FedEx Corporations Measurement of Success - Case Study Example

Strategic Management and Leadership FedEx Corporation’s Measurement of Success The present status of FedEx Corporation represents it to be one ofthe leading courier delivery corporations currently operating in the global market. The company is of American origin headquartered in ‘Memphis, Tennessee’. The company mainly aims towards establishing a bridge between customers or business processes through the help of its large interlinked transportation network setup that facilitates activities such as e-commerce and business services. Besides, over multiple years of service, the company has attained a good brand reputation as well as high preference from the international business giants. This company also offers multiple integrated forms of business applications by carrying operations, competition and management in a collaborative and effective manner (FedEx, 2014a). Over the past years, FedEx has received consistent ranking in terms of the most admired and highly trusted business process in the global transportation market. This factor can be significant factor in terms of measuring this express delivery service company’s success rates. The company currently hires more than 300,000 employees. It also provides prime focus towards safety. It also projects high values of work ethicality and professional standards towards the needs and expectations of its customers (FedEx, 2014). The company carries out a majority of its operations within American grounds and holds a current market share of 49%. In terms of business growth, the company has attained an increase in its revenue figures from being US$34.7 billion (2010) to a total of US$39.3 billion (2011) as can be observed from the diagrams below (FedEx, 2014b). (Source: FedEx, 2014) The net income value of this company has also seen improvement as being from US$1.18 billion (2010) to about US$1.45 billion (2011) (FedEx, 2014b). The company also contributes a significant share of about 4% in terms of economic growth of the United States along with 1.5% to the global gross domestic product (GDP) growth rate. Its prevalent competitors such as United Parcel Service (UPS), which is at a sight improvised state as compared to that of FedEx and holds a domestic market share in the US ground ranging between 46 to 50%. Apart from this, UPS contributes to about to 6% of U.S. GDP and about 2% of global GDP (Diffen, n.d.). Thus, from the above pictorial representation and the theoretical description, it can be understood that the FedEx has underwent significant amount of development between the periods of 2010 to 2013. Thus, from an overall point of view, FedEx Corporation can be termed as one of the most profitable and successful corporations operating in its respective business sector. Correspondingly, the purpose of this study is to focus on the multiple business reasons and efforts that have been practised and that have added up to the success factor of this courier transportation company. The study will also comprise elaboration of multiple strategic and leadership techniques that have significantly contributed towards the success factor of this company. 2. Business Reasons Underpinning FedEx Corporation’s Success There seems to have multiple organizational improvement aspects which this firm has underwent throughout the past decades and which has successfully underpinned the success factor for FedEx Corporation. These reasons have been explained as under. 2.1. Bringing About Effectiveness and Optimisation In Terms Of Workforce Functionality and Processes Efficiency The staffing structure of FedEx Corporation mostly follows a hierarchical trend. The plan herein describes the company’s motives in terms of reinforcing its long-term business sustainability, development and expansion over the coming years projecting its future goal of attaining an estimate of about US$1.6 billion in its annual profit figures by the end of financial year 2016. Over the time, the company has subsequently brought down the complexity of its multiple operations with the prime intention of easing up their management. The company has framed strategies prioritising all its essential work processes and has eliminated all other non-necessary functions depending on factors such as technology, market demand and change drivers. FedEx has also successfully carried out initiatives to realign their business process by offering a type of ‘voluntary buyout program’, with the intentionto bring about adjustment within their organisational structure (FedEx, 2013). 2.2. Bringing About Improvement in Their Air Transport Service Modernising the air transport service has been the second most effective strategy implemented by FedEx Corporation. The company thus initiated modernising their air fleet by dismantling out all the primitive aircrafts, which in the current competitive market scenario, are failing to prove their efficiency and reliability (FedEx, 2014c). Hence, the company has brought in new and efficient air transport vehicles with the intention of getting profited in the upcoming times. Keeping this development plan and the slow economic growth process in mind, the company has also brought down its maintenance cost gradually. Through this old machinery downsizing process, the company also estimated in terms of attaining a decrease in the annual expensed level by US$74 million (FedEx, 2014c). 