Strategic Management in FedEx Corporation - Statistics Project Example

Strategic Management Successful In the global environment there are many shipping and solution providing companies present with their high quality of service. Among the big giants in shipping industry FedEx does play a huge role. It has its business presence in different parts of the world. The company has its headquarters in Memphis, Tennessee. FedEx Corporation is the major company which has many other divisions under it like FedEx Services, FedEx Ground, FedEx Express and FedEx Freight (FedEx, 2014). The company is the global leader in this business and provides quality service to all the types of customers including individuals and also business class. FedEx has its presence in total of 220 countries. In 2009, the company was been named in the top 100 companies in the Fortune Magazine and also was among the 10 best companies which were been admired. Including all the division the company has a total of 660 aircrafts fleet and over 80,000 vehicles with around 300,000 employees present across the 220 countries in the whole world (FedEx, 2014). The flagship division of the company is FedEx Express which holds the maximum market share and is currently the leader in the global market of express delivery and transportation delivering about 3.5 million packages on daily basis across the world through the 2,000 FedEx offices that are present in various countries across the globe. This division accounts to around two-third of the company’s total revenue every year, FedEx has the net operating income of about $2 billion with total revenue of the company being around $42 billion. FedEx has got the highest number of fleet of airplanes under it for transportation purpose, than any other company in transportation and express delivery business in the global market. The company has a market share of 49% in US in 2012, while in the overall world market the company is trying to improve its performance in a huge way and increase its market share to around 15-20%. Big companies look to take the service from FedEx for their transportation, logistics and delivery purpose. Companies like Apple rely heavily on FedEx for the delivery of their goods in time and in good quality across the world to all of their distributors. The changing trend of the company’s financial position over the last 4 years is been seen from yahoo finance and also from business week. The respective graphs are been given below. (Source: Bloomberg business week, 2014) (Source: Yahoo Finance, 2014) It can be seen in both the curve that the company has grown continuously over the last few years and the market share has also kept growing in the global market. The company’s strategies have successfully helped the company to grow in the competitive world and increase its market share even having a strong competition from competitors like UPS. Yes, the company has faced a strong competition over the years from other companies but still the company has grown in a good way and it is a very successful company as it has been able to come up with the best of strategies that has helped the company to continuously grow and increase its revenue over the years. Business reasons FedEx has not only increased its market share by providing good service but the company has also captured a huge market share of its competitors by creating a good brand image in the mind of the customers. FedEx has become a name in the market which is known to deliver anything that the customer wants to deliver. It provides absolute and positively dedicated solutions to shipping of products from one place to another. But every shipping company tries to do this to attract more customers and create a good brand image capturing maximum market share, but the reasons behind FedEx to become successful are been studied in this assignment. To understand the reasons why FedEx has become so successful over the years the three things that are to be analyzed are Product offering, Service level and Customer Experience. Service level In the logistics and transportation business the service level refers to the way the product is been delivers which includes the in time delivery, the quality of the product to be maintained as intact and all these are to provided at the most cheapest cost (Varbanova, 2013). The packaging process of the products does play a vital role in maintaining the quality of the product and protecting it from breakage. FedEx looks to provide a good quality service by delivering the goods in time to the customers and without causing any defect to the product. Product offering Product offering in case of Logistics Company is related to the classification of the customer. It is the way the company groups its customers based on their size. Basically the groupings are done as individual, big business and small business. FedEx has sub groups classification for these groups to take care of each and every customer’s requirements. Customer Experience Customer experience does play a big role as it affects in creating the brand image in the mind of the customers about the company. It depends on the way the customers are been treated in the office or while delivering the goods and also the way the customers are been provided the service for tracking their orders. FedEx has highly skilled employees that have been trained very carefully to provide a good service to the customers and make sure that the customers get maximum satisfaction from the service that is been provided to them (Freeman, 2010). The major reason behind the success rate of FedEx has been that is has provided the service of customizing the delivery process to the customers. The customers are given full freedom to select the way they want to send their product with respect to the type of packaging they need, the type of transportation medium they want to choice and all these are been provided based on the budget of the customers. This has helped the company to gain maximum customer satisfaction and also capture most of the customers from the rivals across the global market. Analysis and Interpretation of the company’s capabilities The analysis and interpretation of the company’s strategic capabilities is been studied with the help of the value chain analysis and the VRIN analysis which will help in understanding the way the company has got success in the global market and the way the strategies have grown in the world market. Value Chain Analysis The value chain analysis helps to know the primary activities and the supporting activities of the company with the help of which it maximizes its market share and also creates a good market value in the global market environment. The primary activity of FedEx is been shown in the below diagram which clearly explains that the company does give a lot of focus on the logistics and shipment of the products and delivery of the products in time and in good quality. These primary objectives of the company has provided the company to focus over its major departments of logistics, operations and Marketing so that the company is able to concentrate in a huge way in satisfying the customers service. The support activities of the company are its various other departments and facilities like firm infrastructure, human resources, procurement and technology development. These support activities