Strategic Management in FedEx in response to Competition Essay

History of air bearers as given by Coyle et Al attributes the usage of aeroplanes for mail conveyance as the get downing point of the air hose industry ( Coyle et al, 2006:158 ) . From mail conveyance air transit moved to passenger, transport where the industry has all through established its laterality particularly when it comes to transporting riders over long distances in really short periods of clip. The services offered by for-hire bearers can be classified into all-cargo, air cab, commuter, charter and international services ( Coyle et al, 2006:159 ) . All-cargo bearers such as FedEx and UPS air hoses are chiefly concerned with the transit of lading. Federal Express Corporation, which is a cargo air hose, is based at Memphis in the United States of America.

Federal Express Corporation besides known as FedEx is the largest air hose globally with respect to freight dozenss but in footings of fleet size, it is the universe ‘s 2nd largest air hose ( Zhang, 2006:98 ) . The corporation provides way and fiscal coverage for a figure of companies, which jointly compete under the Federal Express name globally. The companies include FedEx Ground, FedEx Express, FedEx Office, FedEx Freight, FedEx Services, FedEx Trade Networks and FedEx Custom Critical (, 2010:110 ) . Before the Federal Express became Federal Express Corporation it was known as FedEx but it adopted the current name under which it presently operate in 1998 when it acquired Caliber System Inc. Federal Express Corporation built on its strength of express bringing service and formed more diversified company which incorporated different but related concerns ( Denton, 1992:86 ) . Federal Express Corporation is the taking house in the transit industry globally. The company has managed to achieve its current place by integrating what it takes to be a major participant in the planetary market ( Gp-Training, n.d. ) . FedEx Corporation has built superior practical, physical and people web to determine web economic system in the planetary graduated table.

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The undermentioned treatment will seek to carry on a strategic direction analysis of FedEx based on two theoretical accounts ; Porter ‘s five forces theoretical account and the SWOT analysis. The two theoretical accounts have been selected based on the ground that they provide a bit-by-bit analysis of an organisation. They are nonsubjective and can enable a contriver or strategic director to do accurate anticipations of a concern or undertaking. Further, they greatly assist in anterior findings before capital investings are made, for case, they greatly assist in finding whether the ends and aims of a peculiar concern are come-at-able.

SWOT Analysis and five forces theoretical account of Federal Express Corporation


SWOT analysis refers to an rating technique deployed in finding the strengths, failings, chances and techniques in a concern venture.

On the other manus, Michael Porter established a construction that theoretical accounts a concern as being influenced by five chief forces. This theoretical account is really of import and can be used by industries to understand their operations better. Harmonizing to Overbeck ( 2009:126 ) porter ‘s five forces, which is a theoretical account for industry analysis, include competition, menaces of replacements, Buyer power, Supplier power and Barriers to entry or menace of entry ( McGrew & A ; Wilson, 1982:75 ) . In add-on, FedEx SWOT analysis presents assorted chances every bit good as strengths of the company, which have made it go one of the market leaders globally. However, the company besides has a figure of menaces and

failing that should be addressed to be able to go even more comfortable in future.

Beginning: Hill, C. and Jones G. ( 2009:67 ) . Strategic direction theory. New York: Cengage Learning.

Porter ‘s Five Forces theoretical account


Harmonizing to Hill and Jones ( 2009:42 ) , competition between rival houses harmonizing to traditional economic theoretical account thrusts profit to finally nothing. However, competition is non perfect and concerns are non basic inactive monetary value takers but they strive for competitory advantage over rival houses. Application of competition, which is Michael porter ‘s first force to the Federal express, is apparent. For case, the corporation was faced with baleful competition challenge before it occupied the current place in the industry. For case, the entry of rivals in their market. UPS in peculiar, posed a major menace. The company was ready to pass tremendous amounts of money in market incursion. For illustration, it invested in a 30 million dollar ad for intents of viing with FedEx. Another challenge confronting FedEx is the progressive developments in engineering which act as replacements to transnight mail bringing, for illustration, facsimile and electronic mails. The entry of UPS into the market posed a terrible menace to FedEx, serious plenty to do Pauline and Farhoomand ( 2000:88 ) , to describe that the transit volume of FedEx was traveling down.

