...Case Analysis: Federal Express Introduction Federal Express is an express transportation company, founded in 1973 by Frederick W. Smith. During his college years, he recognized that the United States was becoming a service-oriented economy and needed a reliable, overnight delivery service company designed to solely transport packages and documents. He wrote a Yale term paper on this idea, and received a ‘C’. His professor thought it would never work. Fortunately for Frederick Smith, he didn’t take it to heart and ended up building that company he dreamed of. He found investors willing to contribute $40 million, used $8 million in family money, and received bank financing. He started Federal Express with over $80 million, making it the largest company of its time ever funded by venture capital. Background Federal Express became successful so quickly because all their competition became weaker at the same time. They built a super-hub in Memphis, Tennessee, where all packages from the United States would be loaded on the correct transport and shipped out each night. Today, Federal Express has over 143,000 workers worldwide, and delivers more than 3 million express packages to 200 countries daily. One major change has affected Federal Express. In January of 1998, Federal Express changed to FDX Corporation. FDX Corporation now includes Federal Express, Roadway Packaging System (RPS), Viking Freight, Roberts Express, and Caliber Logistics. Even though FDX owns all...
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...reference for other industries, FedEx is chosen as the case study. FedEx, one of the world’s biggest express transportation and logistics companies, has been used many times as an excellent case to help people learn strategy management and acquire experience. It was founded in 1973. With the development of the company, FedEx transferred itself from a traditional express transportation company to a technical global logistics company. It absorbed the upcoming technology and make itself adapting to the change of the industry and the world to acquire the advantage of competition. FedEx spent a large amount of its resources and money on Information Technology and the R&D department to invent new information systems and develop new services. As the competition of the express transportation industry became more intense and took more consideration on customer segmentation, pricing and quality of service. FedEx developed new products and services to consolidate its advantages to acquire cognition from more customers. Also, many acquisitions occurred so that FedEx was capable of broaden its service portfolio and enhancing its market share. Due to those acquisition, FedEx achieved its commitment that was more than just an express transportation company. With the businesses of the company and the distribution of facilities, like warehouses, constantly widened, FedEx’s business covered more than 90% of the world’s GDP. Furthermore, with the launch of internet, FedEx...
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...Fedex: a perspective study | | Contents Introduction 3 1. The outside in perspective 4 1.1 Markets over Resources 4 1.2 Opportunity driven. 5 1.3 Market demand and industry structure 6 1.4 Adaptation to environment 6 1.5 Attaining advantageous position 6 1.6 Acquiring necessary resources 6 1.7 Inside-out perspective 7 2. Industry dynamics perspective 8 2.1 Compliance over choice 8 2.2 Uncontrollable evolutionary process 8 2.3 Fitness to industry demands 9 2.4 Low and slow ability to change the industry 9 2.5 Convergent to dominant design 10 2.6 Profit is largely industry dependent 10 2.7 Industry Leadership perspective 10 3. Integrated perspective and portfolio perspective 11 3.1 Synergy over responsiveness 11 3.2 Tightly related composition 11 3.3 Joint strategy development 12 3.4 Multi-business synergy & integrating resources, activities and positions 12 3.5 Acquisitions are difficult to integrate 12 3.6 Portfolio perspective 13 4. Conclusion 14 4.1 What strategic perspective does FedEx fit in? 14 4.2 Did it lead them to having a sustainable competitive advantage? 14 Introduction FedEx started out in its early years as a true pioneer. Originally an express delivery company, it transformed itself to a global logistics and supply chain management company. The CEO of FedEx saw enormous potential in connecting their business with IT. For instance, in the 80’s, FedEx gave away more than 100.000 PC’s...
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...r p' FedEx Corporation: Structural transformation through e-business By Ali F. Farhoomand and Pauline Ngl [FedExI has built superior physical, virtual and people networks not just to prepare for change, but to shape change on a global scale: to change the way we all connect with each other in the new Network Economy. (1999 Annual Report) [FedExl is not only reorganizing its internal operations around a more flexible network computing architecture, but it's also pulling-in and in many cases locking-in customers with an unprecedented level of technological integration. (Janah and Wilder, 1997) ince its inception in 1973, Federal Express Corporation ('FedEx') had transformed itself from an express delivery company to a globallogistics and supply-chain management company. Over the years, the Company had invested heavily in IT systems, and with the launch of the Internet in 1994, the potential for further integration of systems to provide services throughout its customers' supplychains became enormous. With all the investment in the systems infrastructure over the years and the US$88 million acqrtisition of Caliber Systems, Inc., in 1998, the Company had built a powerful technical architecture that had the potential to pioneer in Internet commerce. However, despite having all the ingredients for the maltings of a successful e-business, the Company's logistics and supplychain operations were struggling to shine through the historical image of the Company as simply an express...
