Strategic Management and Leadership for FedEx Corporation - Case Study Example

Strategic Management and Leadership for FedEx Corporation Table of Content 0 Measurements of success…………………………………………………….…………...4 2.0 Reasons for success……………………………………………………………………….5 2.1 Credible workforce………………………………………………………………..5 2.2 Leadership…………………………………………………..…………………….5 2.3 Marketing…………………………………………………….……….……..….…6 2.4 Information system……………………………………………………………...…6 2.5 Proper infrastructure………………………………………………………..…..…6 2.6 Culture………………………………………………………………….…...…..…6 3.0 Continuing success………………………………………………………………...…..…..6 4.0 VRIN Framework for FedEx Corporation…………………………………….…….…..…8 4.1 Value………………………………………………………..…………………...…9 4.2 Rarity………………………………………………………………………..…...…9 4.3 Inimitability……………………………………………………………......…….…9 4.4 Non-substitutability…………………………………………………………….…10 4.5 VRIN Framework summary…………………………………………….……...….11 5.0 Value chain framework…………………………………………………………...…..……11 6.0 FedEx business strategy…………………………………………………………...……14 7.0 Leadership at FedEx………………………………………………………….…………14 7.1 Leadership……………………………………………………….………………....……14 7.2 Management…………………………………………………………………….….……15 7.3 Culture and decision-making……………………………………………………...…..…16 References ……………………………………………………………………………….….17 1. 0 Measurements of success There are a number of issues that come into play when it comes to measuring the success of a company. While opinion is divided as to what determines the success factors of an organization, it is important to consider some elements. The size of the company and the financial ratios in terms of profitability are some of the elements that might help in measurement of success. However, it is critical to note that measurement of success can be a challenge. The company’s revenues have been steady from the time of inception until the last financial year. Drawing an analysis of the financial records over the past 7 years, it can be noted that a number of things have changed in terms of revenue collection. For instance, in 2008 the company had a net revenue income of $38 billion (Statista, 2014). In 2009, there was a scale down as the company managed $35.5 billion dollars of revenue. The revenue further dropped in 2010 when the company managed a paltry 34.7 billion dollars (Statista, 2014). However, in 2011 the company’s fortunes began to rise and the revenue collection was up by 39.3 billion dollars. In the year 2012 the revenue stood at 42.7 while in 2013 the revenue base stood at 44.3 billion dollars (Statista, 2014). The upsurge in the revenue in through the last three consecutive years shows that the company has been successful in the market. One of the measures of an organizations success is the size of the company. FedEx has got a global presence in almost all parts of the world. The company has managed to ensure significant growth over the years and it is projected that more branches will be ensured. Consequently, it is notable that the company has been on an acquisition plan and has since acquired new companies, hence adding to the list of the companies. To this end, it is notable that there has been significant progress in the fortunes of the company. FedEx Revenue for six financial years Financial Year Revenue in US billion dollars 2008 38 2009 35.5 2010 34.7 2011 39.3 2012 42.7 2013 44.3 2.0 Reasons for success 2.1 Credible workforce The company has been able to get the best out of the market. The personnel are trained and reactivated to make them more refined for their duties. The workforce of the company is efficient and loyal to a large extent (Pride & Ferrell, 2006). 2.2 Leadership The leadership of the corporation has been incredible. Mr. Smith has been incredible in ensuring that the company’s vision is achieved. Through the leadership of the company, a number of goals and objectives have been enhanced over time (Pride & Ferrell, 2006). 2.3 Marketing The company has an elaborate marketing strategy that has to say the least ensured that the company is at a different level. Through different market strategies FedEx has ensured that different market segments are reached (Pride & Ferrell, 2006). 2.4 Information systems The company has an elaborate information system that ensures that customers are able to find out information online. The information system has been impressive, as many have found it to be effective an easy path of reaching the company (Pride & Ferrell, 2006). 2.5 Proper infrastructure The company has an elaborate fleet not to mention the logistic system. On the other hand, the company has a well laid down a technological framework that ensures that information can be (Pride & Ferrell, 2006). 2.6 Culture The company’s culture and decision-making approaches are the most elaborate. Decision-making is done with a bottom-up approach. In this case every employee is involved in the decisions aimed at establishing proper procedures for operations. 