2.3. Bringing About Improvisation to the Processes within the Domestic Market The primary improvisation undertaken by FedEx was upgrading the existing technology levels and bringing about new processes and management techniques, aimed at improvising their flight servicer and workforce scheduling techniques. The technological advancement process included setting up of new and innovative urban and rural navigation systems for keeping a constant check on the traffic density and choosing of shortest optimal travel paths. Over a period of certain duration, FedEx has also come up with massive consolidation and up-gradation of their loading and unloading facilities along with effective mechanisation of their storage and sorting stations. FedEx has also concentrated much of their focus in terms of bringing about improvisation to their domestic flight services with the prime intention of speeding up their business process (FedEx, 2012). 2.4. Improvising their International Profitability Currently, FedEx has been tending towards diversifying its business processes for attaining growth and profitability from each and every section of the cargo market international levels. The company has also been indulging into crucial aspects such as business process prioritization, economy monitoring, air and waterway cargo forwarding, and logistics services. Through these efforts, the organisation is aiming towards reinforcing its roots on international grounds and in terms of attaining international business prioritisation (Lindbergh Foundation, 2010). FedEx Corporation has also made significant expansion for fortifying its freight supply chain management services specifically for supporting healthcare processes to improvise their international profitability (Lindbergh Foundation, 2010). 2.5. Going Along With Specific Target Growth and Yield Management in United States FedEx till date has successfully gone along with its motto of delivering the appropriate service at the specific time to the right customer at a perfect price. FedEx has established a specific ‘Revenue Management Committee’ (RMC), which has been responsible to generating optimal annual yields from various business processes undertaken by this company. This committee also keeps a close check on the market share as well. Besides, FedEx also seems to follow the policy of dropping less profitable or loss making business accounts and deals. Within its domestic market itself, the company has taken up initiatives regarding shifting of their small sized customer base to medium size (FedEx, 2014c). 2.6. Using Information Technology as a Competitive Advantage Factor FedEx has recently shifted its attention towards adopting a new kind of Information Technology based system which is referred to as the ‘Electronic Trade Documentation’ (ETD) system. With the help of this system, the company aims towards providing the customer and business processes with the capability of tracking down their shipment status from any part of the globe. Thus this IT system has successfully proved itself as being a competitive advantage for this company. Moreover, this system seems to have made effective contributions in terms of increasing the transportation process efficiency (Milburn, 2011). 2.7. Use of Effective Leadership Techniques Over the years, FedEx Corporation has come up with multiple new improvements within its processes and organizational work culture. The company realised that for launching new services it is necessary that the degree of employee engagement needs to be increased. Thus, as a corrective step, the company came up with the idea of implementing a 360-degree feedback technique (Real Time Performance, 2009). This technique helped the company’s management in terms of identifying the multiple loopholes existing within the system and supported developing effective leaders who can guide and maintain a continuous pace of the company processes even in difficult situations. Thus, through the implementation of effective leadership techniques, the company has successfully attained success over the long run (Real Time Performance, 2009). 3.0. Justification of the Success of FedEx Company’s Strategic Capabilities Over time, FedEx has come up with multiple types of corporate strategic capabilities which have successfully helped this organisation in terms of attaining success and ensuring its existence. These strategies mostly aim towards analysing corporate issues which might have hindered the functionality of this organisation. A few of these issues have been explained hereunder: The first issue is regarding the effective evaluation of the global transportation and logistics industry. This point can be explained using the Porter’s five force analysis. By taking into consideration the global transportation and logistics market, it can be said that in the current market condition, the express delivery industry is in a booming stage. This has mainly been facilitated because of increasing globalisation trend, merger establishments between international industries and diversification of business processes. Considering all these factors and viewing the entire scenario from a strategic perspective, FedEx Corporation seems to be holding an advantageous position (Amsler et al., 2010). Being a giant and well-known company in express delivery services, FedEx faces lesser amount of threat from external entrants. Moreover, in the current time, the entire industry is in a saturated state because of being occupied by a few major competitors. However, FedEx faces high amount of risk within the same industry from the other express delivery giants such as UPS (Amsler et al., 2010). Apart from all these, the global express delivery industry seems to be sensitive towards economic conditions such as GDP, per capita income, fuel pricing and multiple more. But these factors do not seem to matter much for this company since the fixed cost factor for this company is very high due to the enormous number of business