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...transportation companies to realize the benefits of technology. As early as 1978, just five years after it began operations, the company pioneered the first automated customer service centre. To provide real-time package tracking for each shipment, FedEx uses one of the world's largest computer and telecommunications networks. The company's couriers operate SuperTracker® hand-held computers, to record the transit of shipments through the FedEx integrated network. FedEx's use of technology focuses on the customer, rather than merely on remaining competitive. With FedEx, businesses can determine the status of their packages at all possible locations along the delivery route in real time. Customers can track packages in three ways: via the FedEx Web site on the Internet, by using FedEx Ship Manager at fedex.com, or FedEx WorldTM Shipping Software. To provide the time-definite service customers have come to rely on, FedEx is continually developing innovative technologies. The following examples illustrate why FedEx remains the leader in the express cargo transportation industry. COSMOS (Customer Operations Service Master On-line System) is a computerized package tracking system that monitors every phase of the delivery cycle at Federal Express. FedEx employees constantly input information into COSMOS by several means. Customer service representatives enter shipping information into COSMOS through computer terminals, alerting the dispatcher closest to the pick-up or delivery area. Dispatchers...
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...FedEx Case Brief Under Frederick W. Smith’s superb supervision and leadership, FedEx has become a renown express delivery courier worldwide, handling about 8.5 million shipments daily. Today, the company is different of what it used to be back in 1971. It has continued to nurture and grow over the past 40 years and still holding onto the company’s culture – quality service to customers. Difficulties were faced during the process, such as problems with coordination, maintaining efficiency, satisfying customer expectations and handling employees. In order to resolve this, a strict hierarchy of leadership has to be implemented. Smith restructured the team’s approach to improve productivity by giving teams more authority and responsibility in order to sustain quality satisfaction among customers and the increased in productivity. What we can learn from this would be that its crucial to not hold back people’s ideas and thoughts. In many cases, they probably handled the situation in a better way than any of us do at the point of time. It is only right to hear what people have to offer and say before we reject their ideas and in unforeseen circumstances, would likely see a decrease in efficiency and productivity in the outcome. FedEx uses a three way operating strategy that works seamlessly. Smith’s leadership lead the company to success and solved problems they used to have, couriers departed early towards their destination and number of packages arrived late were halved. We can see...
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...Federal Express – delivering the goods Kevan Scholes This case study looks at how new business models can create vast improvements in competitiveness. However, the models must be suited to the business environment at the time and will have a ‘shelf-life’ as the business environment changes. The case study looks at one on the world’s most successful adopters of a new business model that transformed the airfreight and package delivery sectors worldwide. But the advent of the internet in the mid-1990s meant that the FedEx business model had to change or the company would decline. This is also the story of how it rose to that challenge. l l l 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. 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 a controlling interest in Arkansas Aviation Sales, located in Little Rock. While operating his new firm, Smith identified the tremendous difficulty in getting packages and other airfreight delivered within one to two days. This dilemma motivated him to undertake research on how to resolve the inefficient distribution system. In an interview with Fortune Small Business in 2002 he explained his business...
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...Federal Express Case Company Analysis: Courier Pak is an underrated service that is provided by FEC. Its profit margin is higher than all the other services provided (66%), and has huge growth potential. It has both great speed and reliability, making a service worth promoting. Customer Analysis: Currently, executives and their assistants are mainly using CP. The top three industries that use CP are Manufacturing and distribution, Advertising, and Printing and publishing. According to Exhibit 6, the market size of “emergency,” “rush,” or “special handling” delivery of small items/documents was around 870,000 per day. CPs are economically viable. Sales currently average 1300 per day, adding up to $10,725 in daily profits. Courier Pack earns a larger profit margin of 66%. In comparison, Priority One service generates 54.89% and the Standard Air Service generates a 26.94% margin. If sales were to increase to 6000 per day, that would be an increase in profits by $28050 per day, a substantial increase. Can FEC do 6000 CPs a day? The average Courier Pak weighs about 1 lb. The average flight carries 4,900 of freight that is loaded to an 85% of volume capacity. A 100% capacity would be at around 5764 lbs., and the difference would add 864 lbs. of CP that could be added onto any flight. Or, given a max capacity of 6200 lbs. on a Dassault Falcon minifreighter, it is possible to fit all 6000 of CP on one freighter. However, we expect this to not be the case, as there are 32...
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...Federal Express The Federal Express is an express transportation company, created in 1973 by an innovative entrepreneur Frederick W. Smith. During his college years, he saw the idea that the United States was becoming more of a service-oriented economy and that it needed a reliable, overnight delivery service company that would transport packages, documents, medicine, computer parts and electronics. Frederick Smith born in Memphis, TN in 1994 perhaps has became one of the most innovative entrepreneurs with his corporation. In 1966 he graduated from Yale University with an economics degree. While pursuing his career, “he authored a paper describing the concept of a freight-only airline that would fly all packages to one central point, where they would then be distributed and flown out again to their respective destination (Hisrich, 2010, pg. 226).” The operations would take place overnight when airports were less crowded, and with the proper logistics, the packages would reach their destination by the next day. The professor did not think the idea was feasible so Smith received a C grade for his paper. Fortunately for Frederick Smith, he didn’t take it to heart and ended up building that company he dreamed of. After graduating from Yale, he enrolled in the Marines he served two tours of duty, first as a rifle platoon leader in the U.S. Marines and later as an air controller. His four year term was well spent because it permitted him the opportunity to examine a working...
