Business Strategy TNT Express in a Global Environment - Essay Example

Module Business Strategy in a Global Environment: TNT Express (UK) In the courier industry, TNT Express (from here on otherwise referred to as TNT) plays a vital role in delivering express services from business to business. TNT express handles the secure delivery of parcels, documents and freight between businesses via road and air transport. The company began in Australia in 1946 by Ken Thomas with a single truck and later in 1958, it changed to Thomas Nationwide Transport (TNT). TNT is now a global company that accounts for over 10,000 employees in the UK providing delivery services to more than 200 countries (TNT, 2011). The paper provides a detailed analysis of the business strategy of TNT and its delivery to customers. Business Values. The values put forward by TNT support the way the organization is run since they make the basis over which TNT conducts its business (TNT, 2011). Business strategies and plans usually change according to the prevailing market situation but the core values of a business organization remain intact. The values of TNT include: i. Honesty ii. Every activity should be aimed at satisfying the customer iii. Show passion to our customers iv. Teamwork v. Evaluate success via sustainable profits vi. Work for the globe. All aspects of business strategy at TNT put emphasis on delivering or providing its customers with a ‘superior experience,’ for instance the use of complex technology to help customers keep track their deliveries. Delivery through People. In one week, TNT handles over an estimated 3.5 million deliveries globally (TNT, 2011). In Britain, it is listed as one of the top providers of the service providing its employees with care and a quality working environment. Being in an industry with huge competitors like DHL, the company has to employ a labor force that is high-skilled covering a range of functionalities, among them sales and marketing, distribution, HR, customer services, and finance. In order to attract such a labor force, TNT provides its employees with remarkable careers as well as chances to progress their careers. MISSION, OBJECTIVES AND AIMS A mission statement reflects the major purpose and key business aims i.e. it is a statement of what a business is, its direction, and what the organization does. All those directly affiliated to the organization have an obligatory duty to understand an organization’s mission. According to TNT (2011), the mission of TNT is to exceed the expectations of customers in the delivery of their products, providing customers with the most efficient and reliable solutions via delivery networks, thus delivering value, working towards becoming the top service provider in the industry by infusing pride into our customers, creating value to the company’s stakeholders as well as sharing a global responsibility. The company’s aims are directed towards delivering products effectively, ensuring customer satisfaction and instilling responsible behavior. To reach this target, there is a strong need for the organization to establish objectives at different levels. Fleischer and Benoussan (2003) believe that SMART objectives aim to ensure the understanding of what is required at a given time and by when it is required. They help the organization to assess its performance so that the organization can determine whether its aims have been reached. With respect to prevailing market situations, the SMART objectives of an organization can change so as to overcome that particular scenario. An objective can be measurable, specific, relevant, achievable, or time-related. An objective that is measurable takes into account all aspects of services and operations of TNT. The major objective is to achieve growth that is profitable. SMART objectives have been developed by TNT to support the major objective and they include (TNT, 2011): i. Responding to over 85% of the organization’s callers within ten seconds. This objective is in line with the organization’s mission to provide customers with the most efficient and reliable solutions. The focus of TNT on its customers is among the key ways in which a distinction between TNT and its competitors can be made. ii. To improve the carbon efficiency of the organization in 2020 by 45%. This is a long-term objective that the organization looks forward to achieve, an indicator that TNT is focused towards business activities that are environmental friendly. Building the Strategy. A business strategy is a way in which the objectives of a business are achieved; usually taking a long-term form and/or plan that relate to the chosen market, the market environment and the products of the company. PESTL ANALYSIS Political and Legal. The organization is legally authorized to conduct its delivery services across the borders of the state as well as the nation. Just like other companies or rather organizations in the industry, TNT Express is charged with tariffs and excise duties. In the UK, TNT (2011) affirms that regulations exist that govern the use of roads, air and sea in transporting certain types of dangerous goods and TNT is no exception. Economic. This involves the risk of demand in the market where orders for delivery might reduce due to factors like changes in weather and financial crises. Social. TNT has taken the initiative to go green where it aims at looking for alternative sources of energy other than oil or petroleum in order to cut down on the emissions from their transportation vehicles. Technology. TNT has taken a technological direction where it employs sophisticated