...David Faskas, Julius Cano, Dan Dragomir, and Tisha Ray FINC 4369 Dr. Jonathan Du February 7, 2011 Analysis of FedEx and United Parcel Service The domestic United States market for package-delivery is a $45-billion dollar market. The air express market is a $25-billion dollar segment of this market. The package delivery industry is very large and highly competitive. Two of the top competitors, FedEx Corporation and United Parcel Service have been racing to gain a larger portion of this multi-billion dollar market for years. Recently with a landmark air-transportation agreement being reached in China, the market for international delivery has boomed. Analysts expect China to become the world’s largest economy within the next few decades. The air-cargo market in China has been growing at a rate of 30 percent per year and is expected to increase for at least 5 years at this rate. With such an important growing market opening to international companies, the opportunity is great. Many risks may also be present with this new venture, but the reward may be great for the company that can take hold of this market share first. Through this analysis I will analyze the goals of each firm, how each firm has achieved or strived to achieve these goals, and how each company has dealt with threats from competitors. FedEx has stated in their mission statement that they have the goal of “[producing] superior returns for shareowners by providing high value-added supply chain, transportation...
Words: 2290 - Pages: 10
...UNITED PARCEL SERVICE INITIAL PUBLIC OFFERING United Parcel Service’s IPO United Parcel Service was founded in 1907 and now has over 340,000 employees, 149,000 delivery vehicles, 500 planes, and $25 billion in annual revenues, UPS is the largest parcel delivery company in the world. The company delivers nearly 13 million packages each business day (9,000 packages every minute) to over 200 countries worldwide. Question 1 UPS is performing very well in comparison to its closest competitors. UPS has 51% of the domestic air and ground package delivery market share by revenue, followed by FedEx (26%) and the U.S. Postal Service (17%). Between 1988 and 1999, UPS spent more than $1 billion per year upgrading its infrastructure to track packages precisely, deliver electronic proof of delivery, and manage shipments on-line. The new systems included electronic scanners, bar codes on packages, and computerized clipboards for all UPS drivers. By 1999, UPS could handle six times as many on-line tracking requests as FedEx. UPS made no distinction between the operating facilities for air and ground operations, like FedEx. All facilities were shared, including the single fleet of trucks that handled the pickup and delivery of all UPS shipments. The integration of its air and ground operations gave UPS the ability to optimize utilization of its assets while still meeting customer service requirements. Since the operations were integrated, a package marked for “Next Day...
Words: 1385 - Pages: 6
...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...
Words: 711 - Pages: 3
...FedEx Corp.: Structural Transformation Through e-Business Pauling Ng and Ali R Farhoomand The University of Hong Kong FedEx 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. FedEx 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. Since its inception in 1973, Federal Express Corporation had transformed itself from an express delivery company to a global logistics 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' supply-chains became enormous. With all the investment in the systems infrastructure over the years and the US$88 million acquisition 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 makings of a successful e-business, the Company's logistics and supply-chain operations were struggling to shine through the historical image of the Company as simply an express delivery business. Furthermore competition in the...
Words: 6317 - Pages: 26
...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...
Words: 8941 - Pages: 36
...Amtelecom Group Inc. Valuation (Amtelecom Communication) Presented by: Table of Contents Executive Summary3 What does it mean when a company "trades at a discount"? Is AMT really trading at a discount? 4 Do you agree with AGI's decision to break up the company? To sell the communication business rather than the courier business? 4-5 Size up the communication s industry and identify key success factors. Size up strengths and weaknesses of AMT?5-7 Assess the value of AMT using all available methods. Which valuation method is most appropriate for each sales alternative? What are the expected net proceeds from each alternative? (Exhibit A & B)8 As Stanley Stewart, what sales proposal would you recommend? How would you pitch it to the board? How would you market it to the potential investors/acquirers? 9 . * AGI strategic intent is to divest Amtelecom Communications, a wholly-subsidiary of AGI, in order to increase value for AGI shareholders. * AGI board unanimously approved to market off the business, but it subject to three conditions; * Retirement of current debt in full; * Payment of a reasonable dividend to AGI shareholders; and * The courier business had to be left with sufficient capital to stay in business. * Proposal To address the above situation, we propose the following valuation: * TEV/EBITDA multiple for both ICS and Amtelecom Communications * METHOD #1 - Using the Stock Price / Dividend Yield. ...