FedEx Corporation responded to the menace of competition that threatened its advancement and in January 2000, it resorted to reorganise the company into groups operation by making concern with the whole FedEx household. Harmonizing to Hill and Jones ( 2009:42 ) it is of import to reconsider scheme in order to vie efficaciously in the market. The theory of Porter ‘s five forces theoretical account province that such action should merely be taken after understanding the constructions of the industry ( Goodwin, 2001:178 ) . The declaration was that the five subordinate companies and FedEx corporation was to vie jointly but to work independently, a scheme that boosted their chase for an advantage in the industry. This is in conformity with the strategic direction theory and the theoretical account of Porter ‘s five forces, which farther advocates the examination of competitory forces in the market before placing menaces and chances every bit good as coming with a suited scheme ( Hill & A ; Jones, 2009:201 ) .

Another scheme that FedEx Corporation used was bettering merchandise distinction by encompassing invention and offering high quality merchandises and services to clients. Harmonizing to ( Goodwin, 2000:67 ) , FedEx Corporation pooled its selling, gross revenues and client service map that enable clients to entree services of the group at a individual point. The reorganisation cost FedEx Corporation 100 million USD in a span of three old ages, but the terminal justified the agencies. These steps retained FedEx in the market, but did non thwart UPS which in a figure of old ages has managed to lift out its just portion of the market. Today, FedEx has grown into a multi- billion corporation having assorted companies viz. the FedEx corporation, FedEx Ground, FedEx Express, FedEx Freight, FedEx usage critical, FedEx Trade Networks and FedEx Kinko ‘s.

On the other manus, UPS has grown to the largest bundle bringing company on the Earth having companies like ; UPS Mail Innovations, UPS Air Cargo, UPS Capital Corporation, UPS Consulting, UPS Aviation Technologies, UPS Mail Boxes Among Others.

Menace of Substitutes

A utility merchandise in Porter ‘s theoretical account is a merchandise in other industries which could be deployed as an option to another merchandise from a different industry. The menace of replacements harmonizing to the five forces theory hence exists when the demand of a merchandise is affected by alteration in monetary value of a utility merchandise ( Overbeck, 2009:56 ) . The same manner the monetary value snap of a merchandise is affected by same replacement merchandises therefore when more substitutes become available, it influence demand, which becomes more elastic because clients have more options. Competition can be endangered by menace of replacements when they come from outside industry. Strategic direction theory and five forces theory harmonizing to Hill and Jones ( 2009:53 ) assert that being of really close replacements poses a strong menace in the market and leads to cut down profitableness. To cover with such a challenge the two theories support the thought of diversifying a company ‘s merchandises and service as FedEx did ( Hill & A ; Jones, 2009:53-54 ) .

FedEx embraced engineering and invention, which enhanced dependability and velocity of bringings in the house. The company adopted following twenty-four hours bringing services, which wholly revolutionized the industry. This made it preferred to many clients because it became dependable and convenient. Perishable trade goods could make their intended finish with appropriate clip, which accordingly reduced competition among its challengers. Harmonizing to Overbeck ( 2009:45 ) , FedEx Corporation Company under the leading of Smith pioneered a figure of technological discovery that propelled the house above all others. For case, over 100000 Personal computers loaded with Federal Express package made to log and associate clients into tracking and telling systems were introduced in FedEx. Federal Express besides, became the first to publish their drivers with handle scanners, a device that alerted clients when bundles were either delivered or picked up. Harmonizing to Pauline and Farhoomand ( 2000:113 ) , Federal Express Corporation was the first to establish a web site with tracking and following capablenesss. Such schemes helped the company to turn without experiencing the pinch of the menace of replacements.

Buyer Power

This is the impact that clients ( purchasers ) have on a bring forthing industry. Harmonizing to Overbeck ( 2009:89 ) , there are factors that determine the purchaser power. Federal Express Corporation has been shaped by the purchaser power particularly corporate purchasers who have tremendous bargaining power ensuing from the big sums of purchases they make. Buyer power is besides influenced by the shift costs. It is a fact that purchaser ‘s power greatly influences FedEx. For illustration, it gained a immense portion of the catalogue concern because it was able to offer purchasers lower monetary values as compared to UPS. The company has ever tried to spread out with the demand of its clients ( Overbeck, 2009:89 ) .

FedEx Company has used information engineering that has been rather important in the globalisation of trade, effectual and efficient sharing of information within and outside the company, improved client service and decreased costs of services offered by the company. As a consequence, the purchaser power is skewed towards Federal Express Corporation because it provides the services that the purchaser demands. Harmonizing to five forces theory and strategic direction theory, purchaser power is a really important consideration in planing concern scheme ( Hill & A ; Jones, 2009:50-52 ) .

On the other manus, purchaser power besides constrains FedEx in some ways. The bringing has nominal exchanging costs such that when a client is non satisfied, they can easy exchange to the rival ‘s services. For case, when UPS made its entry into the market, offering its services at half the monetary value offered by FedEx, many of its clients disregarded the shift costs and moved to UPS.

