SWOT Analysis for FedEx Corporation - Case Study Example

? Analysis of Publicly Traded Corporation – FedEx Corporation Determine the impact of the company’s mission, vision, and primary stakeholders on its overall success. The mission statement of FedEx Corporation encompasses several fundamental aspects that are of utmost importance to the effective continuation of the organization’s operations. According to FedEx Corporation (2013a), the company aims to achieve significant financial returns for its shareholders who have displayed confidence in the organization’s ability to succeed in the industry by providing optimum transportation, logistics and courier facilities to its extensive customer base. Accordingly, the organization’s mission statement also addresses the establishment of prosperous and beneficial relationships with both internal and external groups that are associated with the activities of the business such as its employees, suppliers and other partners (FedEx Corporation 2013a). Not only does the mission statement of the company depict the organization’s commitment towards its primary stakeholders but it also provides a roadmap for the management and the employees as to how FedEx Corporation aims to conduct its business activities. As indicated by the formulation of the organization’s mission statement, the vision statement and mission statement of a company often represent messages or meanings that are one and the same while in other scenarios; the vision statement portrays a company’s aspirations or what it hopes to achieve in the future (Secord 2003). According to FedEx Corporation (2013a) the organization intends to serve its customers in the best manner possible by identifying the exclusive requirements of each market segment. The presence of this clause in the organization’s mission statement has been the driver of FedEx Corporation’s successful service to its global clientele which displays varying needs. For example, the initiation of takeovers in countries such as Brazil, Mexico and India in the recent years has been prompted by the organization’s dedication to “accommodate evolving customer needs” (FedEx Corporation 2012). 2. Analyze the five (5) forces of competition to determine how they impact the company. Porter’s Five Forces model operates as an effective and comprehensive framework for identifying, analyzing and evaluating the possible opportunities and threats to a company which are posed by various competitive forces within the industry (Hill and Jones 2007). On the basis of this understanding, the framework outlines five key areas of competition that play a fundamental role in the formulation and execution of strategies to effectively address the outlined threats and successfully capitalize on opportunities. Bargaining Power of Suppliers The nature of FedEx Corporation’s activities and the scale of its operations demands regular interaction with several suppliers that are located across the globe. The company’s suppliers are identified as fuel suppliers, producers of shipping materials and airplane manufacturers (Berger 2011). Berger (2011) states that dominant fuel suppliers command strong bargaining power over the organization because of the unavailability of substitutes which greatly limits the organization’s ability to engage in successful negotiations in order to lower operating expenses. Similarly, the aircraft manufacturing industry displays an oligopolistic situation with Boeing and Airbus being the primary suppliers of aircrafts which lends significant bargaining power to the manufacturers (Berger 2011). Contrary to this observation, Berger (2011) identifies that producers of shipping materials exhibit only limited bargaining power because FedEx Corporation has the option of choosing its designated suppliers amongst several companies in a market that is highly competitive. Bargaining Power of Buyers Hill and Jones (2007) comment that bargaining power of buyers is subject to change as per the changes in the external environment. In the case of FedEx Corporation, the vast clientele of the company is not limited to individuals but also extends to other businesses. Owing to this understanding, the company offers a host of packages and logistics solutions to its customers based on their distinct needs. According to Berger (2011) clients such as Dell seek global logistics solutions rather than domestic delivery packages which are sought after by individuals which is why FedEx Corporation must ensure that its services are designed to suit the requirements of each customer and are significantly differentiated from that of the competing businesses. Service differentiation initiatives include the introduction of value-added services and designing multiple packages for various customers as clients have the option to switch to DHL or TNT Express to meet their expectations. This analysis indicates that buyers do not command strong bargaining power over the company but do enjoy medium bargaining power (Berger 2011). Threat of Entry by Potential Competitors The competitive pressure posed by possible entrants into the industry can be examined on the basis of the aspects that were identified by Michael Porter. These factors include product differentiation, economies of scale and capital requirements as well the aspects related to various costs, expenses and availability of distribution