...THE BATTLE FOR VALUE, 2004: FedEx Corp. vs. United Parcel Service, Inc. Executive Team Summary 1. Introduction a. Main facts of the case In the context of the U.S. & China agreement of liberalization of commercial cargo flights, determine which of the two companies has created more value and is in a better position to take the advantages of the new agreement. b. Most important Characteristics of the company studied in the case i. Industry: Air Delivery & Freight Services ii. Position in its industry & Main competitors 2. Answer the Questions presented at the end of the 1st session and reviewed and answered in the second session. * How have FedEx and UPS performed financially? How do we measure its financial performance? Financial performance measures that can be obtained from a firm’s financial statements consist of absolute data and financial ratios. Absolute measures such as income, net assets and equity, reveal trends and allow a company to be compared to its performance over time, while financial ratios, including return-on-assets and current ratio, adjust for scale and allow for comparisons of different-sized companies. Financial ratios are ideal to compare FedEx and UPS, since UPS has $13.5 billion more in assets and $11 billion more in revenues than FedEx. Please see Table 2 for a comparison of the most common and widely used financial ratios. UPS is outperforming FedEx in liquidity, solvency and profitability...
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...Competitive Advantage Paper In this report we focus on the two main competitors in the package delivery industry: Federal Express Corporation (FedEx) and United Parcel Service of America, Inc. (UPS). Studying FedEx, UPS and their competitive relationship gives a good insight for the companies' and industry's future. The two companies have different strategic goals and are operating in the same industry but in different main markets: FedEx is working on "producing outstanding financial returns" and focuses on the profitability of overnight air market whereas UPS is looking for "earning reasonable profit" and its core business that is the ground delivery. Sustainable competitive advantage Attaining a competitive advantage in package delivery business appears to be a challenging task. The main reason is that it is an easy-to- duplicate business both for the competitors and any new entrants. This is obvious in FedEx's case: the company always has distinguished itself through technologically advanced services, expanding in many places and new products over other competitors, especially UPS. UPS was the main choice for low-priced ground delivery services however being a market follower in the air delivery sector could negatively affect its reputation and cause loss of market in the long term. Taking the above into consideration the combination of high-service quality, convenience and low rates can give a company a sustainable competitive advantage. Federal Express "We will...
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...Starting with the End in Sight: Integrating Finance After a Merger 2 When two companies merge, integrating their Finance functions is a major imperative. Variations in financial standards and procedures can prevent the merged entity’s Finance function from effective daily operations, impacting both internal and external stakeholders. Integration of this key function is also time-sensitive: the entity’s leaders, not to mention investors, demand consolidated financial statements, earnings and projections as soon as possible. Additionally, a majority of the potential gains from a merger cannot be achieved without committed support from Finance. Many companies recognize this challenge and give substantial attention to financial integration soon after announcing the deal. However, this urgency creates its own problems. Under time pressure, finance professionals will feel rushed to combine disparate numbers and harmonize divergent processes. If they do not yet have a clear vision of the new company’s future state, they may implement manual temporary work-arounds, such as preparing manual reconciliations of customer accounts, that require incremental work effort, cost and risk to Finance. By focusing only on interim integration work and not considering the future state in parallel, many companies risk that the manual interim state will one day become the future state. Maintaining disparate and manually integrated systems limits opportunity for future standardization and cost...
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...China and the Us began in mid Feb both UPS and FedEx stock began a steady incline. Fedex had the largest share of the Chinese market with 11 weekly flights, almost twice UPS with 6 weekly flights, and served 220 Chinese cities. Their volumes in China had grown more than 50% bt 2003 and 2004. FedEx had the reputation of being innovative, and an operational leader, whereas UPS was know as the industry follower. UPS had problems with unionization, and FedEx did not. FedEx set a goal of producing “superior financial returns” meaning increasing earnings and maximizing value to shareholders. I also believe the lower price to earnings ratio of FedEx, 22.93 vs 29.01 and a higher EPS made FedEx a much more attractive stock to investors. With FedEx’s already strong position in China, expected to be the worlds largest economy in 2009, it would potentially be much easier for them to continue to capture the growing Chinese market that UPS, with much less of a presence. I believe the 14% increase in FedEx vs 3% increase in UPS is largely due to the position FedEx had in the Chinese market with 11 weekly flights almost twice UPS with 6 only weekly flights. Also FedEx’s volumes in China had grown more than 50% between 2003 and 2004. FedEx had also had the reputation of being innovative, and an operational leader, whereas UPS was know as the industry follower. Investors thought that after the transportation agreement was completed FedEx would be in a better position to take advantage...
