FedEx Corporation Mission and Vision Statement - Case Study Example

Capstone project: Federal Express (FedEx) Corporation al affiliation: FedEx Corporation Mission and vision ment Missionstatement FedEx Corporation is in a mission to produce superior financial returns for the shareowners through provision of high value-added logistics, transportation and related information service through companies operating on focus. The requirements of the company’s customers will be met in a manner attributed to highest quality and appropriateness to each of the markets served. In order to achieve these goals, FedEx focuses on striving to establish relationships with employees, partners and suppliers that are mutually rewarding while ensuring all operations prioritize on safety and that all activities are conducted in highest ethics and professionalism standards. Basically, the mission of FedEx Corporation touches of aspects of safety, quality, values, ethics and relationship rewards. vision statement The company intends to establish a world where goods and information are transported quickly and faultlessly as well as where raw materials and parts for businesses are sourced globally and high-valued goods are moved quickly between countries and across time zones. Movement of goods quickly will develop a world where information and transportation networks can minimize time and distance, establishing to customers a competitive advantage (FedEx, 2012). Analysis of mission and vision statement against organization’s performance The fact that FedEx Corporation focuses on providing financial returns to shareholders is in itself an indication of how FedEx is committed to accountability for performance. The mission also indicates that the organization is oriented to the future with safety, quality, values, relationships rewards, and values having the highest priority (Ferrel and Hartline, 2010). The relationships with the organization’s customers, partners and suppliers are an indication that the organization is committed to efficiency and strong relationships where each party involved leaps optimum benefits. In addition, the company involves the dynamics of quick and faultless transportation of information and goods to establish a world where raw materials and parts for businesses are obtained from other global nations and across time zones (Ferrel and Hartline, 2010). According to FedEx annual report (2012), the operating margin for FedEx has increased to 7.5% in 2012 up from 6.1% in 2011. This has led to 40% change in the company’s net income for 2012. For all FedEx Corporation segments, transportation business and e-commerce services are offered through collective competition, independent operations and collaborative management under the FedEx brand (Ferrel and Hartline, 2010). In order to ensure that goods and services are transported across different time zones quickly, FedEx Corporation operates under FedEx Express which is the largest transportation company in the world, FedEx Group Packages System Inc. that offers ground delivery of small packages in North America and FedEx Freight, Inc. (FedEx Freight) which offers less-than-truckload freight services in North America. So far, the company reports experiencing increasing demand of the various FedEx corporation services by overall customers; volumes of transportation services through the company’s networks; high capability to manage the company’s cost structure in order to ensure that they match with dynamic levels of volumes (Ferrel and Hartline, 2010). In FedEx, the operating income and operating margins elevation is attributed to FedEx Ground Segment’s exceptional performance, FedEx Freight’s increased profitability and elevated yields across all segments of operation amidst moderating global economic conditions (Ferrel and Hartline, 2010). FedEx corporation strategy The strategy provides unique cohesion in its operating strategy resulting to faultless and simultaneous operations. For all FedEx organizations there is collective competition which is made possible through the use of one brand globally and speaking with one voice. Although different segments of FedEx perform different operations, they all use the same brand which is an effective way in promoting trust and confidence of customers on the organization. Although operating less than one brand promotes consumer confidence level, each of FedEx corporation’s segments is run and operates independently. This independence promotes efficiency in the focus of each segment to meet the distinct needs of their customers quickly, effectively and at high quality (FedEx, 2012). The establishment of high speed transportation networks in each of the organization’s segments ensures that there is minimal time and distance which in turn assures the shareholders are associated with the provision of high value-added logistics, services and transport to consumers. However, independent segments have to be answerable to segment managers such that and each manager works with other managers to promote collaborative organizational management which works well in sustaining loyal relationships between the organization and it clients, investors and employees (FedEx, 2012). In 2012, FedEx was committed to sustaining strong performance which was, in reality delivered, as was evidenced in a 40% increase in earnings per share and a 9% increase in annual revenue which was over $42 billion. According to FedEx annual reports (2012), the delivery of strong performance was amidst United States’ political gridlock, the European financial turmoil, fluctuating fuel prices and slowing Asian economy. Given that today the world is characterized by accelerating rate of global change, individuals at FedEx ensure that there is agility such that the needs of customers