channels (Berger 2011). FedEx Corporation currently operates as the largest all-cargo airline across the globe; moreover, it is also recognized as the foremost express transportation company (FedEx Corporation 2012). The extensive resources owned by FedEx Corporation have been accumulated after decades of relentless service within the industry. This notion implies that it is highly unlikely for a new entrant to emerge as a direct competitor for FedEx Corporation. Moreover, FedEx Corporation’s recent expansion in the emerging markets of India, Mexico and Brazil has significantly expanded its global reach as a result of takeovers. This observation displays the company’s ability to invest in growth plans which further diminishes the possibility of the emergence of direct competition. Rivalry amongst Existing Firms The foremost competitors of FedEx can be identified as UPS and DHL amongst other organizations that operate on a small scale across the country. These firms primarily compete on price and fiercely engage in the initiation of efforts to attract a large customer base by designing packages and launching value-added services. While, UPS and DHL are FedEx Corporation’s direct competitors it must be stated that these companies offer varying competitive pressure with DHL primarily focusing on its international expansion at the same time as FedEx Corporation and UPS aiming to enhance its domestic presence. Threat of Substitutes The extent of the impact of each competitive force is dependent upon technological and economic factors that govern an industry (Berger 2011) and this observation is also reflected by the example of FedEx Corporation. The development and widespread accessibility of the internet has essentially replaced the traditional mode of communication through letters, thereby, eliminating the revenues generated by the company’s letter delivery service. However, FedEx Corporation has compensated for this loss by offering an extensive range of courier, logistics and transportation services to address the needs of a wide range of market segments. 3. Create a SWOT analysis for the company to determine its major strengths, weaknesses, opportunities, and threats. Strengths The annual revenues earned by FedEx Corporation have displayed an increasing trend since 2010. The company reported $42.7 billion in annual revenue in 2012 compared to $39.3 9 billion in 2011 (FedEx Corporation 2012). Investor confidence in FedEx Corporation’s performance has been a testament of the shareowner’s belief in the future success of the company. According to FedEx Corporation (2012) the company’s capital expenditure in 2012 was greater in comparison with the last year. This observation implies that the organization has further developed its resources to address the increasing competitive pressure posed by UPS. Weaknesses FedEx Corporation’s global reach is not as extensive in comparison with DHL. A significant portion of the organization’s revenues comes from its US operations and is not divided in range of countries or regions. The FedEx brand name, though recognizable, does not enjoy the same degree of customer awareness as its major competitor DHL in Asian countries. Opportunities Since 2010, FedEx Corporation has greatly expanded its global reach by initiating acquisitions in the developing markets of India, Mexico and Brazil (FedEx Corporation 2012). By offering high-quality service to its customers in the emerging markets, FedEx Corporation has the ability to eliminate several small competitors and local companies in developing markets. Threats Fluctuating prices of fuel pose a consistent threat, for example an increase in fuel prices in 2008 caused FedEx Corporation’s operating costs for fuel purchases to rise by $1.9 billion (Berger 2011). Domestic competitive threat by UPS and mounting global competitive pressures by DHL 4. Based on the SWOT analysis, outline a strategy for the company to capitalize on its strengths and opportunities, and minimize its weaknesses and threats. Based on the aforementioned analysis of the environment in which FedEx Corporation currently operates, it is recommended that the company favor the advancement of a strategic decision to continue its expansion within emerging and developing markets in the regions of Asia and South America. According to FedEx Corporation (2012), the organization continued its takeover plans in Mexico and India in 2012, with the takeover of Servicios Nacionales Mupa, S.A de C.V. (Multipack) in the former and the acquisition of AFL Pvt. Ltd. in the latter. The continued implementation of this strategy is recommended owing to the analysts’ predictions which have uncovered that future growth in North American and European markets is expected to be moderate at best (FedEx Corporation 2012). However, the successful transition of South American and Asian markets has welcomed a rise in consumers and producers thereby, enhancing FedEx Corporation’s growth opportunity in the continents. 