3.0 Continuing success The corporation will have to ensure that certain aspects are put in place to ensure that success is furthered into the future. Internal and external factors will be very essential in ensuring that the corporation furthers its success to the future. To this end, the corporation should consider scaling down of the workforce in order to save more on the revenues. The corporation will have to scale down of the employees through the intentional take over plans (FedEx people and workplace, 2011). To this end, the company will be able to save some substantial amount of revenues that can be invested in other parts. On the other hand, the corporation should be able ensure that it expands to other destinations in order to widen its customer base. When there are wide customer bases, it is possible to widen the revenue base. Case in point is that the corporation should consider venturing to other fields and markets in the global scene. There should be a proper market survey before the corporation ventures into the different target fields. The different markets pose different and unique challenges in terms of competition and the company will have to consider these markets before making entry. On the other hand, the company will have to consider its price penetration strategy when gaining entry into the different markets. The company will also have to bring on board to transportation fleets that are effective and efficient to the extent of ensuring prompt and elaborate service provision FedEx people and workplace, 2011). The corporation will have to consider fuel effective fleets so that spending on fuel is reduced and the revenues maximized. When these internal and external factors are emphasized on, the company will be furthered into the future. 4.0 VRIN Framework for FedEx Corporation FedEx has a number of strategic competitive strategies that are wide and varied. An enterprise can only ensure a competitive advantage in the market when there is well laid down strategies capable of tilting the fortunes of the company to positive ends. FedEx Corporation has an infrastructure that has advanced to a greater extent that ensures leverage over other competitors in the market. Consequently, FedEx has an information system that has advanced to a greater extent. The advanced information system at the company allows for packaging tracking that is precise and effective. Very few companies of the statue of FedEx have such elaborate information systems. The customers can follow up their products through the online system without having to make inquiries directly to the company. Online tracking is relatively faster than having to contact the customer directly. The infrastructural development as a competitive advantage has all to do with skilled human resources, fleet of automobiles and planes. A reliable delivery service is made effective through the well laid down infrastructure at the FedEx Corporation. 4.1 Value FedEx has an elaborate strategy that is aimed to give the customers the best in terms of the delivery of services. One of the major areas that the company provides value in is providing well-packaged goods. On the other hand, the products destined for every customer can be monitored through an elaborate information system. The company endeavors to give the best to the customers through its massive infrastructural framework. Creating value in service provision in the areas of logistics, transportation and e-business enhances competitive advantage to the corporation. The company through its value strategy enables the company to review the charges for the services to the extent that they are able to make as much profit as they can. One of the areas where the company has been incredible in terms of provision of valued services is by outsourcing some of its operations to other companies (Sanchez, 2008). The elaborate system of logistics, an innovative system of e-business and transportation fleet has been very effective and has been a key drive to value addition. 4.2 Rarity FedEx as a corporation has remained relevant in the market for several decades based on its unique features and wellbeing. However, it should be noted that there are some areas that are beyond reach for the company, in terms of being profitable, the company falls a distant third after UPS and postal services. The company has however some unique competitive advantages, especially in the fleet of planes it has. For instance, the company has over 639 aircrafts different from its closest rival UPS. FedEx also controls storage spaces that are large to some great extent. The information system at FedEx is very elaborate to the extent that well over 6.4 million people visit the corporation’s portal every single month. On the other hand, about 2.3 clients electronically connect with the company on a daily basis (Sanchez, 2008). FedEx has a wide range of components that literally puts its competitors off guard though only to some extent. The elaborate logistics and e-business strategy is a competitive advantage that the company has over other market player. The company’s rarity can only be analyzed only to the extent to which it has some unique features that its competitors do not have. The rare capabilities of the company stretch far and wide though there needs to some advancement in different areas to ensure that the gap of rarity is widened. The company’s online presence that helps connect with customers in different parts of the world is real time is one of the most profound rarity elements that the company has (Sanchez, 2008). 