and conditions can easily be responded to and that the organization remains ready to deal with and effect any anticipated changes (FedEx annual reports, 2012). FedEx Corporation links between the company’s strategic goals, strategy and its financial performance Since 1999, FedEx Corporation is the parent company for FedEx Express, FedEx Ground, FedEx logistics, FedEx custom critical and FedEx trade networks (Lussier and Achua, 2009). With the operations under different segments, the company has experienced the benefits of being more focused and efficient given that independent operations combined with collective competition. In 2000, FedEx Corporation experienced significant challenges but managed to raise revenue by 9% (to $18.3bn), net income increased by 9% to $688m and 10% gain on earnings per share (Lussier and Achua, 2009). These financial results were very acceptable to the shareowners who continue to support the company till today. In addition, the company is today regarded as one of the best places to work in America (Lussier and Achua, 2009). Today, FedEx Corporation has managed to mitigate cost through the adoption of quick and faultless transportation of goods and services which are available through the company’s network solutions available (ship, freight and ground) globally (FedEx annual report 2012). Through different network solutions, customers of every size are provided with the ability to access world markets. As a result, FedEx achieves its vision of being prosperous and improving customers’, businesses, and nation’s quality of life (Lussier and Achua, 2009). Through the company’s service to customers of all size, new businesses from small and medium size customers are attracted and the shareowners are provided with superior financial returns. The small and medium-sized customers for FedEx are responsible for about half of the company’s revenue (Lussier and Achua, 2009). In addition, logistics, information and transportation services are very critical for ‘start-up’ business environment which source and sell internationally and are in need of reliable services to enable them to navigate the global economy (Lussier and Achua, 2009). FedEx operates under the bundling strategy for its sales team. Through this consolidation, FedEx customers are made to not only use express transportation but also expand to use other of the company’s services as well (FedEx annual report, 2012). The consolidation of FedEx services is today used in Amazon’s largest e-commerce distribution. In addition, the company has managed to offer guaranteed Saturday delivery for Harry Potter books. Through the use of diversified portfolio strategy, FedEx customers are provided with at the right time and the right price. FedEx annual report (2012) reveals that the consolidated results of operations have continually increased since 2010. For instance, the operating income increased by 19% in 2011/2010 and by 34% in 2011/2012. This is an indication that the company has managed to achieve an increased expansion of high margin international business, capitalization on e-commerce and attraction of new business from small and medium sized customers. Again, the implementation of fast and reliable logistics, transportation and information services indicate that FedEx has continuously remained in touch with modern day’s high-tech, high-speed global economy given its increasing collaboration, innovativeness and efficiency which has always remained focused on continued earnings and cash flow growth (FedEx annual report 2012). FedEx Strengths and opportunities Strengths: Strong revenue growth FedEx Corporation has a strong revenue growth. In 2010, the total revenue was $34.7 billion, $39.3 billion in 2011 and recently in 2012 the revenue was $42.7 billion. The increases in revenue for FedEx represented revenue growth of rate of 2.96% which is solid and whose expectations to accelerate into the future up to about $49 billion in revenues in 2015 (FedEx annual report 2012). Currently, the company has reasonable institutional vote of confidence of about 78% which displays intense confidence for the company and its future by long-term and big-money investors (FedEx annual report 2012). Well-founded distribution system At FedEx Freight, the company has a massive airplanes’ fleet while ground transportation and logistics are characterized by a fleet of trucks (Berger, 2011). The trucks and airplanes are destined to numerous locations while the company has in place numerous employees to see through its operations. With proper transport means, FedEx has the capacity to transport thousands of packages universally each day. Berger (2011) highlights that apart from numerous transport means, FedEx has resulted into a leading player in the field of transport while its services include overnight courier services, freight services, logistics solutions and business support services. For FedEx, the size of the company is strength and with a network covering 200 countries worldwide the resulting international expansion is an increased contribution to the strength of the company (Berger, 2011). Strong brand image Berger (2011) reveals that despite comprising of several independently operating segments, FedEx Corporation has unchanging mission statement of ensuring that the shareowners receive superior financial returns. The company is also guided by values that emphasis people, innovation, integrity, innovation and service. The company also operates under People-Service-Profit attitude which coupled with the company’s motto indicate that the organization has great value for its customers who are entitled to first priority and which works well in winning the trust of the customers (Berger, 2011). Reliable and efficient customer support Through the incorporation of new