operations carried out by FedEx. Besides, the level of competition in which this company operates has forced it for attaining strategic ways of cost cutting. Adding to all these, the superior experience and expertise attained by this company over the long-term period of its services might also act as an advantageous aspect (Amsler et al., 2010). In Terms of Value Chain Value Chain Value-chain analysis is a systematic procedure which describes about every single step within complex business functionality. This process mainly aims towards analysing the level of effective raw material utilisation along with the maximum amount of value attained by the customers regarding products or services at least possible cost. The service of FedEx Express includes packages pickups from multiple locations which mostly comprises of business areas, drop boxes and local residences. Through this way, the company delivers value to the customers in terms of easy package pickup, tracking and delivery service from every possible location at every possible time. This customer value also includes assurance in term of timely delivery, failing to which the customer will be provided with a refund. These activities flow in a continuous manner and thus require an effective management system. Furthermore, these primary activities are effectively carried out through the systematic help from the support activities such as company infrastructure, information technology, materials management, human resources management and multiple more. The company also maintains a reliable network of transportation fleet which further ads up to its competitive advantage. In Terms of VRIN Framework The VRIN framework analysis of FedEx Corporation brings forwards the following highlighted facts. Valuable. In terms of the aspect of valuable, it can be stated that FedEx possesses resources of multiple kind. The good shipping prices of FedEx Corporation turn out to be much more attractive in comparison with UPS’s services. This factor can be used up as a competitive advantage by FedEx in terms of attaining larger business contacts as well as more customers. One more competitive edge which FedEx has over UPS is its unique cost cutting and profit earning techniques (Roggio, 2011; Texas A&M University, 2002). Besides, in terms of packing material and customer service quality, the company does not have a competitive edge over UPS. Similarly, the two companies seem to have ended up in a tie in terms of implementation of IT within their functionality (Roggio, 2011). Rareness. The rareness facet within FedEx Corporation and UPS can be found in terms of their unique operational techniques and organisational objectives. Adding to this, uniqueness between these two can be found in terms of their profit making techniques. For FedEx, majority portion of their profit earning is carried out in terms of overnight air transport services. On the contrary, UPS basically concentrates on the ground transport services for earning marginal profit percentages. Thus, this unique approach can be deemed to be rare amid its competitors (Texas A&M University, 2002) Imitability. In terms of imitability, not much can be stated since the scenario between the two of the leading express delivery giants can alter depending upon the situation. Even though these two giants have uniqueness in their functionality and strategies, but it does not seem to be difficult for one company to imitate the operational pattern of the other one unless some legal obligations such as copyright is put into practise (Roggio, 2011; Texas A&M University, 2002). Non-Substitutability. Apart from the brand image, innovative strategy and integrated communication network, every other business process of FedEx is substitutable. However, the substitution process might take massive amount of financial investment which may not be possible for small express delivery organisations to undertake easily (Texas A&M University, 2002). 4. Strategic Capabilities Leading To Competitive Advantage In context to the multiple aspects described above, it can be stated that strategic capabilities determine an organisation’s abilities in terms of framing strategic and innovative plans not only to ensure its market sustenance, but also to rise as a tough market competitor. These strategies can be in terms of effective leadership, systematic management, optimal resource utilisation and multiple more. With regard to FedEx Corporation, it can be said that it is mainly due to the innovative strategy of this company, which has brought it among the top 100-fortune list. In terms of strategic capabilities, innovation has also been a strong competitive advantage for this company. Apart from this, the strategy of implementing information technology can also be considered as a significant competitive advantage for this company since it has specifically helped in terms of boosting up the company’s efficiency levels (FedEx, 2014; Texas A&M University, 2002). The third strategic capability of this company in terms of coming up with an effective and efficient air fleet might act as a major competitive advantage for it since this company attains maximum percentage of revenue from overnight air courier delivery services. The future strategy regarding the up-gradation of the ground and water fleet might also turn out to be a major competitive advantage for FedEx against its prime rival UPS (FedEx, 2014; Texas A&M University, 2002). Applying the RBV Framework The resource-based view (RBV) framework helps in terms of explaining the approaching strategy of a firm. It considers the firm as pile of resources. Adding to that, the diversity in terms of combining these resources and utilizing them in