4.3 Inimitability FedEx Corporation has been impressive in the market since the time of inception though to some extent. Infrastructure and technology have been some of the components that have proved inimitable by other companies. Case in point is that the company has built a technological platform that cannot be matched by most of the players in the market. The online platform has been one of the most effective in so far as the company’s wellbeing is concerned. Customers are able to monitor their shipments through the online platform without having to call the office for inquiries. Most of the customers visit the company’s website to find information and even interact with the company on a real time basis. This has been one of the areas that the company has had a competitive advantage. Most of the industry players such as UPS and DHL do not have an elaborate information system such the one that FedEx has (Sanchez, 2008). On the hand, the company has an infrastructure that is enhanced and well established. Infrastructure in this sense means that the company has elaborate transportation facilities capable of making the company achieve its predetermined objectives. The company has well over six hundred airplanes that serve in the transportation business. The fleet of transportation facilities inherent in the company puts the company at a strategic level. 4.4 Non-substitutability Value, inimitability and rarity are components that can be developed by any company in the industry. Though the FedEx has a greater competitive advantage over some of the industry players on some platforms, it is critical to note that competitors are ever bound to do the same things that a competitor does to ensure that they get to the same level or even gain a competitive advantage over such a company. In the case of FedEx Company, there are some of the most visible competitors such as UPS and DHL (Sanchez, 2008). These companies have the ability to adopt some of the elements inherent in the FedEx Company. For instance, the UPS has been on a drive to develop a technological platform that is capable of connecting customers all around the world. On the other hand, there has been a drive to have a transportation fleet that can be to match those of FedEx. To this extent, it can be noted that that the bragging rights that offer competitive advantage to the FedEx Company a competitive edge over other industry players may soon be a thing of the past. As the other company players endeavor to strengthen their competitive advantages in the market, it may be de3trimental to the FedEx Company as the other competitors begin to offer similar incentives hence giving alternatives to the customers. 4.5 VRIN Framework summary The VRIN framework is testimony that the FedEx Corporation’s strategy of technological and fleet system is one that is rare, valuable and inimitable. The aspects have, to a large extent enhanced the company’s competitive advantage to a greater extent. The benefits of the corporation in financial terms have been pushed upwards hence giving the company leverage in the market. However, there are challenges that may come from competitors such as UPS and DHL who continue to come up with innovative means to ensure that they become more relevant in the market. FedEx’s competitive advantage may be put into test in the coming days (Sanchez, 2008). 5.0 Value chain framework The value chain has also a number of competitive advantages. In this sense, the value chain can be seen from the point of picking up of the packages. The human resource of the corporation gets the packages from different places such as residences, drop boxes and different business entities. Value is enhanced specifically for the clients in so far as picking up of the packages are concerned. It is made possible for the employees to pick the packages from any location at whatever time. FedEx has an elaborate money back plan where clients who do not receive their packages on time. In essence, value is created when it comes to delivery of packages in time (Walters & Rainbird, 2007). When the shipments are received, they are first taken to a hub. A central location where the packages are sorted is established. After the sorting of the products are taken to different destinations locally and abroad. The packages are kept in the hub until such a time when it is appropriate to be shipped or flown to different destinations. Delivery of the products is one of the most valuable activities for the FedEx Corporation. The different employees of the company carry out their duties as diligently as possible to ensure that the objectives of shipments to the respective destinations. The packages are scheduled so as to reach the respective destinations on the specified time. By meeting the expectations of the customers through timely deliveries, the value is increased with every positive feedback. The last issue in the activity log is the