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...The Success of FedEx vs. United Parcel Service (UPS) Executive Summary In today’s ever advancing world, shipping services are an essential part of our everyday lives. The two largest companies’ in the shipping industry today are Federal Express Corporation (FedEx) and the United Parcel Service (UPS). FedEx is an international company that believes in quality customer service. With its consistently high quality and innovative services, FedEx has achieved a relatively high market share in the global package delivery market. FedEx is currently the global leader in the express package delivery market, and it offers delivery services in over 220 countries and territories. The biggest competition that FedEx faces today is UPS. UPS is the largest package delivery company in the world, and it offers services in over 215 countries and territories. With its consistently low priced shipping offerings, UPS has earned a reputation as the low-priced market leader. Attaining a competitive advantage in the package delivery market is a challenging task, but UPS and FedEx have found innovative ways to accomplish this objective. Although these companies essentially offer the same delivery options, each of them has carved out its own market niche within the package delivery market. Table of Contents Introduction 4 Federal Express (FedEx) 6 United Parcel Service (UPS) 6 COMPETITIVE ANALYSIS 7 United Parcel Service (UPS) 8 Threat of Substitute Product 10 Delivery Confirmation...
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...Introduction There is no doubt that FedEx Freight is a leading U.S. provider of less-than-truckload (LTL) freight services. It is known for exceptional service, reliability and on-time performance. (History of FedEx Operating Companies About FedEx) With the rapid rise of virtually instantaneous electronic mail, some wondered if FedEx overnight mail delivery was as important as it was in the past. Margaritis pointed out that the company received only 9.3 percent of its revenue from overnight express mail, and that much of that mail could not be delivered electronically, such as gifts, electronic components, and medical equipment. (FedEx Cooperation) Nevertheless, “While FedEx Ground and FedEx Freight posted solid financial results, the third quarter was very challenging for FedEx Express due to continuing weakness in international airfreight markets, pressure on yields due to overcapacity, and customers selecting less expensive and slower transit international services,” said aid Frederick W. Smith.( Jeff B. 2013) In view of these issues, this essay is aimed to discuss how the business environment, company 3 resources and segmentation are related to the business performance. The paper analyzes these three elements using Porter’s five forces and SWOT. Porter’s five forces model analysis The five competitive forces model was came out from Porter’s first book "Competitive Strategy" in 1980. From that on, the model is broadly used by business managers as a guide tool to analyze...
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...Case #4: THE BATTLE FOR VALUE, 2004: FEDEX CORP. VS. UNITED PARCEL SERVICE, INC. Synopsis and Objectives • Set in June 2004 • To assess the financial performance of FedEx Corp. and United Parcel Service, Inc (UPS). The two firms have competed intensely for dominance of the overnight express package industry. • This case is intended for use in an introductory discussion of corporate value creation and its sources. It requires no numerical computations; rather, the tasks are to interpret the results and to reflect upon their implications. The contrasting record of the two firms affords a platform to: • Assess economic profit analysis (also known as Economic Value Added) and, more generally, the measurement of financial performance and health. The case provides a complete historical economic profit analysis for both firms, and permits comparison with other classic approaches to historical performance analysis. This comparison affords the opportunity to discuss the attributes of healthy and successful companies, and to explore the strengths and weaknesses of economic profit. Key learning points about economic profit include its dependence on the conventions of generally accepted accounting principles (GAAP) and its ignorance of strategic option value. • Evaluate the financial implications of rigorous competition and corporate transformation. Questions 1. What are the enabling and inhibiting factors facing the two firms as they...
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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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...Commentary This is a case about the company FedEx, a courier delivery service in US, which initially started off on a small scale and then started ramping up its facilities to reach the number 1 spot among all courier services. In June of 2000, FedEx, initiated Project ARISE .The major goals of project ARISE pertained to two major issues: the first was with respect to unifying the sales and marketing groups for both FedEx Express (air) and FedEx Ground (ground). The second issue was to develop a new compensation plan for the account executives now that their focus was on two different services (FedEx Express and FedEx Ground).In Jan 1998, FedEx acquired RPS, which would later become FedEx Ground, in order to diversify its delivery capabilities to both air and ground. Internally, combining these two departments would prove to be more cost effective; from a customer standpoint. Main issue How to evaluate the best account executive compensation plan for the integrated FedEx Express and FedEx Ground services that is in accord with the goals of Project ARISE. RECONMENDATION Solutions from FedEx end should be that they encourage cross-selling, and a first step in this process would be to declare quotas for sales force of both the firms. There is also a need to create a compensation plan that has greater clarity so as to give the sales force even more incentives. To properly connect both the Ground and Express lines of FedEx under a single sales team, a distinct compensation...