an effective manner is what that makes a firm unique from others. It is just like a process of conducting an inside approach analysis of a firm. Moreover, this framework considers the surrounding environment as the starting factor for its analysis. In context to FedEx Corporation, the RBV framework relationship has been explained as under. If viewed from a Resource Based View (RBV) perspective, FedEx has a strong competitive advantage since it comprises ample supply of financial, physical and manpower resources. For instance, it is a prime necessity for the management part to maintain constant and operative communication within the system with the intention of maintaining efficiency. Consequently, keeping in mind of the long-run competitive objectives, the company has been continuously implementing multiple initiatives in terms of bringing about improvement and precision among its workforce and work processes. This can be considered as an effective strategy undertaken by FedEx in order to bring about reduction in the amount of time and resource requirement (FedEx, 2013). Moreover, the company also maintains a huge network of clients all across the globe, which can be considered as another crucial competitive advantage. In due course of time, the company has also made efforts towards attaining greater efficiency levels in terms of global sourcing programs (FedEx, 2013). In addition, the company has shown its terrific capability in terms of adapting to frequent changes occurring within the environment surrounding the environment. This further proves the superior dynamic capability of FedEx Corporation (Habbershon & Williams, 1999). By modernising its air transport service capabilities in both national and local paradigms, the company has also been able to gain efficiencies in broadening its profitability prospects, which in turn has rewarded it with enriched competitive benefits. To be mentioned in this regard, modernising and making its air transportation services more convenient for the target customers have not only assisted FedEx to maintain a satisfied and loyal customer base, but has also aided it with financial leverages. It was principally with the use of this strategy that the company was able to attain a quarterly dividend share of US$0.15 in its stock, which is an increase of about US$0.01 per share in comparison with the previously paid dividend. This profitability in turn has helped stockholders in attaining greater returns further accelerating their morale and commitment to the organisation (FedEx, 2014c). As often argued, a satisfied and loyal stakeholder base proves a crucial base to enhance strategic capabilities that further facilitates the prospect of sustainable, long run competitive advantages. 5. Contribution of Leadership towards Company’s Success, Basing on Appropriate Theory In keeping with multiple testimonies made by FedEx, it can be asserted that the leaders within the company demonstrate multiple types of personal qualities. The company also rates multiple aspiring leader based on their skill levels. A few of these leadership traits have been described hereunder: Charismatic trait. According to Judge & Bono (2000), charismatic leaders, often categorised in the section for transformational leadership, principally intend to inspire the followers to value gains beyond their personal interests, likeness and desires. Correspondingly, charismatic leadership traits can be segmented into four dimensions, i.e. Idealised influence, Inspirational motivation, Intellectual stimulation and Individual consideration (Judge & Bono, 2000). In FedEx, as the company’s leaders often show signs of trust and faith towards the workforce and bear other characteristics of a transformational leadership, it can be asserted that they are principally power by charisma. Correspondingly, they possess a strong focus and understanding of the company’s mission and vision, which they intend to channelize among the workforce to gain better efficiency. Fredrick W. Smith, the present Chief Executive Officer (CEO) FedEx has maintained a charismatic approach in his leadership wherein he has been quite flexible and motivational in his approach (Row, 1998). However, in Bono & Judge (2004), views were obtained concerning the efficiency of this leadership trait revealed that charismatic leaders focused on agreeableness, modesty and kindness are often capable to have strong idealised influence on the workforce, enhancing their performance on a consistent and steady manner, ensuring long run advantages. Hence, based on this understanding, the leadership practices of the company may be listed as its major success driver. Focus towards individual performance. In FedEx, leaders pay equal and effective attention towards each and every employee of the organisation. This includes listening to their issues, giving them adequate training and advice, safeguarding their interests and multiple more. This gradually helps in terms of maintaining a well-managed organisational culture and work environment (Row, 1998). To be noted in this context, individual performance development is often supposed to be the key in facilitating organisational development in an all-inclusive manner with emphasis to its rudimental strategic capabilities and weaknesses. As argued in Kohoe & Wright (2013), focusing on individual performances often assists organisational leaders to manage high performance within the team, being able to influence individual employee attitudes and behavioural traits. This particular initiative can also be asserted as a facilitator of better employee engagement, which in turn aid in building a cohesive workforce performing towards the achievement of the overall