services that the customers get from FedEx. One of the primary roles of the company is to provide services to the customers spread across different regions. In the company’s system, clients are allowed to track their shipments while in transit through the online services. Value in enhanced when the customers are able to track their products until they finally get hold of them. Anytime customers are able to track their products on different instances, it provides a sense of security to the clients and assurance. As such, value is enhanced to a greater extent. The various primary activities are only achievable because of the well laid down infrastructure and an information system platform (FedEx, 2014). Without the information system, the clients cannot be able to follow the shipments, neither can they make inquiries about the shipments and get some quick feedback. Therefore, the various platforms that include infrastructure and the information system space act a competitive advantage for the company. The chain value system in the case of the FedEx Corporation is enhanced to the extent that it is able to ensure competitive advantage over the rest of the competitors in the market. In the event that the chain is not elaborate and efficient, it becomes difficult to track the products either online or otherwise. The company has made tremendous progress through the chain system and it is clear that the corporation has broadened its customer base to a greater extent. 6.0 FedEx business strategy FedEx as a business entity has an elaborate strategy that will ensure that the company profile is raised to a significant level. One of the key areas of strategy is raising the company’s profitability levels. The areas of focus for the company are areas where productivity is achieved and other areas that have growth potentials. The company seeks to derive close to $1.7 billion of enhanced profits by in the coming financial years. The company seeks to achieve its strategic business plan by ensuring that five key areas are covered. One of the strategies is to modernize the air fleet. This will ensure that the company becomes relevant and in line with the current technological transformations. This will ensure efficiency and apt delivery of services son as to ensure a competitive edge over the competitors. This strategy is essential for it will allow the company to develop a modern system that is able to achieve the predetermined objectives as appropriate. On the hand, the company seeks to ensure that there is an efficient staff, functions and processes that are capable of meeting the objectives of the company. Efficient staffs are important in the sense that helps in streamlining the objectives of the company through proper and effective performance of duties. Consequently, the processes are to be made effective and elaborate. For instance, shipments and deliveries are to be made effective to ensure that everything is tandem with the objectives of the company. The company would also seek to raise the international profits. This will ensure that the company raises its total revenue for the corporation. As such, the company will be able to have a broad financial based to ensure that the expansion strategy is achieved (De Wit & Meyer, 2004). The various strategies that the company has lined up are very effective and are bound to undergo some success if properly implemented. For instance, if the company improves the efficiency of the staff operations and the processes, there will be proper utilization of resources while will streamline the time used for every activity. Such will help the company deliver the products on time and as appropriate (FedEx, 2014). Consequently, modernizing the air fleet, the resultant factor will be that the older planes will be effectively faced out. In this regard, the operating costs will be reduced to the extent that most of the resources will be saved. The fleets to be brought in to the picture will be able to fuel effective and to the extent that the company will save more resources that would otherwise be used for older planes (FedEx, 2014). The business strategies can only be possible of there is a proper implementation plan for the different for the strategies. Productivity and profitability can only be enhanced when a company puts into place the necessary plans to ensure that the objectives are met as appropriate (Pride & Ferrell, 2006). The business strategies for the company will succeed owing to the fact that the company has a broad financial base that will ensure that the resources are available for the implementation of the various programs. On the other hand, the company already has a well laid down infrastructure and hence, it will be relatively easy to introduce some of the plans such as facing out the older planes. The success factors with respect to the strategies are relatively achievable with the right procedures in place. 