do perform in an efficient way to help the company improve its performance and also keep the efficiency of the primary activities intact and also help them in improving. The value chain involves the way the company creates value to the shareholders and the customers by providing efficient service in the global market. FedEx creates a lot of value to its customers by providing the opportunity to choose the way they want to deliver their products and send them. The packaging and the transport medium being used for the shipment of the product is decided based on the customer’s preference on the basis of the budget they have for the shipment of their particular product. The company looks to provide its service to the customers in a customized way. The company has a huge physical; assets to provide timely service with around 663 aircrafts and 90,000 vehicles and many pilots, drivers who make the order delivery in a successful way. The IT infrastructure of the company is very good which allows the company to guarantee the delivery of the goods to the customers in the perfect way. FedEx relies heavily on the company’s support from their IT department for autorotation and also for tracking the orders. Fred Smith the company’s CEO has said in the company’s website that the information about the package is important in the same way as the delivery of the product is. The marketing department helps the company to market and advertise itself in a huge way such that the company gets maximum brand awareness among the customers across the world. VRIN analysis The VRIN analysis is done to understand the competitive advantage that the company is having in the global market. VRIN refers to the value, rarity, inimitability and non-substitutability. The respective analysis for each of the particular point is been done below. Value in respect to the FedEx refers to the value that the company creates for the customers and also to the stakeholders. The customers are preferred in a huge way by providing them the facility to select their own process for the shipment and transportation of the products. The stake holders also get a lot of value from the company as the company is growing which allows the stakeholders to also grow in a huge way. Rarity includes the way the company’s strategy is rare in the global market. In case of FedEx the process is really to rare as its policy of providing different customers of different class to ship their products in the way they want based on the budget they have for the particular product. Inimitability refers to the amount in which the process by other company imitates the particular process of the original company. In this case for other shipment business industries they can intimate only when they have such a huge capital and facilities in their services. Achieving this is very difficult for any company, only UPS which is one of the leaders in this business can take up this process. Thus for FedEx this strategy is a huge benefit and gives the company a huge competitive advantage over the competitors and thus the company can grow up increasing the market share of the company in the global market. Non-substitutability refers to the fact that the company rarity of the resource of the company which can’t be substituted by any other thing. FedEx is into shipment and logistics business where the company has used all the type of transportation medium that is road, airways and also through marine. Substituting these transport mediums is very difficult as there is no other way company can do the shipment of the product, thus the company gets a lot of opportunity for competitive advantage as the risk from the substitutes is very low. The VRIN analysis and value chain does give a lot of understanding for the strategic capability of the company in getting a competitive advantage. In case of FedEx, the company has a strong strategic capability and follows the policies very strictly to create a good value for the customers across the global market. These strategic capabilities of the company have enabled the company to have a continuous success in its business over the years. Innovation and the competitive strategy FedEx the innovation and the competitive strategy that the company has been following over the years to be successful in the market and also for having a huge edge over the other shipment business companies in the world is been studied using various theories and concept and also looking at the business operation of the company. Competitive strategy The sustainable growth in FedEx has come because of the service that the company provides to the customer. The company provides time information about the shipment made by the customer on regular basis. The company continued to provide information to the customers as its strategy to attract more and more customers because of its reliable service. The same information is used even by the company official to track the shipment and also maintain the quality of the product in the way it was been packed without causing any defect to the product. FedEx is able to offer timely information to the customer and their business model is based mainly on the speed and the flexibility at which the company acts to the customer’s needs and demands (Fidler, 2002). The company gets a lot of completive advantage in the following ways that are been listed below. High efficiency and safety delivery service of the products that are been shipped and the company provides nation wise delivery in overnight service and also provides pick-up service within 1 hour of placing the order. The quality of the product is been well maintained and thus the efficiency of the company increases in a huge way. The company has its presence in various places across the globe with its service been present in different countries thus the global presence of the company gives it a huge market to explore and a lot of competitive advantage. Innovation strategy The company is highly dependent on the innovations that the company make over the years in a continuous way. Every employee in the company is made to provide ideas to come up with new innovations for improving the business operations and also for increasing the competitive edge that the company has gained over the years. The innovations are done based on the fact that the company looks out on the possible changes towards the desirable changes and also that will bring maximum for the company. The company has made many innovations by making tie up with some other companies like the tie up with the National semiconductors has provided the company to use semiconductor chips for every package that has been shipped. These chips help the company to have a continuous tracking of the package and its quality (Western, 2007) The company uses hub and spoke model for its IT infrastructure to keep the information updated on daily basis about the product that is been shipped. The company uses COSMOS database information system for locating the package anytime within 30 minutes which does helps the company to provide the customers information regarding their order and also helps the company to keep the quality of the product in good manner without any defect being occurred in the system. FedEx has developed the Power ship system to attract maximum customers towards its service which does allows the company to