technology to help customers to know where their deliveries are at any given moment. “Technology is the key to communication issues,” states Fleischer and Benoussan (2003), hence, this technological advancement presents the organization with the necessary communication platforms to keep in contact with freight deliveries, plane pilots and truck drivers to verify their status on transit. Environmental. The need to reduce emissions as well as land for developing more airports is limited. In addition, installing noise pollution controls for airplanes and trucks is necessary. PORTER’S FIVE FORCES High Threat of Entry. Threat of new entries into the market is high due to the increasing need for transportation of products both within the country and overseas. This can be attributed to the fact that the UK has a high and growing number of immigrants who always send packages back to their native countries. High Intensity of Rivalry. The existence of competitors like DHL is a huge threat to the existence of the organization hence a need for quality provision of services to ensure loyalty of consumers (TNT, 2011). Substitutes. The threat posed to TNT’s form of delivery by emergence of substitute delivery methods is medium since it is hard to think of a better way to deliver parcels to their destinations without road, sea or air. High Buyers Bargaining Power. Buyers are the TNT’s customers who will go for the cheapest, most reliable and most efficient company for the delivery of their products hence, it is vital for the organization to provide customers with suitable prices that will ensure the company keeps its profit making objective. High Bargaining Power of Suppliers. TNT is also supplied with a host of products to ensure its efficient operations. Operational expenses and maintenance costs of the vehicles, ships and planes can be quite high as well as hiring and retaining of qualified personnel. The organization should work towards balancing its prices so as to maximize profits. Strategic Group Analysis The analysis takes into account postal organizations four strategic groups or rather categories: global players (TNT Express, FedEx, UPS, DHL) with high focus on international markets as well as expanding internationally; regional diversifiers (Parcelforce, Royal Mail, Interlink, DPD) – those with some degree of dominion in the continent and or neighboring countries; traditionalists with total focus on improving mail efficiency nationally (Nightfreight, UK Mail, APC, Tuffnells, DX); and service providers (Hermes, Yodel) – providing services beyond shipping, mail, stationery and banking as well as showing innovative solutions all across organizational operations (TNT, 2011). TNT Express is UK’s leading parcels company with a company revenue of ?758 million in 2010; accounting for 15% of the total revenue for the top players in the industry. Other strategic groups in the industry include UPS and DHL with revenue of 13% each (TNT 2011) during the same year. A host of other companies in the UK parcel industry have indicated positive growth in recent years mostly attributed to a combination of acquisitions and organic growth; with most recording a percentage growth higher than 5% annually. They include DPD, Yodel, APC, FedEx, Interlink, Parcelforce Worldwide, Tuffnells and City Link. As a result, the revenues of companies like DHL, Nightfreight, UK Mail and DX declined during the same period (TNT 2011). Critical Trends Top performers in the industry are focusing on cutting on costs through automation, reduction of headcounts as well as more involvement in selling of assets and outsourcing with a major focus on creation of value. Furthermore, many parcel companies have welcomed the idea of digitalization which has added new dimensions to their products as well as increased access to products. Most of the companies are implementing business-to-consumer e-commerce form of business as part of their strategy for diversification. Another trend common in the market is that high performers have a sense of recognition for their customers; keeping them at the center of every activity of the organization. Retail options providing clients with longer service hours have been introduced to improve the accessibility of products as well as online options that provide customers with information of the products and services offered. THE STRATEGY MAP OF TNT EXPRESS The strategy map of TNT puts the customer at the center of every business activity. It sends a message to every person affiliated with the organization regarding how the company plans to meet its goals. The business objective of TNT Express is growing of profits and the role of the strategy map is to act both as framework and a practical guide to achieving this goal. In addition, it acts as a point of reference for supporting the organization so as to ensure all staff focuses on the organizational objective and aims as well as understanding the role they play in quality delivery of products. TNT presents an exceptional commitment to the company’s strategy. This can be seen where in 2010 TNT Express was honored with admission to the Palladium Hall of Fame among other leading companies like BMW and Siemens; an honor presented to companies with outstanding achievements as a result of using the Kaplan-Norton Balanced Scorecard (TNT, 2011). Tactics of Business Strategy Delivery. Different organizations employ varied tactics of delivering their business strategy. Beer and Eisenstat state that “organizations are established under different conditions, environments and for different reasons. Consequently, the tactics employed