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Vinke Air Freight - Essay Example

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Vinke Air Freight is a Midwest-based air freight service company that offers overnight delivery of large packages anywhere in the continental United States. The new president of the family-owned company is concerned that the organization has reached a saturation point with its current product line and, while optimistic about increasing the company's market share within its current segment, is considering the idea of expanding operations to include overnight delivery of letters and small packages…
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Vinke Air Freight

Download file to see previous pages... Vinke currently serves large- and mid-sized companies who occasionally need to ship parts to meet emergency needs. The present client base certainly must value the fact that their large packages can be delivered to an airport and Vinke will transport the parts as well as arrange final delivery. In an emergency, industrial delivery scenario, Vinke's personal attention to clients is a major benefit. In the overnight letter and small package market, however, customers are not seeking the specialized attention that has built the company's current market. They are more interested in having their letters picked up at their location and timely delivered to the intended destination. Neither are they faced with the issues of industrial shipping. These customers are consumers for whom overnight delivery has become ubiquitous. They don't need specialized personal care nor are they constrained by the logistics involved in moving large manufacturing parts to meet emergency timeframes; they simply want their letters to be picked up and delivered on time.
In considering the organizational changes required by the proposed entry into the new market, and the competition already in place there, the task could prove daunting. Vinke's current client base is industrial or manufacturing companies. These organizations can be serviced from the airport to destination. For overnight letters and small packages, the company will not be able to expect its customers to drive to their airport; Vinke will need to implement a pick-up service. They won't be competing for a relatively small pool of clients; they will be forced to serve the general public. This will require extraordinary organizational changes. Further, rather than the occasional and urgent nature of delivering large industrial parts that easily fill up planes with just a few orders, the new market demands will centre upon frequent handling of routine letters and small packages. Planes will either have to be full of packages from a high volume of shippers or fly partially empty to meet delivery requirements. The likely costs associated with this operational change will be quite large and potentially threatening to operating capital. Finally, competition in this market is fierce. One need only visit the web site of a major potential competitor to see the complex bundle of service divisions required to fulfil demand in this market (FedEx, 1). The organizational changes required to effectively compete in this market are overwhelming.
The criteria necessary for evaluating the proposed venture are found in a standard Strengths, Weaknesses, Opportunities, Threats (SWOT) analysis model. The critical issues for Vinke are clearly outlined in this matrix. Unable to utilize their key strength, personalized customer service, the company is overwhelmed by the weakness of its limited operation scope and mass-customer service incapability. Any potential opportunity that might be presented through the use of its current equipment and facilities is immediately and obviously threatened by the strength of the competition already in place.
There may be growth potential in the overnight delivery of small packages market, as management ...Download file to see next pagesRead More
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