was having difficulties about the company image THE EXPRESS TRANSPORTATION AND LOGISTICS express The growth of the INDUSTRY transportation and logistics industry… • Globalization emerging new markets & using cheap materials and resources, this situation needed rapid transportation of materials and final products. the quick delivery shortened the • Ø Ø THE EXPRESS TRANSPORTATION AND Advances in IT & Changing market demand LOGISTICS INDUSTRY Promoted the globalisation of commerce (ctd.) Sharing info reduced costs and improved customer services by generating operational efficiencies. Many transportation companies expanded into ITsupported logistics management services. Interconnectivity thru Internet and Intranet enabled reengineering sales and supply-chains. Just-in-Time inventory management Ø Ø Ø THE EXPRESS TRANSPORTATION AND …resulted in following key LOGISTICS INDUSTRY competitive advantages: (ctd.) Speed Ø Ø Ø Ø Ooperational efficiencies Improved customer service Value-added services FedEx Corp. “If we’re all operating in a day-today environment, we’re thinking one to two years out. Fred’s thinking five, ten, fifteen years out..” William Conley...
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...IS used in FDX What is information systems: Information system is defined by different ways but they are all in the same field. Information system is a collection of hardware, software, data, people and procedures that are designed to generate information that supports the day-to-day, short-range, and long-range activities of users in an organization. Information system is a very wide field that is divided in different types, to fulfill business’s variety of requirements for information, which are: Executive Support Systems, Management Information Systems, Decision Support Systems, Knowledge Management Systems, Transaction Processing Systems, and Office Automation Systems. Firstly, the Executive Support Systems ("ESS") is designed to help senior management make strategic decisions. It gathers analyses and summarizes the key internal and external information used in the business. Secondly, Management Information Systems ("MIS") is mainly concerned with internal sources of information. MIS usually take data from the transaction processing systems and summarize it into a series of management reports. Thirdly, Decision Support Systems ("DSS") are specifically designed to help management make decisions in situations where there is uncertainty about the possible outcomes of those decisions. DSS comprise tools and techniques to help gather relevant information and analyze the options and alternatives. DSS often involves use of complex spreadsheet and databases to create...
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...Supply Chain Management OM-ll Assignment Submitted by: Group: 7, Sec: B Mohit Vora (14PGP086) Himanshu Jain (14PGP081) Satvik Jani (14PGP095) Satyadeo Thakur (14PGP096) S. Sreenvas (14PGP119) Ankit Goyal (14PGP070) About FedEx: FedEx Corporation is an American global courier delivery services company headquartered in Memphis, Tennessee. The name "FedEx" is a syllabic abbreviation of the name of the company's original air division, Federal Express, which was used from 1973 until 2000. FedEx Corporation was founded in 1973 by entrepreneur Fred Smith. Today, with a fully integrated physical and virtual infrastructure, FedEx’s business model supports 24–48 hour delivery to anywhere in the world. FedEx operates one of the world’s busiest data- processing centres, handling over 100 million in-formation requests per day from more than 3,000 databases and more than 500,000 archive files. It operates one of the largest real-time, online client/server networks in the world. The core competencies of FedEx are now in express transportation and in e-solutions. Supply Chain Model: FedEx Supply Chain Process: * Order is sent to FedEx via XML, Internet, customer calls, EDI and is processed by the FedEx Order Management System. * Order information is sent from FedEx Information Network. * Order is transmitted to the appropriate Distribution Center. The order...