5. Discuss the various levels and types of strategies the firm may use to maximize its competitiveness and profitability. The strategic formulations for FedEx Corporation can be examined on the basis of corporate level strategy, business level strategy and functional strategy. The most important strategic category with regards to competition is that of corporate level strategy as it addresses the competitive environment and also evaluates the possibility of eliminating competitive forces through takeovers and acquisitions. Henceforth, FedEx Corporation must advance the development of these strategic formulations to promote its global expansion plans. Business level strategies essentially dictate the design and formulation of the company’s services. As stated earlier, the company must focus on the development of value-added services to attract customers who have the option to switch to another service if FedEx Corporation fails to deliver desired offers and logistics solutions. 6. Outline a communications plan the company could use to make the strategies you recommend above known to all stakeholders. The outline of the communications plan for informing all stakeholders regarding the implementation of strategies that have been discussed in the preceding analysis must commence with the identification of a purpose. In this case the purpose is identified as the announcement of a particular strategy that is expected to impact stakeholders once it is executed. The target audience of the plan include all primary and secondary stakeholders such as shareowners, customers, suppliers, employees, general public, local community and government officials. The communication plan must also outline the period of implementation and the time by which the results of the strategy are expected to emerge. 7. Select two (2) corporate governance mechanisms used by this corporation and evaluate how effective they are at controlling managerial actions. The management review practices at FedEx Corporation are marked by the implementation of two distinct mechanisms for corporate governance. These mechanisms are; formal evaluation of executive management and succession planning and management development (FedEx Corporation 2013b). The first corporate governance mechanism evaluates the performance of the Chairman and CEO through the establishment of an independent board. The effectiveness of this measure is observable by the fact that it encompasses an examination of the organization’s financial and non-financial performance to enhance the comprehensiveness of the appraisals. The second mechanism, through the establishment of an independent body evaluates the possibility of succession for the Chairman and CEO, the effectiveness of this plan is indicative by the Board of Directors’ regular appraisal of emergency succession plans should an unavoidable situation arise to ensure that organizational operations are not adversely affected (FedEx Corporation 2013b). 8. Evaluate the effectiveness of leadership within this corporation and make at least one (1) recommendation for improvement. The leadership style at FedEx Corporation has been treasured by generations of senior managers who have greatly valued the people-orientation of the organization’s leaders who engage their employees and believe in the ‘people first philosophy’. While, this approach has proved to be of monumental importance for the company, it has failed to take into account recent advancements in leadership theories that are more applicable within the context of modern business. Therefore, it is recommended that FedEx Corporation adopts the philosophy and principles of transformational leadership which has proved to be successful in nations such as India which is a key region of interest for the company. 9. Assess efforts by this corporation to be a responsible (ethical) corporate citizen and determine the impact these efforts (or lack thereof) have on the company’s bottom line. Provide specific examples to support your response. The mission statement of FedEx Corporation outlines the importance of following ethical and professional standards in business operations. FedEx Corporation takes pride in its brand name and values its strong corporate reputation (FedEx Corporation 2012). The ethical standards that are widely practiced within the organization are viewed to be critical to the organization’s overall success. The organization’s comprehensive global citizenship plan has been designed systematically to outline goals and objectives and examine ways and procedures to effectively achieve those goals. FedEx Corporation has designed its program into four categories which include economics and access, environment and efficiency, community and disaster relief and people and workplace (FedEx Corporation 2013c). The company believes that ethics and responsibility are concepts that must be instilled within an organization which is why the management regularly appraises its progresses in the identified areas to formulate frameworks for betterment and improvement in the field of corporate social responsibility. References Berger, A. (2011). Case Study–FedEx Corporation: Strategic Management. GRIN Verlag. FedEx Corporation (2013b). Corporate Governance Guidelines. Retrieved August 12, 2013 from < http://investors.fedex.com/phoenix.zhtml?c=73289&p=irol-govguidelines#mr> FedEx Corporation (2013c). Goals and Progress. Retrieved August 12, 2013 from FedEx Corporation. (2012). 2012 Annual Report. FedEx Corporation. (2013a). Mission Statement. Retrieved August 12, 2013 from Hill, C. W., & Jones, G. R. (2007). Strategic Management: An Intergrated Approach. CengageBrain. com. Secord, H. (2003). Implementing best practices in human resources management. CCH Canadian Limited. Read More