technologies, FedEx has continually developed new techniques that add value to their customers. FedEx has also gone to the extent of establishing their own technology known as COSMOS or customer oriented services and management operating system which involves the use of wireless technology to assist in the tracking of deliveries at a higher level of efficiency (Berger, 2011). In addition, FedEx has extended the drop-off times and aligned them to the needs of customers (Berger, 2011). Unbeatable know-how in business FedEx is recognized as the first organization to establish the idea of Express delivery. Compared to other services like United States Postal Service, FedEx has been unmatched especially when it comes to timely operations and customer service. In addition, the owning of the Express Delivery services by FedEx has resulted to customers holding the company at higher standards thereby making the company to be turned to more than other companies (Berger, 2011). FedEx Opportunities: Extensive use of online shopping FedEx should invest heavily on the internet to promote online shopping for its customers. Today, the internet is available to most persons in the world while e-commerce has evolved at a robust pace. As a result, integrated systems for internet-based ordering and procurement are what customers want especially where the involved physical transportation and logistics solutions offer timely order fulfillment. Through the investment of flexible state-of-art information technology, FedEx will assist customers to bridge the real world with the e-world. Online shopping is necessary especially in the shipping industry where competition is fierce around the holiday season. Through the internet, FedEx can take advantage of its strong brand image and international strength to capture crucial market share and this would help boost its business significantly (Berger, 2011). Again, online shipping market has experienced continued growth in the past few years and it is expected to continue to soar. With the online shipping being a preferred option for conducting shipping needs, FedEx should also consider working with other online companies that use shipping services to obtain recognition and trust for their brand (Berger, 2011). Acquisitions Based on FedEx annual report (2012), FedEx experienced strong financial results. One reason could be due to the recent acquisition of Rapidao Cometa, Opek Sp. and Tatex. With further acquisitions in the future, the company is set to have its financial results soar even higher. Differentiation strategy at FedEx Like most corporations, FedEx is constantly thinking of how to assist its business to gain competitive advantage. At FedEx, differentiation strategy is mostly applied compared to cost leadership strategy. Compared to other companies like UPS, FedEx costs are generally higher. However, in an industry where consumers are very sensitive about costs and are always inclined to the producer with low costs, FedEx has to remain more differentiated compared to its competitors globally as this gives it a stronger competitive advantage (Hill and Jones, 2012). Through being the top in global express delivery, FedEx has managed to differentiate its customer service thereby guaranteeing only superior customer services and avoiding limitations that may result from the product or service. Although differentiation on customer services is costly, it works well in creating strong relationships with customers and winning a large market share which assures the shareholders of strong financial returns (Hill and Jones, 2012). In addition, the continued development of technology offers cheaper and effective ways to continually reminds the potential customers of the services offered by the organization like through social media and other websites. Differentiation strategy is critical in FedEx given reasons like speed of delivery, availability and loyalty programs. For FedEx Corporation, the strong brand image is strength in attracting customers. When coupled with the company’s fast speed in delivering goods or services, the result is that most consumers will be willing to pay the extra fee charged on FedEx services and products (Hill and Jones, 2012). For instance, FedEx overnight shipping is a smart differentiation strategy which gives the company a higher competitive advantage compared to UPS and the strategy prevents entry of other companies seeking to explore the shipping industry given the high cost to start a competitive company (Hill and Jones, 2012). In addition, FedEx should focus on increased availability in other parts of the world such that whenever customers are in need of their services, they are present. Compared to their closest competitor which is UPS, FedEx should pay more focus on being available in places where the competitor is not readily available like outside North America to Europe and Latin America. In order to win repeat purchase, FedEx should also focus on loyalty programs to create brand preference and solid customer base that is assured of the most rewarding experience (Hill and Jones, 2012). FedEx Corporation proposed merger and acquisition The proposed merger is that between FedEx Corporation and Digital Product Delivery or DPD Company in Europe. This company is a leading international parcel service provider that is favored by efficient road networks in Europe and a strong international brand image characterized by a clear strategy. DPD is a part of an international group that offers highest standards on services and quality globally (DPD, 2013). Through merging with DPD, FedEx will be in a position to focus more on its responsibilities to the environment given that most of the transport and logistics services are dependent on the fossil fuel. In addition, FedEx responsibilities