Supplier Power

Supplier power illustrates the easiness with which providers can find monetary values. Supplier power Idaho determined by the figure of providers available in an industry, the peculiarity of their services or merchandises their influence over a company. The more provider options open to a company, the less the likeliness of high provider power.

Harmonizing to Hill and Jones ( 2009:52 ) , a powerful supply has the ability to act upon the bring forthing industry. Harmonizing to five forces theory and strategic direction theory, providers can easy find the hereafter and advancement of a house and so can the 3rd parties ( Hill & A ; Jones, 2009:53 ) . While other rival companies in the industry were sub-contracting their cargo to 3rd parties and purchasing infinite on commercial air hoses, Federal Express Corporation tried to get its ain transit fleet and in the 10th twelvemonth, it became the first company in the United States to accomplish 1 billion USD gross grade in ten old ages without corporate amalgamations and acquisitions. Harmonizing to Farhoomand and Pauline ( 2000 ) , Federal Express Corporation does non hold external factors that influence its internal determination and operation and has been able to progress greatly in the industry this is because Federal Express Corporation has limited influence of purchaser power.

Barriers to Entry/ Threat of Entry

Hill and Jones ( 2009:43 ) argue that industries possess some features, which protect the exalted degrees of net income of houses in the market, which prevent extra houses from come ining the market. It is this suppression of extra challengers in the market, which is termed as barriers to entry. Harmonizing to Strategic direction and five forces theories, barriers to entry cut down rate of entry of new concerns, which hence maintains the high degree of net income for those houses that are already in the industry ( Hill & A ; Jones, 2009:87 ) . The beginnings of such barriers include authorities created barriers, Asset specificity, patents and proprietary cognition and organisational economic systems of graduated table. Federal Express is already in the industry and ruling the industry already ( Farhoomand & A ; Pauline, 2000:79 ) . Therefore, it is non faced with any barrier to entry into the industry.

FedEx and the other bringing companies already in the market like UPS are the cause of the barriers. They have big trade name name every bit good as established dealingss with foreign states. Smaller companies will hold an about impossible undertaking of perforating the market because of the big capital demands. With small capital, it will be impossible to offer competitory monetary values. Further, making the criterions set by the market giants is an acclivitous undertaking.

Federal Express SWOT Analysis

FedEx SWOT analysis presents how the company has been able to utilize information engineering in specifying its schemes ( Quality-Assurance-Solution, n.d. ) . Information engineering apart from bettering the public presentation has made it possible for the company reaches new associates or groups of people. SWOT analysis of FedEx Company involves analysing strength, failings, chances every bit good as the menaces of the company in conformity with the SWOT analysis theory ( Burger, 2008:12 )

Strengths of FedEx

SWOT analysis theory harmonizing to Burger ( 2008:13 ) is really instrumental in assisting companies identify internal and external properties and factor, which affect the companies ‘ resource capableness. Harmonizing to the theory, internal properties are strengths and failings while external properties are chances and menaces ( Burger, 2008:13 ) . FedEx strengths in the conveyance industry include ;

Efficient service bringing to clients. The company gives the demands of client ‘s first precedence. This has instilled clients with assurance in the company, thereby doing it rather preferred among many people in the planetary market.

In add-on, Grignard ( 1994 ) argues that the strength of the company is the ability to offer express mail services, which ensures that mails are delivered overnight. This has made the company to surpass many major participants in the industry such as United States Postal Service in footings of service bringing every bit good as client service. Harmonizing SWOT analysis theory such strength is really important in doing FedEx recognize its aims ( Burger, 2008:13 ) . FedEx Company besides has a really strong trade name name, which gives it its topographic point in the planetary market.

FedEx is known for its innovativeness. It has proved clip and over that it is capable of originating great thoughts that wholly change the market. For illustration, the purchase of their ain aeroplanes and ships alternatively of engaging. This boosts a client ‘s assurance in the company as they are guaranteed that 3rd parties are non a party to the bringing of their packages.

Further, FedEx is known as a market leader. It ‘s known for its usage of advanced engineering and effectual communications systems in all its operations. It ‘s a recognized worldwide transit company and it ‘s besides known for its ability to take in smaller companies to spread out its demands.

Above all, its greatest strength is its trade name name and the good will or repute attached to it.


SWOT theory harmonizing to Burger ( 2008:12 ) provinces that failings are some of the internal conditions, which prevent companies from accomplishing their aims. For case, the difference between the company and its pilots is an internal cleft which could damage its repute


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