Fedex: Strategy Analysis

By capitalizing on this strategy, FedEx was able to boost its average delivery volume in 1976 to 20,726 packages per day via its three services, Priority-One, Standard Air, and Courier Pack, compared with an average of 10,521 delivered daily the prior year. Clearly the company’s calculated use of strategically-located hubs, nighttime flight routes, and limited package size allowed the company to carve out a niche by reliably delivering packages on an immediate, overnight basis.

FedEx’s new product Courier Pak makes sense because of its’ high profit margin and potential to generate new volume. Out of the 3 services that Fed Ex provides, CP yields the highest profit margin at 66% while Priority-One is at 55% and SAS is only at 27%. In addition to this, the company believes that it will be able to boost up sale of CP from 1300 to 6000 packages per day. This shows that CP is the most profitable and huge potential for growth.

FedEx’s super-hub is located at Memphis International, making it the busiest cargo airport in the United States and second only to China worldwide. FedEx operates approximately 652 aircraft. Each night, approximately 140 FedEx aircraft arrive and depart Memphis en route to 375 airports in 220 countries (About FedEx, n.d.).

During the 1980s, the air express industry was a medium to attractive industry to already be a major player in, but not a very attractive industry to try and break into. The industry can be characterized by high rivalry from competitors who compete on the same services with very little differentiation, medium power from suppliers who supply the resources necessary to run the business, high buyer power because customers can basically find an equal service from any firm in the industry, low substitution threat from other means of shipping transportation, and low threat of new entrants due to the high initial capital outlay and need of management

Life Cycle Cost (LCC) is the total lifespan cost incurred by an organization in purchasing, installing, operating, maintaining, and disposing off any equipment used in daily operations of the firm. In regard to this, estimation of LCC encompasses using a particular approach in identifying and quantifying components of an LCC equation (Pehnt, 2006). The use of LCC as an assessment tool when selecting possible design alternatives results in the provision of a cost-effective solution within limits of available data. In addition, a standard LCC comprises initial and operation costs, installation and commissioning costs, energy costs as well as disposal costs among others.

The organization is FedEx, the logistics company, and specifically its Express business unit, which is focused on overnight courier activities. The time period is generic basically the activities are repeated day over day. Product costing is important for the company, knowing that most of the cost structure is fixed costs. Normally, FedEx looks at service costs at the route level, and then the fixed costs related to the entire network that brings packages to customers around the world.

DHL 31%, USPS 8%, FedEx 27%, and Amazon 3%. From these numbers Amazon is a very small player in the shipping department. Every competitor, expect DHL, are currently shipping the excess freight that Amazon cannot maintain. With Amazon 's move to acquire more of the market, these competitors need to be on the lookout because portions of their market share can be taken away. These major shipping firms only provide shipping services not offering household products like Amazon. With Amazon starting by semi-supplementing their shipping avenues, Amazon has the potential to grow even larger. The market cap numbers are not a good basis to judge market share on since FedEx and UPS have the majority of the market in the shipping industry. FedEx and UPS are the major competitors against Amazon and its new shipping department. FedEx and UPS had the most recent annual net income of $50.3 billion and $58.3 billion respectively. They represent the majority of packages delivery from individuals, businesses, and online retailers.

These are their daily volumes for those services. FedEx has many service areas. They service over 220 countries, territories and every single address in the U.S. FedEx tends to make more than 6 million package tracking requests daily. This is an outstanding number for a company dealing with packaging and locator with tracking numbers. Their express facility has 1,057 stations, and 10 air hubs. While their ground services has 32 hubs and over 500 pickup/delivery terminals. Freight has approximately 355 service centers and nearly 2,000 office locations. Despite all their services FedEx has a mission. Their mission is to produce outstanding financial returns for their shareowners. However, all customer requirements will be met while providing high value logistics, transportation and related business through operating companies. According to FedEx website, “FedEx will strive to develop mutually rewarding relationships with its employees, partners and suppliers” (About FedEx). Safety is their number one concerns and first considerations in all operations. However, all their corporate activities will be conducted according to the highest ethical and professional standards. FedEx values their people, service, innovation, integrity, responsibility, and most of all loyalty. This company strategy consists of three levels; compete collectively, operate independently, and manage collectively. These strategies will help the company accomplish their goals. Standing, as

My company is FedEx. The company's stated mission, as per its website (2013) is that it "will produce superior financial returns for shareowners by providing high value-added logistics, transportation and related business services through focused operating companies." This mission statement highlights the following stakeholders: the shareholders and the customers. A further stakeholder not mentioned but critical to FedEx is the company's employees. For example, an often-cited maxim at FedEx is People-Service-Profit, highlighting that it is the people who deliver the value-added for the customers, and that this is how FedEx delivers profits. The company also mentions its partners as key stakeholders, and there will be the usual tangential stakeholders like governments, competitors, potential customers, and suppliers. Most of these are external stakeholders the internal ones are the employees and the shareholders. All managers, even senior managers, are employees and most are shareholders as well.

Logistics services in the supply chain can be considered as a service offering, with numerous logistics companies competing to offer comparable services to many of the same consumers. As consumers hunt for potential providers in this extremely competitive marketplace, logistics service suppliers should discover approaches to distinguish themselves and their service offerings so as to help them compete. One established method for companies to differentiate themselves is by building strong brands. For instance, FedEx has evidently distinguished itself through successful brand management. The brand value to consumers is usually signify as consumer-based equity which happens when consumers possess a high level of familiarity and awareness with the brand and retains some strong, constructive and inimitable brand associations in memory (Davis, 2003). Brand awareness is referred as the consumers’ capability to recognize diverse brand elements – brand

The internal environment of FedEx consists of customers, distribution and competitors. This environment determines what FedEx does to succeed in their market.

FedEx Corporation, situated in US, is one of the leading supply chain management solution providers in the world. With annual revenues as high as USD33 billion, the company offers incorporated business

FedEx is a logistical service company specialized in transportation, e-commerce and business services. The success of FedEx lies on an efficient information system. The business process is as follows:

Fedex has Hub & Spoke sorting and distribution system with 520 facilities & 32 hubs all over the world and it is continuously adding more hubs every year to make its delivery system more extensive. It also has 5000 drop boxes at US post office which enhances the reach of

In addition to that, FedEx came up with new services such as Saturday deliveries, delivery by 10:30 A.M., customer interfaces (drop boxes, drive through stations and express delivery stores) and same day pickup of order. This is to distinguish its services. More on that, FedEx's philosophy of "People-Service-Profit" was successful in insuring a union free workforce devoted to customer focus. In 1978, deregulation in transportation helped FedEx to acquire larger planes therefore achieve lower cost. Trade deregulation in Asia-Pacific enabled FedEx to expand further. The acquisition of Gelco express, Tiger International, and establishment of Airport Hub in Brussels expanded FedEx internationally. Inflation and rising global competitiveness generated the need for "just-in-time" supply model, which was the advantage supported by FedEx advanced technologies.