An examination of FedEx Corporation’s strengths, weaknesses, opportunities, and threats, with its position as the original overnight delivery service being discussed as one of the company’s greatest strengths.
FedEx Corporation was created in 1973 as an entirely new concept in package delivery – an overnight air delivery service. While many competitors have sprung up since that time to steal small portions of the market share, FedEx is still undeniably the global leader in its industry. The company also provides e-commerce and supply chain management services to its clients in more than 210 countries.
The corporation has some 215,000 employees and contractors and offers a plethora of delivery options including worldwide express delivery, ground small parcel delivery, freight delivery, and customs brokerage. Integrated business solutions are provided through a group of operating companies, of which Federal Express Corporation is the largest.
FedEx has experienced consistent growth in terms of net income in just about every year of its operation, which has meant three decades of growth. One of the company’s greatest strengths is undoubtedly its business concept. No matter what the economy is doing, there will always be a need for package delivery of some sort by companies and individuals involved in nearly every industry. Even when times are tough and companies are seeking to save money, FedEx has less expensive delivery alternatives from which to choose.
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Of course, being the originator of the express delivery concept is also a key strength. FedEx became a household name before any of its competitors ever arrived on the scene, and thus has become synonymous with the idea of express package delivery in the minds of many, if not most, consumers.
Another reason for FedEx’s unparalleled success is the company’s philosophy of “People-Service-Profit,” which dictates that company puts its people first above everything. This way, executives apparently believe, employees will be motivated to provide the best customer service possible, and profitability will follow.
The approach appears to be working. The FedEx employee relations program involves recognition for outstanding performance with tickets to special events and paid time off to participate in community volunteer projects.
Perhaps FedEx’ greatest weakness is the corporation’s large size. In a large, multinational organization, it is often difficult to maintain tight control over all operations. Indeed, according to respected marketing expert and author Jack Trout, the “bigness complex” negatively impacts most organizations, because the bigger the company, the harder it is to manage (Trout, p. 193).
Change is difficult to manage in a company spanning multiple countries and multiple cultural environments. As FedEx Corporation continues to expand, its executives may find it more and more difficult to retain a top market position.
As times and customer demands have changed, FedEx has diversified and altered its array of services. For instance, in the early days of FedEx the company’s corporate customers began to realize the value of its service and request similar delivery support in overseas locations. FedEx responded by expanding globally, first into developed countries, and later into developing countries with its Asia Pacific Division, which is headquartered in Hong Kong. The delivery giant continues to expand in both geographical scope and service range. For example, in November 2002 FedEx submitted an application with the U.S. Department of Transportation for 12 new airline frequencies to Hong Kong, hoping to add to its 84 monthly flights into and out of the Asian city in order to better serve its U.S. shippers and exporters.
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Even though FedEx was an innovator in its field some 30 years ago, today there are multiple other companies providing the same services with the same efficiency and similar philosophies. Thus, FedEx must continue to innovate and expand in order to meet continually changing consumer demands – especially in the current global economy where technology plays such a significant role in how we do business.
So far, FedEx Corporation has embraced technology, presenting an informative, user-friendly, interactive website that allows customers to conduct many transactions online, including preparation of shipping documents, requesting proof of delivery, package tracking, pickup scheduling, and rate estimations. There is even an online Global Trade Manager to assist customers in determining duties and taxes and preparing documents required for international shipping.
While FedEx has taken many opportunities to promote its services through sponsorships – such as the company’s sponsorship of the PGA Tour and Senior PGA Tour, it appears as though strategic partnerships with other companies are not on the agenda. Nevertheless, there could be opportunities available to gain even greater market share if FedEx executives would consider such relationships. One example might be an alliance with Office Depot stores (or a similar company) to offer FedEx shipping services in-store at all retail outlets as the predominant shipper. Small business customers could receive a discount, perhaps, and this would benefit both companies as well as the customer.
While there are other overnight delivery companies succeeding in FedEx’ market, the innovator remains the market dominator; all the others are copycats, in many ways. Yet, FedEx must always remain vigilant and aware of its competitors’ offerings and marketing programs. Among FedEx’ biggest competitors is Airborne Express, which delivers packages to more than 200 countries. Airborne reached sales of just over $3 billion in 2001, which included a two percent growth from the previous year’s figures. The company’s greatest area of strength is price – Airborne’s prices are typically lower than those of FedEx, making it the most cost-efficient choice for shipping either locally or long distance for many cost-conscious consumers. Airborne has recently entered into a strategic alliance with OfficeMax, installing Airborne Express shipping solutions in each of the office supply company’s retail outlets. The potential for increased sales is phenomenal for Airborne.
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UPS, another FedEx rival, owns Mailboxes Etc., which has enabled the company to corner the market on shipping services for small business. That is, until the recent alliance between Airborne Express and OfficeMax. UPS has a distinctive look – the brown suit and brown truck, on which it has capitalized in recent advertising campaigns to propel it to the forefront of the minds of potential customers. FedEx has a disadvantage in this area, because it is quite easy to remember the catch phrase, “I love brown,” and “Brown helps me…” from UPS television ads. FedEx ads are clever, but don’t have an easy-to-remember tagline. Currently running ads do exhibit the phrase “There’s a FedEx for that” at the end of each, but the words are written, not spoken. Spoken words are more easily remembered.
Another external threat that FedEx must deal with is changes in international shipping regulations, duties and taxes. In order to provide adequate customer service and support in this area, FedEx Corporation must always remain informed of laws and customs regarding trade and shipping in the more than 210 countries in which it conducts business.
“Airborne Express,” www.hoovers.com.
Airborne Express corporate website. Available at www.airborne.com.
“FedEx Corporation.” Available on Yahoo! Finance at www.biz.yahoo.com/p/f/fdx.html.
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“FedEx Corporation.” Available at www.business.com.
FedEx Website. Available at www.fedex.com.
Trout, Jack. Big Brands, Big Trouble. Wiley & Sons, Inc., 2001.