of economic and social interest for its workforce and of society will be fulfilled (DPD, 2013). Market conditions favoring the merger between DPD and FedEx and the expected outcomes Since DPD operates under fossil fuel, its responsibilities include protecting the environment through the reduction of CO2 emissions and conservation of natural resources and avoiding waste through a recycling policy (DPD, 2013). This is a good strength for FedEx which has an opportunity to reduce its carbon emissions through the conversion of its fleet to natural gas that is substantially cheaper compared to fleets running on oil. The establishment of fleets running on natural gas will ensure that the company operates under no threats of fluctuating fuel prices while at the same time conserving the environment though reduced carbon emissions (DPD, 2013). DPD has a strong commitment to contribute to the well-being of the community through supporting many not-for-profit organizations through financial donations and voluntary work. Merging with DPD will mean that FedEx will have a stronger commitment to the community’s well-being through more financial donations, voluntary work and logistical support provision. Appropriate rewards for FedEx employees In order to boost employees’ motivation, I would have in place a strategic reward system that focuses on compensation, recognition, benefits and appreciation. The reward strategy will recognize employee performance and behavior on the spot and/or annually (Collier, 2010). The rewarding of performance would be done through comparison of employees final goals to the expected goals. In order to reward behavior, I would identify behaviors like creativity and innovativeness, enhancing customer relationships, fine tuning of critical processes and others. The recognition of behavior would be possible through spending time with employees to encourage them and offer any form of support, providing employees with autonomy to act independently, and keeping the workplace up to date in terms of equipment available and training sessions to provide employees with fresh techniques (Collier, 2010). The rewards for innovativeness will be in form of certificates, gifts, promotions and/or benefits. Company organized training sessions or other career developments will be appreciated though salary appraisals and where necessary certificates and benefits (Collier, 2010). For employees with persistent high performance, promotions and/or salary increments would work as well as vocations for high performing top management personnel. From FedEx annual report (2012), the salaries and benefits for employees rose to $16,099 million, from $15,276 million in 2011, which was about 37.7% of the company revenue ($42,680 million). With increased employees’ motivation through various forms of rewards, it is evident that their performance increases to raise the organization’s revenue and produce value for the money spent on the rewards (FedEx annual report, 2013). FedEx strategy and support for ethical business FedEx seeks to set itself apart through the establishment of a reputation for ethical and social responsible behaviors and operates under an ethics program (Pride, Hughes and Kapoor, 2010). The company encourages collective competition between its segments and competitors in the industry like UPS. Within its code of conduct, fair competition should be observed by every employee. All employees are encouraged to compete on merit, competency and customer loyalty. However, employees are prohibited from engaging in conversations with competitors on customers, pricing policies, and terms of sales or discounts among others and this promote ethical business behavior for the organization (Pride, Hughes and Kapoor, 2010). In the United States, service agreement between competitors is lawful (Pride, Hughes and Kapoor, 2010) but in most cases perceived to be unethical. For instance, despite being competitors, USPS contracted FedEx for seven years to make its domestic air deliveries of mail given the fact that FedEx has the second largest air-fleet. Such a contract between competitors is healthy since it involves fairness and respect of the contract parties. The environment at FedEx is characterized by goal-oriented culture within which employees are expected to fit into given that the transport and logistics industry requires more than working within recommended working hours (Pride, Hughes and Kapoor, 2010). Although long working hours may compromise the balance between work and life, most of the employees in FedEx are proud to work at FedEx and this means that the long working hours are not unethical but ethically within the high expectations of FedEx on its employees. References Berger, A. (2011). Case study “FedEx Corporation”. Norderstedt, Germany: GRIN Verlag. Collier, M. (2010). The ultimate online customer service guide: how to connect with your customers to sell more. New Jersey: John Willey & Sons. Ferrel, O., & Hartline, M. (2010). Marketing strategy. New Jersey: Cengage Learning. Hill, C.W., & Jones, G.R. (2012). Strategic management theory: An integrated approach. Ohio, United States: Cengage Learning. Lussier, R., & Achua, C. (2011). Leadership: Theory, Application, & skill development. United States: Cengage Learning. Pride,W. M., Hughes, R.J., & Kapoor, J.R. (2010). Foundations o business. New York: Cengage learning Inc. Additional resources Digital product delivery or DPD (2013). “DPD parcel Services without frontiers” retrieved from http://www.dpd.com/ FedEx (2012). “Mission, Strategy, values”. Retrieved from http://about.van.fedex.com/mission-strategy-values FedEx annual report (2012). “Financial information: annual reports.” Retrieved from http://investors.fedex.com/phoenix.zhtml?c=73289&p=irol-reportsannual Read More