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...Marketing Case #1: Federal Express (FEC) Situational analysis Consumer | Small packages (up to 2 lbs) must be delivered in a reliable and timely manner. Delivery confirmation would help. | Competitor | USPS (Express Mail), Emery (much bigger brand name), smaller airfreight forwarders, REA Air Express, Airlines, *local freight companies (hard to match local relationships) | Company | Courier Paks at flat rate, self-contained delivery/flight system (sustainable), People-oriented culture (employee satisfaction seems high) | Collaborators | Local storage/sorting facilities, truck drivers, salesforce, researchers (comparing Express Mail reliability) | Context | The airfreight industry is becoming cutthroat and companies are copying business models and popping up everywhere. Express mail is taking off but at a per distance and weight cost basis. | Setting the strategy Segmentation | Basic consumer (20%) , Manufacturing and distribution (17%), Advertising (8%) – Reliability is key across segments | Targeting | Businesses with lots of paper pushing and the general consumer | Positioning | Reliability, All American Jets (America’s Shipper), Flat rate package – Possible expansion into bigger courier packs | Value proposition Product | Flat rate box – We run our own airline | Place | Toll free number to call about locating local courier pack provider – You’d want couriers to keep stores of packs on their trucks to sell | Promotion | Convince customers...
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...What this case is about FedEx vs. UPS China & US agreement for the establishment of air-cargo hubs in China and landing rights for commercial airlines at any available airport China is battleground for the two package delivery giants Assumption: success in China was widely seen as the litmus test for corporate survival in the new millennium No guarantee for how new cargo routes would be allocated between UPS and Fed Ex Which company was better positioned to attract the capital necessary to win this competitive battle? Current facts FedEx had largest foreign presence in China invented customer logistical management innovative, entrepreneurial, operational leader 2003 assets: $15.4 B Net Income: $830 M Revenue: $22.5 B Performance assessment: superior financial returns No unions – flexible with costs Model asset attentive UPS world’s largest package-delivery company historically bureaucratic and industry follower overhaul of image repositioning as leading provider of logistics and supply-chain management services small-package market - $60 B vs. worldwide supply-chain market is $3.2 T everything from the moment something gets made until it gets delivered for final delivery, and then after market, it’s parts replacement 2003 assets: $28.9 B Net Income: $2.9 B Revenue: $33.4 B Performance assessment: long-term competitive return History of FedEx 1971 Fred Smith Yale Purchase planes instead of using cargo space on passenger airlines like competitors Largest venture-capital start-up...
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...The corporate strategy of fedex corporation Executive Summary This analysis of the corporate strategy of FedEx Corporation relates to three specific issues in the corporate strategy case. The first issue is a critical analysis of the global express transportation and logistics industry. The second issue discusses about the mergers and acquisitions in transportation and logistics industry. The final issue is a critical review of the performance of FedEx in the events leading to the January 2000 reorganisation. In the first section, the global express transportation and logistics industry is an attractive sector based on the fundamentals of the sector given in the five forces analysis using Porter's framework. There are large barriers to entry, there are minimal substitutes that exist, industry is relatively disciplined, and the power of buyers and suppliers are mixed. FedEx is well placed in the sector given its core competencies and dynamic capabilities relating to its management and the functional areas of marketing, human resources and information technology and systems. In the second section, gives a brief knowledge about the benefits and limitations of merger and acquisition strategies in this industry. This also describes how effective was the 1998 Caliber System acquisition and where did it led the company do in its further years. In the final section, it is noted that FedEx performed poorly within its sector and given its capabilities, the firm was expected to have...
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...------------------------------------------------- Airborne Express Case 1. How has Airborne survived, and recently prospered in its industry? Please address why you think it was difficult for bigger competitors such as FedEx to imitate Airborne’s strategy. Although Airborne does not get the publicity that FedEx and UPS get, they have managed to remain the third largest player in the express mail industry. One unique aspect that has helped Airborne maintain a leading position in the industry is their ownership of an airport, which serves as their major hub. This is a huge advantage because they have complete control over the timing of each shipment and what comes in and out of the airport. Airborne also purchases and modifies used aircrafts, which saves costs and allows them to run roughly 15% more full than their competitors. Onsite at the airport, Airborne leases out warehouse space to their business customers, which allows for quick delivery on last minute orders. This is a unique offering in which their competitors cannot match without purchasing an airport. Another important aspect of Airborne that helps maintain their position in the industry is their selective process for choosing customers. Ray Berry, vice president of Field Services Administration at Airborne, was quoted stating, “We pick our kind of customer deliberately.” (Rivkin, 11) The company would purposely pass over business with customers who didn’t fit their vision. Airborne mainly targeted “the business...
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