Words: 1708 - Pages: 7
...section vi cases 1 2 3 4 5 6 7 8 9 10 11 12 FedEx Corporation Honda Motors Virgin Toyoko Inn Group PowerGen Kao Corporation Continental Caterpillar Metro Grupo Elektra Lego Mindstorms Shell and Billiton 13 14 15 16 17 18 LoJack and Micrologic Proteome Systems Swatch Ducati Chicago Museum Trilogy University 647 663 680 702 709 721 738 755 773 778 795 803 818 827 847 854 872 883 892 901 909 928 19A Cap Gemini Sogeti 19B Cap Gemini Sogeti 20 21 22 Kentucky Fried Chicken Cirque du Soleil Nike and the University of Oregon 933 case 1 FedEx Corporation: Structural transformation through e-business By Ali F. Farhoomand and Pauline Ng1 Case 1 [FedEx] 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) [FedEx] 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) its inception 1973, Federal Express Since express deliveryincompanytransformed logisCorporation (‘FedEx’) had itself from an to a global tics 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...
Words: 9073 - Pages: 37
...and making deliveries to 6 million business and residential addreeses. * In 1999, was recognized as the “World’s Most Admired Global Mail, Package and Freight Delivery Company” and “ Company of the Year”. Factors driving: * Operational and service-excellence culture * Carefully trained workforces. * Accountability and efficient execution at every level of the organization. > Current performance is likely to be sustained as it is believed that UPS’s combination of “controls, rules, a detailed union contract, and carefully studied work methods…help guarantee the customer reliable, low cost service. Question 3 How is FedEx performing? How, if at all, do its performance and plans affect your assessment of the sustainability of UPS’s current performance? Performance of FedEx * A $ 17 billion global transportation and logistics enterprise. * By the late 1990s, FedEx moved over 3...
Words: 550 - Pages: 3
...Industry Analysis In 1996, “Businesses and individuals spent $16-17 billion on expedited shipments within the United 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...
Words: 1643 - Pages: 7
...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...
Words: 475 - Pages: 2
...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...
Words: 6757 - Pages: 28
...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...
Words: 2186 - Pages: 9
...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...
Words: 1926 - Pages: 8
... FedEx was founded in 1971 and was incorportated in October 2, 1997, is a holding company and was founded by Frederick Wallace Smith, current CEO, president & chairman of FedEx Corporation. It is an express transportation company offering fast delivery services within few business days and serving markets. The company provides a portfolio of transportation, e-commerce and business services under the FedEx Brand. The company also operates in four different segments, taking charge on series of activities, namely “FedEx Express”, “FedEx Ground”, “FedEx Freight”, and “FedEx Services”. -Location worldwide * Auckland * Bangkok * Beijing * Cebu * Christchurch * Guangzhou * Hanoi * Ho Chi Minh * Hong Kong * Jakarta * Kuala Lumpur * Manila * Melbourne * Osaka * Penang * Seoul * Shanghai * Shenzhen * Singapore * Sydney * Taipei * Tokyo -Total revenue man power -Core product & supplementary services. FedEx Ground Package System, Inc. (FedEx Ground) is a provider of small-package ground delivery service. FedEx Ground provides day-certain service to every business address in the United States and Canada. FedEx Freight Inc (FedEx Freight) is a provider of less-than-truckload...
Words: 391 - Pages: 2
...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...
Words: 1229 - Pages: 5
