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Key Topics
Requirement
Write a report on Strategic Management of FedEx
Solution
Industry overview
The main purpose of industry analysis is to evaluate the strength and opportunity of the concerned industry. In this assignment whole or entire courier or e-commerce service providing companies strength and its business opportunities and the threat has been analyzed. In this assignment, the FedEx company industry analysis has been conducted which is also operating and providing the major and reliable transportation, e-commerce and courier services to the major part of the world. This company that is FedEx is been categorized into the transportation industry. So this industry has been found much competitive as there are many consumers with different need and preferences.
At the global level, FedEx major competitors are DHL that is Deutsche Post, FCML Courier, LDH Express, and Royal Mail.
The current position of FedEx is topmost in the courier and e-commerce industry operation at domestic level. By providing the reliable and satisfying services on time to the customer.
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FedEx overview
FedEx is mainly the service industry that it can be categorized in the transportation industry. The main competitors of the FedEx are UPS that is United Parcel Service and the United States Postal Service. FedEx has the global presence. Its major market share is in Europe and USA. FedEx is the global solution and shipping corporation that mainly provides services to the major consumer and businesses globally. It was incorporated in the way back to 1970 and since then it is operating and dealing with the transportation, shipping, and courier delivery service sector.
Current position
Currently, FedEx is the world leader in the service industry. The company that is FedEx flagship division, FedEx Express, is currently the worldwide leader in the transportation and express delivery market. Due to its supply chain management and same day delivery system it has to gain the strategic and competitive advantage in the transportation industry.
Relevant general environment and their implications for successful implementation of strategic goals.
The general environment of the transportation industry as well the environment of the FedEx company influence the operational activities and its risk and opportunities. The environment is so competitive in transportation industry at both the level that is at domestic as well as at the global level (Kumar et al., 2015). To compete at both the level the strategy which the FedEx has adopted is it has fine and sound supply chain management and policy of delivering the post on the same day. Which leads it to gain the competitive and strategic advantage in the competing industry where so many competitors are competing with each other. The main goals are to make the global presence and to be the leader in the transportation and shipping industry. So for this FedEx adopted the environment of fine supply chain management and providing the same day delivery. It became successful in the industry by making the loyal and regular customer just by providing the reliable and prompt service to the customer.
PESTLE Analysis
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Political factors or environment- It plays a vital role in making any business or operation into a great success. Transpiration and shipping industry requires the transportation of the goods and services through the sea and by the airline. So here the proper rules and regulation are to be followed. Any political issues like instability in the political system in the country will hamper the industry growth. But in case of FedEx, the political factors found to be stable in the country and very favorable. It has fine international trade agreements which are boosting the growth of the FedEx.
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Economic environment or factors- Economic factors also contribute the growth of the industry. The economic segment of the general environment address changes and the conditions in the economy which includes many factors such as interest, inflation, and unemployment, GDP, and exchange rate (Boersen et al., 2015). So in case of the transportation and shipping industry, it has been found that the GDP has been increased over the time all over the world. Which is contributing to the courier and shipping industry to operate in a good manner and earn more profit. With the change in the price of Dollar, FedEx is affected and it has impacted the economy.
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Social factors- Countries which have more population are more likely to have a major customer. So same is the case with the transportation industry. Social factors include such as literacy rate, lifestyle and so on. If more literate people are there then they demand more transportation and shipping services so the transportation and shipping industry will be benefited due to more literate people. So FedEx is serving its major services in the region which are more educated and developed so it has good opportunity to serve the maximum customer.
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Technological factors- In any industry technology play a vital a role. Due to globalization and technological advancement, transportation and shipping, as well as courier industry and company, gained a lot of importance. The increasing trend of online shopping has resulted to increase the economy of the FedEx Company as it is also dealing in the same transportation and courier services sector (Gleghorn et al., 2015). In regards to technology, FedEx is very much sound and its adopted fine technology in its supply chain management.
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Legal factors- FedEx has sincerely following the legal formalities for its operation. FedEx follows the ISO 14001 certification regarding the environment as well as it also follows the regulation and rule. FedEx provides the information security online and stands answerable in any case of legal matter.