7.0 Leadership at FedEx 7.1 Leadership Ireland (2005) notes that leadership is very essential in the life and wellbeing of every enterprise or organization (Ireland & Hitt, 2005). When there is proper leadership, it is possible that objectives can be transformed into realities. Without leadership, success in the organization cannot be achieved. James (2001) argues that it is important to change old paradigms of leadership in the event that they are no more effective (James and Burgoyne, 2001). To change mindsets and have people perform their duties as appropriate, there needs to proper leadership to ensure that the visions and objectives of the company are met. Jimmy notes that in an organization, leadership is critical in ensuring that the individual company programs are achieved. FedEx Corporation has achieved because of the fact that Fredrick W. Smith has been at the helm of the organization. Through his leadership, the company has moved from one standard receiving international accolade all over the world. One of the theories that have been employed extensively at the company has to do with participative leadership. In participative leadership, everyone is considered as critical since the decisions affect every individual (Achua et al, 2007). At FedEx, every employee’s input is valued for the purpose of coming up with conclusive outcomes. Situational theory is another leadership theory that is critical (Achua et al, 2007). In this case, the leader is expected to come up with decisions based on a particular decision. At this stage, the leaders should not be rigid with one style of solving an issue. Instead, there should be a multiplicity of approaches used in ensuring that an amicable solution is reached. The leadership of FedEx had in the past used diverse approaches in arriving at decisions at the organization. The corporation has been able to weather the various storms in the market through effective employment of leadership. 7.2 Management Proper management is essential and appropriate for every organization to succeed. In different occasions, management teams have proven to be central in the organizations wellbeing (Hislop, 2013). Every department in every organization has a leadership structure that has specific duties of ensuring that the respective departments achieve their tasks. At the FedEx Corporation, the company has an elaborate management system that is departmentalized. The Ever management level has a leader that responds to the chief executive. The middle level managers at the management levels are directly responsible for what happens on the ground with respect to the various departments. Ultimately, the chief executive is the ultimate authority who the managers at the management level have to report to. The C.E.O who is the ultimate leader of the company is responsible for the overall management of the company. Mr. Smith has been exemplary in the management of the company. 7.3 Culture and decision-making The most important issue in leadership is culture. For instance, the company’s culture of decision-making is a bottom-up approach. In this case, the decisions are made are made from the lower levels of the company and then take up for deliberations by the executives. FedEx has a strategy of empowering the departments at the lowest levels so that they are able to come up with decisions that are elaborate and instructive. In most cases, bottom-up approach of decision-making is effective for the input of the other lower departments is considered hence ensuring that every component is included. Decision-making has been to a large extent impacted by the bottom –up approach and this has proved element of a success factor. References: Achua, C. F., Lussier, R. N., & Academic Internet Publishers. (2007). Cram101 textbook outlines to accompany: Leadership: theory, application, and skill development, 2nd Ed. Moorpark, Calif.: Academic Internet Publishers. De Wit, B. & Meyer, R. (2004). “Strategy: Process, Content, Context”, Thomson Learning, 3rd Ed. FedEx people and workplace. (2011). Global citizenship goals and progress updates. Retrieved from: Farhoomand, Ali F. & Ng Pauline (2000) “FedEx Corporation: Structural Transformation through E-Business”, University of Hong Kong. Hong Kong. Print. FedEx. (2014). FedEx Express–Strategy. Retrieved from: < http://investors.fedex.com/phoenix.zhtml?c=73289&p=irol- overviewexpressstrategy> Hislop, D. (2013). Knowledge management in organizations: A critical introduction. Oxford: Oxford University Press. Ireland, R. D., & Hitt, M. A. (2005). Achieving and maintaining strategic competitiveness in the 21st century: The role of strategic leadership. Academy of Management Executive Journal, 19(4), 63 James, K. and Burgoyne, J. (2001) Leadership Development: Best practice guide for organisations. London: Council for Excellence in Management and Leadership. Pride, W. M., & Ferrell, O. C. (2006). Marketing: Concepts and strategies. Boston: Houghton Mifflin Co. Statista. (2014). The statistics portal. FedExs revenue until 2008-2013. Retrieved from: < http://www.statista.com/statistics/267501/revenue-of-fedex/> Sanchez, R. (2008). A focused issue on fundamental issues in competence theory development. Bingley, UK: Emerald/JAI. Walters, D., & Rainbird, M. (2007). Strategic operations management: A value chain approach. Basingstoke: Palgrave Macmillan. Read More