Rivalry among Existing Firms: Weak Force - Strong Force - Case Study Example

Name Tutor Course Date Airborne Inc Case study The market that airborne competes: Rivalry among Existing Firms: Weak Force - Strong Force Airborne competes in an industry where rivalry among the existing firms is quite strong. This because of the decisions that were made by the company was for the purposes of countering rivalry in the market. The company had to reduce its prices for the purpose of countering rivalry in the market. Federal express, UPS and DHL were among the major competitors in the industry. The company had to lower its rates by 84% for the purpose of wining the contract with IBM which could have been won by Federal Express (Hill, 111). This is an indication that rivalry in the market among the existing firms was intense. The delivery time of the company was also influenced by the existing competitors which was UPS and Federal Express. Although the company decided not to compete with the companies in terms of the delivery time, it had to lower its costs. This is also an indication that rivalry among the existing firms was intense. Each of the rivals was also trying to outsmart each other. The company established its own airport for the purpose of countering rivalry. The international strategies of the company were also aimed at countering rivalry in the market. The ground delivery service was established by the company as a response to the competition among the rival companies. All the strategies of the company were also aimed at countering the rivalry in the market among the existing firms. The company was finally acquired after it failed to survive the intense competition of the rivals. Strategic group map SWOT analysis of Airborne in 2003 Strengths Weaknesses Third largest company in terms of the market share in the US air express industry. Presence of small business centers. Experienced chief executive officer and good leadership. Good brand image in the market. A well established infrastructure. Good control system. Effective information technology infrastructure. A well established fleet of vehicles to carry out the deliveries. Effective ground based transportation system operating at 90% capacity. Presence of its own maintenance unit for its fleet. Low process for it services impacting negatively on the revenue generation. Huge workforce impacting negatively on the profitability. Decline in profitability. High cost of operations. Poor performance in the international market. Opportunities Threats Growth and expansion in the international market. Growth and expansion in the domestic market. Utilizing the high number of fleet in terms of the cars and transport planes. Modern planes that are effective in terms of transportation. Joint venture and merger opportunities Embracing new technology for its operations. Developing new services in the industry. Exploiting the C-containers patent. Intensive competition in the market by the rivals. Low profitability leading to debts. Rules and regulations in the sector. Changing market trends in the local and international market. Strategic moves, practices and skills The company had to come up with strategic moves in order to compete effectively with Federal Express and UPS which were the major competitors in the market. The company built its own airport for the purpose of handling its goods and reducing the reliance on the transport planes. This move was also strategic and it enabled the company to compete effectively in the market. It designed its own C-containers which made it easy for the company to handle the goods during loading and unloading (Hill, 109). This was compared to the competitors who were using the A-containers. On the other hand, the company purchased its own fleet of aircrafts and it also established its own maintenance unit that reduced the cost of repairs by 50-60% and hence enabling it to compete effectively. The company lowered its rates for the purpose of attracting more customers. The rates of the company were lower than the competitors and hence its ability to attract gain a huge market share. The company also embraced the use of technology for the purpose of enabling it to compete effectively with the rival companies. The use of LIBRA II and FOCUS technologies enabled the company to satisfy the customers by enabling them to track their parcels at any time (Hill, 110). The delivery time flexibility also played an important role in ensuring that the company is able to counter the delivery time of the rival companies which was guaranteed at 10:30. The company also established ground delivery services and deferred services for the purposes of countering the offers that had been made by the rivals. DHL purchase of Airborne The purchase of Airborne by DHL was successful as it acquired the company at a cost of 1.1 billion. The purchase was a success since Airborne already had an established infrastructure and a customer base. The company occupied 9% of the market share and it was also the third largest competitive company in the market (Hill, 105). The customer loyalty of the company was high and this is also beneficial to DHL in terms of increasing its competitiveness. DHL is also the largest small, package delivery company and the purchase of Airborne is more advantageous. The developed infrastructure of Airborne will play an important role in ensuring that the company is able to carry out its operations effectively. The efficiency of the company will be impacted positively by the good infrastructure. DHL is also has a huge presence outside North America. Its market share will increase due to the purchase. The purchase was successful as DHL Airborne had already been in existence for decades which led to the attraction of many customers in the market. The technology that was in use at the company will also be beneficial to DHL in terms of enabling it to carry out its operations effectively. Although the process of the company was low, it is still able to make profits. This will also be beneficial to DHL considering that it has a low market share initially. At the time of purchase, the company was still reliable which an indication that it can still make profits is. DHL will however be required to make a few changes in order to fully benefit from the purchase deal. Work Cited Hill, Charles. Airborne express the underdog. Stamford: Cengage learning, 2011. Read More