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Environmental factors- it has a major impact on any industry. In case of transportation and shipping industry in which FedEx also operate is getting affected by the environmental factor. Change in the climate may affect the air transportation and led to delay in the delivery of the goods. Apart from this FedEx ensure to make the environment healthy and clean.
External environment analysis of the logistics, transportation or courier industry.
FedEx is categorized in the logistic industry too that is determined by the porters five force model which has been detailed to know the industry analysis in the external context. This analysis includes 5 forces that are detailed below.
Five Force Model
Forces Strategic significance
1. Internal rivalry High
2. Supplier power Low to moderate
3. Buyer power Moderate
4. The threat of new entrants Very low
5. Substitutes and complements Moderate
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Internal rivalry- in the transportation, courier or shipping industry the existing rivals is high such as the FedEx, UPS, USPS, and DHL. Regardless of the few competitors, still the transportation and logistics industry remain so competitive and main reason is a large number of the consumer, low cost of changing providers and poor demarcation among the competitors. FedEx competes with other firms across of its service lines.
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Supplier power- a major product of the transportation services are available easily. So the power of the supplier is low in regards to service and transportation industry. There a huge number of supplier available in the market who are ready to supply raw materials and other required product to the transportation and service industry.
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Buyer power- moderate or low due to medium shipping choice. In the same manner of bargaining power of the supplier, the bargaining power of the buyer is also moderate. But at the time it fluctuates also as a customer have full right to choose their service provider according to the demand and time, need. But though they lack the right to negotiate on the price.
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The threat of new entrant- transportation, logistic or courier industry is been credited or have the advantage of minimum threat from the new entrant. Due to making the entry in this sector or industry require a high cost. And require a high cost of operation and capital equipment also.
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Substitutes and complements- it is moderate and sometimes said to be low due to limited services for the large air freight and freight. Due to a low number of the substitutes or alternative this logistic industry has low that from the substitute.
Greatest threat and how to address it to make a profit. (Strategy)
According to five force analysis of the logistics and transportation industry, it has been found that the industry is facing many challenges in regards of rivalry as there are few major competitors in this industry namely UPS, USPS, DHL, and FedEx. So in a way to stay longer in the market and to compete in the industry the organization needs to build and focus on the strategies to cope with the challenges (Chen et al., 2017). And respond to the customer need in such a way that it may attract more customer and make them loyal. So for this company need to provide the reliable services.
So in a way to gain the competitive advantage, FedEx adopted the strategy of focusing on the customer need and provide the prompt and reliable service to the customer. Finally, the FedEx became a success in implementing this strategy that is to provide the same day delivery and reliable services to the customer globally. Which lead FedEx gain the strategic advantage over the competitors.
FedEx can use it supply chain management in an effective manner and try to focus on the customer need in a way to gain the strategic advantage in the logistics industry.
VMO Strategy of the FedEx
FedEx focused to build a sound relationship with all the vendor and stakeholder. So for this, it appointed the person to look into the matter of relationship with every vendor. It adopted steward’s relationship tactic which led him in deploying the resources in much effective manner. A purchasing and sourcing group. To ensure FedEx Corp. and its operating companies get the best deals from their vendors, the corporate IT department created a purchasing and sourcing group within its vendor management office. The group is responsible for staying on top of the company’s top 100 contracts and the competitive landscape associated with each of those vendors (Thomas et al., 2016). It also provides the IT leaders of the operating companies with a dossier on their top vendors containing information they can use to negotiate the best deals. All these VMO strategies enable FedEx to be competitive and build a strong image.
Organization strategic
FedEx focuses on the below major five strategies to grow.
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• It's focus to grow internationally
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• Developing core packaging business
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• Focus to grow or develop the supply chain capabilities
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• Focus and concentrate to grow with technology and e-commerce (Thomas et al., 2016)
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• Focusing to grow new services and alliances
Strategic Group Mapping
So from the above picture, it can be concluded that the level of service delivery of FedEx is better and fine in comparison to other competitors in the industry. Whereas it has to focus more on the quality because in regards of quality UPS is better but the quality of FedEx Is also fine and better but it needs to concentrate little more in a way to stay in the market and to make a more loyal customer.