organisational goal (Gruman & Saks, 2011). Risk taking nature. FedEx’s leaders also project prior interest in terms of making a stand for new and unpractised thoughts and ideas. They also tend to take side in terms of protecting the company and the workforce’s interest even under risky scenarios (Row, 1998). Contextually, as argued by Smart & Conant (2011), the risk taking ability of a company depends largely on its strategic strengths and weaknesses. Maintaining a degree of coherence with this particular underpinning in its leadership practices, FedEx encourages better participation of employees in company risk taking, although after isolating the currently available options of development from the future gain opportunities emphasising immensely on boldness of the forecasts made. It is further suggestible in this context that due measures should be taken by FedEx when making bold forecasts to pay limited or insignificant attention to past statistics and focus immensely on future prospects when contemplating aggregation of the risks to be undertaken along with the gains associated therewith (Kahneman & Lovallo, 1993). Dependable. Being dependable is one of the prime qualities, which can be witnessed within this company’s leaders. This trait gets projected in terms of coming up with effective and creative decision making, which till date has benefitted this company in the long run (Row, 1998). Notably, practicing a dependable leadership style to build a cohesive working team as well as to facilitate performance management through the implementation of High Performance Work (HPW), as observable in the context of FedEx, have a strong linkage with organisational culture, overall stabilities and success potentials in the long run (Ogbonna & Harris, 2000). As the work culture in FedEx depend largely on continuous innovation and development, it is important for the company to practice a leadership style, which empowers its workforce to come up with different ideas, forming the base of innovation strategies on a continuous and consistent basis. Additionally, it also makes the employees’ morale accelerate, rejuvenating the competitive position and success potentials of the company overall (Valencia, Jime´nez & Valle, 2011). Flexibility. In simple words, it can be said that leaders within this company are accustomed in terms of adapting to variable environmental conditions. According to Vijande, Sánchez & Trespalacios (2012), organisational flexibility is directly linked with its performances, which further increases its strategic capabilities to mitigate risks and ensure the desired gains from the initiatives undertaken. Based on this understanding, organisational flexibility maintained in FedEx can directly be linked with its success potentials, as it offers the company with an enhanced capability to fortify its competitive positioning and therefore, secure its success drivers in achieving the determined goals (Lewicka, 2011). For instance, handling a lot of stress factors and dealing with multiple problems at a single instance to name a few. This quality also sounds beneficial for this company since, express delivery organisations are economy sensitive and thus often end up in hostile situations. FedEx’s leaders often focus towards maintaining the organisational as well as workforce integrity. They seem to act up unclouded judgement (Row, 1998). Correspondingly, the Fiedler’s contingency model can be correlated with the attitude and attributes depicted by FedEx’s leaders as the key notion behind this approach is that leaders are necessitated to deal with responsibilities derived upon the scenario in a competent manner. FedEx’s leaders have been generally flexible enough to take adequate risks and commanding decisions to deal with uncertain scenarios. 6. Future Prediction for Continuation of the Company’s Success based on its Strength SWOT Analysis of FedEx Corporation Strengths Weaknesses 1) Acquisition of business 2) Strong hold over the market 3) Business diversification 1) Financially declining status 2) Over dependence on the US domestic market Opportunities Threats 1) Strategic cost-reduction techniques 2) Initiative in terms of development of air-fleet and logistic services 3) Implementation of IT into processes 1) Competition within same industry 2)Volatility of the fuel prices 3) Threat in terms of trade barriers The above table describes all the key strengths and weaknesses of FedEx Corporation. A detailed understanding of these above-mentioned strength and weakness factors might help in determining the future chances and risk factors, which might get associated with this company in the long run. In terms of advantages, it can be said that the company might achieve massive market share through the effective up-gradation of its air fleet. Adding to this, the stronghold of this company over the market might help it in terms of attaining multiple business proposals over the coming years (Slide share Inc., 2014). However, as for the disadvantage part, it can be said that any sort of deterioration within the economic condition and gradual increase of fuel prices will definitely have a negative impact on this company. Since this company mostly depends on its air fleet in terms of providing service, so the expense rate regarding aircraft fuel might become a major liability for this company in the future period unless it focuses towards switching to cleaner and efficient sources of fuel for its sustenance (Slide share Inc., 2014). 7. References Amsler, M., Cullen, J., & Erdmenger, J. C. (2010). Executive summary. Strategic Report for FedEx Corporation, 3-10. Bono, J. E. & Judge, T. A. 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