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...Case 1 How FedEx Works: Enterprise Systems 1. FedEx uses many businesses processes when shipping an item. First they arrive to pick up the package, upon arrival they scan the package so they know it is now in their possession and it is able to be tracked. This is part of a manufacturing and production process, as well as a sales and marketing process. It is a manufacturing and production process because it starts the initial travel or shipping of the package to its destination. Sales and marketing is used through customer service by getting someone to use FedEx (generating an order) and by the convenience of having the package picked up from the customers door step. Once the package is picked up it is taken to a hub or sorting center. At the sorting center the package is put on a conveyer belt that sorts through the packages and sends them to their destination. While on the conveyer belt the packages are scanned by invisible laser beams which weigh each box and measure the size. The length, width, & height are measured and together they produce the volume of the package, this tells FedEx how much to charge the customer for shipping. This particular example is in the financing and accounting category of a business process. The packages are then pushed by a diverter to the appropriate slide; there are nine of these slides or chutes all of which represent a different location in the U.S. The packages that are unable to be read are sorted manually. They are then put in a...
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...Green Sandra Vargas Melanie Rivera Jhael De Alba History Founded in 1971 by Frederick W. Smith. First Investment 1980’s: – FedEx reached its maturing stage. – First US company to reach $1 billion in revenues. FedEx handles 3.3 million packages General Environment Global Provider of: - Transportation - e-commerce - supply chain management FedEx an Innovator company: - Overnight package and letter delivery - 10:30 am next day delivery - Saturday delivery service • • • • • • • • • • • • Most familiar service. Handles millions of shipments. Delivers in 1 to 2 business days. Heavy weight shipments. Less than truck load (LTL) freight. 600 miles next day delivery. 1,600+ miles second day delivery. • • • Custom brokerage. Electronic custom clearance. Speed shipments across the border. Cost effective. Alternative for small packages. Distance and time are wider. When customers need it now. 24hrs. 7 days a week, including nights, weekends and holidays. External Environment Household name Competitive environment Global Presence IT advances Strong market position in air freight Competitive Environment World wide presence Dominates ground services domestically High market share in the US Acquired full ownership of Mail Boxes, etc. Intense competition with FedEx Competitive Environment Recent acquire of ground services Specialize in air freight deliveries Global presence Other mergers,...
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...Managing Information Systems FedEx Case 1. List the business processes displayed in the video. - Pick up the package & scan the box. - Transfer of the packages & letters to a big rig - Packages are loaded to a conveyor and sorted regarding its final destination - The belt carries the package to a scan that register each of them according to their weigh and size. - The packages are then pushed different ways depending on their destination - The packages with unreadable label are treated manually and disposed on their right destination. - Packages are thrown into container that are entirely weighted and specially designed in order to fit on an aircraft. - Packages take to the air. - When arrived at destination, packages arrive to another facilities centre and are sent regarding the right cities. - Once in the truck, FedEx couriers are delivered to the exact location specified on the label. 2. List the types of information systems shown in the video. Can you describe how systems that were not shown might be used at FedEx? - At the first moment the package is being picked up, the FedEx carrier scan the label on the box that send directly to the system that the package has been picked up. - Once the package arrives to the first conveyor, the scan gives the information regarding the destination. - In the sorting centre, another scan takes care of adding the weight and size to the label in order to determine the price that would be charged to the consumer...
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...than the latter but regardless of whose problem, it is irrefutable that unreliability is an inherent trait of technology. FedEx cannot eradicate this problem completely but it can potentially prevent it from happening by using different management information systems to monitoring their network. Network Performance Monitor by Solarwinds (Network Monitoring Software) or WhatsUp Gold by IPSwitch (Ipswitch) are network monitoring software that can monitor and analyze network performance. FedEx can use these products to detect and analyze network packets to predict an imminent network outage. Technology cannot be used by everyone. Some parts of the world, and even in America, people are still computer and information illiterate. And thus they cannot rely on technology to accomplish their tasks, in this case, it can be a simple task of entering a tracking ID onto fedex.com website. In addition, some people cannot use technology because they are handicapped. For example, blind people cannot browse the web on a computer laptop, or deaf people cannot speak or hear from a phone. Other drastic example such as people whose have degenerated brain function diseases, that render them completely inert, cannot see, hear or speak. These people cannot utilize any technology to obtain customer service. I think FedEx can overcome these challenges in many ways. First, FedEx can implement artificial intelligence onto their website to train and show their customers on how to track their packages...
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...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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...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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