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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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...Case 9 FedEx vs. UPS—Competing with Contrasting Strategies in China Fiona 11125231 Introduction FedEx and UPS are two U.S based logistics corporations which entered into China in the 1980s. However, both two companies adopted contrasting entry approaches. As for expanding strategies, FedEx adopted a forceful approach while UPS followed a conservative strategy till the late 1990s. With the improved business prospects in the Chinese logistics industry, the intensified rivalry between FedEx and UPS reached its peak gradually. Following Chinese entry into the World Trade Organization (WTO), FedEx and UPS continuously implemented various new services and agreements to grab Chinese logistics market. Obviously, these strategies helped both companies increase their revenues significantly so both companies expected to gain more market share in the future. Entering and Expanding Services Network At first, FedEx commenced its operation in China in 1984 by means of joint venture while UPS entered into China through an agent partnership relationship. FedEx partnered with multinational companies in China to build service network thus FedEx focused on building infrastructure and distribution centers in the first decade of its operations in China. Though joint venture provided FedEx with greater opportunities that are inaccessible through other strategies, it brought much higher investments and risks. On the contrary, an agent partnership relationship saved UPS from high risks. Unlike...
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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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...1. Companies that often achieve high success rate do so because of the fact that they design their operations to support the company’s business strategy. These firms take the necessary steps to ensure that production operations are suited for the intended target markets. Production Operations can be defined as the special ability that production does well in order to outperform its competition, whether through offering quality, flexibility, low cost, or durable products/services. Toyota Motor Corporation a globally recognized leader in the automotive industries focuses on quality as its operation capability. If the company had focused on low cost instead of quality its operations would have an altogether different look. Two ways that Toyota’s operation might have changed as a result of a cost minimization focus which would be the most appropriate in this case are reduction in models they offer and a reduction in marketing and advertising. Since its inception in the 1930’s Toyota has offered over 150 different models across its major markets in Asia, Europe and North America. However, not all of the models offered have been profitable for the company which has resulted in many models being discontinued. With a cost minimization focus Toyota who has had great success with such models as the Camry and Corolla both of which were ranked in the top 10 of best cars to purchase. The company can focus more of its revenue into producing more of these particular models and enhancing...
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...FedEx FedEx is a company that provide logistical service. The company is well-known for transportation, e-commerce and business services. Reason behind succeed of the FedEx company has always been efficient information system. The business process will be discussed in the section of How FedEx deliver parcels. Company Mission and Goals “FedEx Corporation will produce superior financial returns for its shareowners by providing high value-added logistics, transportation and related business services through focused operating companies. Customer requirements will be met in the highest quality manner appropriate to each market segment served. FedEx will strive to develop mutually rewarding relationships with its employees, partners and suppliers. Safety will be the first consideration in all operations. Corporate activities will be conducted to the highest ethical and professional standards (FedEx, n.d.).” Company History According to FedEx, the company was originally founded by Frederick W. Smith; known as the chairman, president, and CEO of FedEx Corp. In 1965, it was during the process of writing the term paper; Smith got the ideal for FedEx. His term paper discusses leading organisations’ problem in the information technology sector. He also stressed on the point where most airfreight shippers did badly delivering urgent shipments because relying on passenger route systems. To solve the problem, Smith proposed a specific system to deliver time-sensitive shipments. On the...
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...5 Income Tax Provision 6 Defined Benefit vs Defined Contribution Plan 6 Earnings-per-share 7 Stock-based compensation 8 Statement of Cash Flows 8 Investing Activities 9 Non-cash Transactions 9 Conclusion 10 Works Cited 11 FedEx: Power of Global Trade Introduction The purpose of this paper is to analyze the annual report of a publicly traded company. I have chosen to review FedEx. This report will be reviewing the 2011 Annual Report issued by FedEx. The choice of FedEx is twofold. The first factor being that I am a little partially bias toward FedEx because I worked for one of their companies, FedEx Express, for over three years. FedEx Express was a fabulous company to work for because they offered a competitive wage and excellent benefits to part time hourly employees. The company’s ability to offer those competitive wages leads into the other factor, their impact on the global economy. FedEx is a massive corporation with reach to every market within the global economy. Their services are literally the life line that facilitates global trade. Without the air cargo industry, the global economy would be severely hindered. According to the FedEx 2011 Annual Report, 30% of the global GDP in 2010 was reliant by international trade of goods. In 1991, international trade was only represented by 3.7% of the air cargo industry. Based on FedEx analysis, in 2015 the international trade will be...
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