Through the adoption of the effective supply chain management, FedEx has gained the strategic advantage in the industry.
Its current position in the market is at the top that is FedEx is the leader in the logistics industry.
SWOT Analysis
Strength
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It has a sound brand image
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Good reputation for on-time delivery
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Well located hubs, great routes
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Fine Research and development
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More focus on customer needs and making satisfied
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A leader in the domestic express delivery market
Weaknesses
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Relative high price
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Lacks quality in regards to UPS
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Not fully differentiable from UPS
Opportunities
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Growth chances more in Asia China Specifically due to economy beginning to recover (Burner et al., 2017).
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Growth chance due to continued globalization
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Expansion of online retailing creates a great opportunity
Threats
- High fixed cost
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Worker and drivers are trying to form the union
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UPS is trying to take market share in the express delivery arena
Opportunities- through the continued globalization online buying has been growing exponentially. IBIS World research forecasted that per year 8.6 percent increase online revenue (Mishra et al., 2015). So it is the opportunity for the FedEx to utilize this opportunity and earn maximum revenue by delivering the quality services to the customer it can also expand the Chinese market in a way to cover the maximum market share at the global level.
Threats- the price of the fuel has increased tremendously. Back in the 90s, fuel cost about a 50percent gallon. Presently it is near about 3.60 per gallon. The major market is been cover by the UPS and it is trying to tap the major market at the global level so to compete with this it is somewhat threatening. E-substitute from the ever-growing popularity of the internet it is creating the major challenges to the FedEx (Grant et al., 2016). It is relating with the VMO strategy as VMO strategy of FedEx is to ensure the sound relation with all the sourcing group to ensure effectiveness in the operation it strategy is also that it appointed an authorized person to look after the relationship of each vendor to maintain the relationship strong and competitive.
Recommendation
At the end of this assignment, various recommendation can be sought and recommended such as after analyzing the external environment of logistics and transportation industry where FedEx is also operating it can be recommended that it needs to focus and concentrate on the global expansion of the business as the China market is a good opportunity to serve and to generate more revenue and make the global presence. Besides this, it need also to focus on the fuel policy at the global level to meet the requirement as if the oil or fuel rate rise the delivery cost will also need to be addressed accordingly.
Need to concentrate on the quality of the services also as it lacks the UPS services proved in regards to quality.
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Mishra, S. (2015). Effective communication for corporate sector: A need for a paradigm shift. Indian Journal of Health and Wellbeing, 6(7), 749.
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Bruner, R. F., Lipson, M. L., Carr, S., & Lipson, M. L. (2017). FedEx Corp. versus United Parcel Service of America, Inc.: Who Will Deliver Returns from China?. Darden Business Publishing Cases, 1-14.
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Grant, R. M. (2016). Contemporary strategy analysis: Text and cases edition. John Wiley & Sons.
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Boersen, N., Niehues, K., Scott, H., & Weyrich, S. (2015). SimplyVisa.
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Chen, S., Wang, C., & Ou, S. M. (2017, August). The Key Success Factors of Developing Intelligent Logistics Within Pharmaceutical Industry in Fujian Free Trade Area. In 2017 International Conference on Green Informatics (ICGI) (pp. 149-154). IEEE.
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Gleghorn, G. D., & Harper, A. (2015). Logistics and Supply Chain Management and the Impact of Information Systems and Information Technology. In Technology, Innovation, and Enterprise Transformation(pp. 295-301). IGI Global.
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Thomas, M., & Alluru, J. R. (2016). Thriving in a downturn: aligning corporate strategy and the economic context to ensure stable growth. Strategic Direction, 32(2), 14-16.
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Kumar, V., & Sharma, R. R. K. (2015, December). Identifying critical success & failure factors for TQM implementation: Extract from real case studies. In Industrial Engineering and Engineering Management (IEEM), 2015 IEEE International Conference on (pp. 16-20). IEEE.
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