by different organizations in the delivery of organizational business strategies are also varied” (607). TNT’s map describes three tactics it uses to deliver its services – management of customer relationships, operational excellence, and innovation. These represents the path taken by TNT towards achieving its long-term objectives, for instance, operational excellence is set to be achieved via a concrete establishment of fast, quality and reliable services; as a result, there is improved customer relationships due to the ability to understand the different but specific needs of the customer thus developing a strong customer loyalty and commitment; and innovation, which is about looking forward to future customer needs where the organization maximizes the strong business relationships it has to build a shared vision and joint approach towards achieving the desired TNT future (Mintzberg 112). SWOT Analysis Strengths Weaknesses i. Having a distinctive market position – the position of TNT in the market is based on the distinction of the organization from its competitors in terms of speed, quality provision of services and reliability of their delivery services. ii. The ability to attract, develop and retain qualified and competitive staff that are capable of performing higher than the expectations of the customer and ensure that customers remain loyal to the organization. iii. Its ability to reach over 200 countries gives the company a strong hold to its customers. This is due to the suitable equipment available to the organization for transportation services (ships, planes and trucks) i. The transfer of products must be physical hence costly. ii. Most of the technological advancements favor only the communications part of the organization as opposed to the major activity of the organization: timely delivering of products to customers, for instance, documents can not be transferred online as the receiver of the product expects a package. iii. The existence of strategic gaps within the organization due to different roles of staff ranging from frontline parcel distribution to sales, accounts and marketing duties i.e. a gap between the human resources available and those responsible for fully implementing the strategy. Opportunities Threats i. The organization should identify the types of goods and services to provide, for instance a delivery service that is highly integrated. ii. Expanding to other parts of the world. TNT has its services focused in Europe, Asia, South America and North America. Expanding its services to nearly all corners of the world can be a boost to the organization’s revenue. iii. Technological advancement provides the company with a better chance to improve its communication practices and keep close monitoring of employee performance and activities as well as enable customers keep track of their deliveries. i. Existence and entry of new competitors in the delivery industry, for example DHL. ii. Economic crisis. Potential crisis could result in reduced delivery of products as few will favor international supplies than domestic supplies. iii. Climatic changes. This could affect flights and as result delay delivery of certain products to their desired destination. Who TNT Express Serves Strategy Delivery. TNT groups its customers into clusters depending on their needs. Some customers are regular users of TNT’s delivery services while others come in once in a while. The responds given to these two groups of customers is different based on the fact that repetitive business practices (regular customers) are more cost effective as compared to acquisition of new customers (one-off-request customers) due to the nature of the competitive market. What TNT takes into account while responding to customer needs is to ensure customer loyalty is established and maintained. Beer and Eisenstat state that “for an organization to succeed, it needs to ensure customers remain loyal to the brand and keep the loyalty for continued success” (599). The Customer Promise. TNT keeps track of their customers’ satisfaction via regular Customer Loyalty Measurements. The promise of the company to its customers is mainly to meet their requirements as well provide timely deliveries and at the right place since the company transports many different types of goods, including blood supplies, Christmas trees etc. Development of its People. TNT has recognized its people as core to achieving its customer-based strategy. As a result, there is an organizational commitment to develop the staff through education and training of managers to become trainers and assessors of the organization’s team. The organization also recognizes the performance of their employees via appraisals thus making it easy for managers to identify the weaknesses and strength of their staff and act appropriately. Works Cited Barney, J. & Hesterly, W. Strategic Management and Competitive Advantage, Pearson, New Jersey, 2008. Print. Beer, M. & Eisenstat, R. Developing an Organization Capable of Implementing Strategy and Learning. Human Relations, 1996. Print. Fleischer, C. & Benoussan, B. Strategic and Competitive Analysis: Methods and Techniques for Analysing Business Competition. Pearson Education. Upper Saddle River. New Jersey, 2003. Print. Garavan, T.N., Barnicle, B. & O’Suilleabhain F. Management Development: Contemporary Trends, Issues and Strategies. Journal of European Industrial Training. 1999. Print. Mintzberg, H. The Rise and Fall of Strategic Planning, Harvard Business Review, 1994. Print. TNT Express Annual Report (2011). Building on Strengths. 2011. Web. Nov. 23, 2012. Read More