satisfy the needs of the company also for its growth process. This system enables to track the shipment, prints the invoice and also provides the information about the price. This type of latest IT systems does helps the company in a huge way to have a good track of the shipment been made and also help the customers to get information about their package, but apart from this these systems does helps the company to reduce the usage of paper and also improve the productivity and efficiency of employees working in the company across the world. Thus the competitive strategy of the company and the innovation strategy of the company have given a lot of advantage to the company to grow in a continuous manner and also have a good market share in the global market providing the best facility to the customers. Leadership FedEx does choose its leaders through a very critical and stringent process. The type of leaders that are been selected for the company are based on their attributes of being charismatic, their flexibility to adapt to the changing situations quickly and also make the effective and efficient decisions in a quick way. The company focuses on the factor that the leader of the company has high level of capability in making decision and also is capable to take the risk for making the changes in the right time. The leader must be able to motivate the employees in a good way so that the productivity and the efficiency of the employees are continuously increased and the output of the company goes on increasing. Frederick W. Smith being the CEO of the company has encouraged the employees in a huge way and also has made a huge difference in the business process as the company has adapted to the changing market situation in a very easy and effective way. He has been able to make the company’s process very efficient and also make it effective in the way that the customers achieve maximum satisfaction (Northouse, 2012). He has made all the important strategic decisions for the company which has created a lot of advantage for the company in a huge way over the years. Providing service over 220 countries the company needs to have a good control over the business operation across at different places so that the company can have a huge advantage and also keep growing in the competitive market. He has been the major reason behind all the agreements that the company has made with various aviation companies across the globe for shipment of the products. Most recently he has brought the concept for implementing the energy-efficient standards for the vehicles and also has made the company a part of the national energy policy (Burns, 2012). With continuous improvement and providing quality service the company has won the Malcolm Baldrige National Quality Award and also has been ranked among the top companies in Fortune magazine. The company has a good work environment and all the employees are been respected equally even by the leader, thus the company looks to have a leaders who is unbiased and also treats employees based on their performance and looks to improve their performances in various ways. Thus for a company as FedEx which has its presence in over 220 countries and also has lot of competition in the global market the head of the company does play a vital role in creating a good work environment. He is the person who motivates all the employees in the company to work efficiently and provide the best service to the customers and attract more and more customers so that the company can keep increasing its market share on a continuous manner. The leaders make the key decision in the right moment so that the company can stay ahead in the competition and gain more popularity in the global market. He needs to keep taking risk and also be updated to the changing global market condition so that he can be proactive in taking the decisions and also implement the new innovative solutions to improve the process and also help in the course of growth of the company. Suggestions The company can face many internal and external forces that can affect in the growth of the company. Internal factors are like after the retirement of Frederick W. Smith as the CEO of the company the company will get a new leader and every person has a different style of leadership, thus with the new coming leader it will be quite difficult for the employees to adapt to the new style of leadership. This will take a lot of time for the employees to get used to the new leader which can affect the company’s performance in a huge way and thus the company might even incur loss because of the change in leader. Thus for the company to prevent this problem from arising the new leader must be selected from the existing board of directors and must be given the duty few months before Frederick W. Smith finishes his tenure as it will help the new leader to adapt to the same leadership skill and also the employees will not find it difficult to gel with the known person that they might face from the new unknown leader. There are many external factors that might arise and cause a lot of problem in the growth of the company and affect in its revenue generation in huge way. With the increasing competition in the shipment business and other competitors also looking to take up the latest technological help for their service it is a big threat for the company as many of the customers might prefer to go for cheap and local shipment companies rather than going for FedEx, apart from this the biggest competitor for the company being UPS always tries to grow and come up with innovative and creative ideas to provide fast and good quality service for the customers. To overcome this company needs to have a good look at the changing demand of the market and keep chaining itself with the changing market situations. There’s another problem that might arise because of the changing technological system in the global world. The company keeps updating its IT system in a continuous manner thus sometimes it might be difficult for the employees to get used to the new system quickly thus the employees must be trained properly before implementing the new IT system which will help the company to adapt and use the new system very effectively and help the company to improve its process in a huge way with a lot of competitive edge over its competitors. References Bloomberg businessweek. (2014). Fedex Corp (FDX: New York). Retrieved from:< http://investing.businessweek.com/research/stocks/charts/charts.asp?ticker=FDX>. Burns, J. (2012). Leadership. London: Open Road Media. FedEx. (2014). Annual Report 2013. Retrieved from:< http://annualreport.van.fedex.com/2013/Files/FedEx_Annual_Report_2013.pdf>. Fedex. 2014. Company Information. Retrieved from :< http://about.van.fedex.com/company-information>. Fidler, B. (2002). Strategic Management for School Development: Leading Your Schools Improvement Strategy. California: SAGE. Freeman, R. (2010). Strategic Management: A Stakeholder Approach. London: Cambridge University Press. Northouse, P. (2012). Leadership: Theory and Practice. California: SAGE. Varbanova, L. (2013). Strategic Management in the Arts. London: Routledge. Western, S. (2007). Leadership: A Critical Text. California: SAGE. Yahoo Finance. (2014). FedEx Corporation (FDX). Retrieved from:< http://finance.yahoo.com/echarts?s=fdx+Interactive>. Read More