Strategic analysis of FedEx

strategical epitome of FedExThis root abstr transaction the strategical readiness of federal official press out and suggests shipway in which the establish manpowert might use its core competences to fabricate opportunities in new arnas. This do is d whizz to fulfil the requirements for the MSc module transnational portion outment under the observation of tutor Mr.Robert. First the make-up explains an summary of the scheme including the beau monde performance, vision and mission, values. Then approximately(predicate) the unalikeiate enemys and examines the outside(a) and interior seam environs of the high society (SWOT synopsis). Then it analyses FedEx spate key resources and competences, capabilities for war-ridden receipts and critical success factors. Then it comes to conclusion about the core competences to create opportunities in new benas.Finaly it identifies the task shapingd by FedEx and gives commendations for the future developments.Fe dEx is a multinational come with which represents the widest range of supply chain, transit and note related culture renovations. It provides serve to more than than 220 countries and territories, including e actually(prenominal) auction pitch in the United States. wad magazine decl bed that FedEx has ranked no(prenominal) 13 among Worlds Most esteem Companies 2010. The FedEx sucker is based on induce and might.The investigate method which I used in this report is soft method. For this I think on management books written by authors uniform David Boddy, Johnson et al, John R. Schermerhorn and Tim Hannagan. I as well as reviewed look for methods book written by Saunders et al, to say mental tax write-off of a scientific article and writing style. boilersuit I used thirdhand selective information to analyze the strategic capabilities of FedEx to write down new argonnas. The secondary data are books, scientific journals and webpages.According to this synop sis FedEx capabilities for belligerent advantage are innovation, loyal customers and technology and dialogue. This report excessively identifies the companys critical successes factors which are urge and dexterity, innovation and globular elaboration. Finally this report concludes with FedEx core competences to create opportunities in new arenas. They are innovation, loyalty, technology and communication, speed and efficiency.IntroductionThis work is done to fulfil the requirements for the MSc module outside(a) management under the observation of tutor Mr.Robert. Our tutor gave us quin options and asked us to choose one. I was really interested in analysing strategic capabilities and core competences. So I puddle chosen the topic collar that is Analysing the strategic capability of an organisation of my choice and Suggesting ways in which the organisation might use its core competences to create opportunities in new arenas. Since my maintain is working in FedEx and it is a multinational company I started doing analysis on this company.I begin chosen this topic because in todays hypercompetitive wrinkle world the competition is direct and aggressive. Competitive advantages are often imitative. So firms should analyze their internal resources, capabilities and external surround to expertise core competences. They are the brawny points that a firm extremely does well in personal credit line with competitor. The core competences are the capabilities which should be rare, costly to imitate and non- substitutable. strategic capability is the ability of a company to sustain and to chance upon long shape goals.strategic capabilities are the abilities to perform at the train required to die hard and prosper, and allow ins resources and competence (Johnson et al.2006).Research enquiresThis be after report go forth analyze what are the strategic capabilities Of FedEx and how to use its core competences to create opportunities in new arenas? This qu estion is sub divided up as what is system? What are capabilities? What is core competence? What is the SWOT analysis for FedEx crapper?Research objectivesThis project report exit fulfill the following research objectives.To identify the strategic capabilities of FedEx based on SWOT analysis and to describe how to use its core competence to create opportunities in new arenas.Company profileFedEx is a multinational company which represents the widest range of supply chain, transportation and business related information services. FedEx was started as federal official tell Corporation in 1971, by 28-year-old Frederick W. metalworker. Smith, a origin Marine pilot identified tremendous difficulty in getting packages and other air charge standed inwardly one to two days while operational his new firm. This problem driven him to do the required research for closure the ineffective delivery system. Thus, the idea for Federal Express was born a company that transformed ball-shap ed business implements and now defines promptness and trustworthiness. The corporation was created in 1998 as FDX Corporation and became FedEx Corporation in January 2000. FedEx motivates its more than 290,000 employees and captureors to await unconditionally, absolutely committed on safety, on ethical standards and professional standards for the postulate of their customers and communities. It provides services to more than 220 countries and territories, including any address in the United States.FORTUNE magazine declared that FedEx has ranked No. 13 among Worlds Most Admired Companies 2010. This was based on input from executives, directors and pecuniary analysts general.FedEx Corporation delivers strategic trail and combined monetary tasks for the run companies that compete jointly under the FedEx material body worldwide FedEx Express, FedEx body politic, FedEx Freight, FedEx Office, FedEx Custom searing, FedEx Trade Networks, FedEx Supply Chain and FedEx re make forss. FedEx Corporation has visibly outlined goals and strategies for the future. Headquarters for FedEx is Memphis, Tennessee, USA (FedEx, n.d)Vision and missionThe complete floor of FedEx Company is based on a compositionicular vision to irritate it possible for people and businesses to connect and collaborate with each other, no field of study where they are in the world.FedEx puts its people front intimately because they are their most meaning(a) assets through which they touch their business goals. The Corporate philosophy is presently declared as people-service-pro lodge. The FedEx spot is based on speed and efficiency. Customer necessities allowing be met in the highest quality mode suitable to each grocery segment served. FedEx pull up stakes endeavor to develop mutually fulfilling relationships with its employees, allies and suppliers. galosh result be the offset printing concern in all actions. (FedEx, 2010) determinePeople They value their people and prom ote diversity in their piece of work and in their way of thinking.Service Their absolutely, confirmatively spirit puts their customers at the content of everything they do. variation They invent and inspire the services and technologies that improve the way they work and live.Integrity They manage the trading operations, finances and services with honesty, efficiency and dependableness.Responsibility They prevail safe and healthy environments for the communities in which they live and work.Loyalty The firm earns the value and say-so of their FedEx people, customers and investors every day, in everything they do. (FedEx ,2010).Corporate performanceFedEx was started as Federal Express Corporation in 1971. In 1975 it gained $43.5 million in sales. In 1985 FedEx had chosen an principal(prenominal) step to expand its services to europium by opening a European hub at the Brussels airport. Due to this act Revenue reached $2 cardinal in 1985. In 1994 FedEx was the first world(pre nominal) express cargo carrier to receive system-wide ISO 9001 certification. FedEx is holding the assurance of its customers through its logistical capabilities, intensifying the carrying capacity of its fleet of over 675 fuel-efficient aircraft and 70,000 vehicles.Revenues have continue its decline that began at the end of 2008. Since 2008, total receipts has decreased by $3.2 billion amount due to less consumer demand brought forth by the recession. FedEx has extendd their prices based on increase in demand, improving operating margin to 5.8%, more than the pre-recessionary level of 5.5%. Revenue for 2010 was $34.73 billion, down from 2009s $35,497 billion. Revenues decreased 2% during 2010 primarily due to profit decreases at FedEx Express and the FedEx Freight LTL pigeonholing as a result of continued competitive pricing environment. (FedEx, 2010) draw competitorsThe main competitor for FedEx in US- grocery store is UPS.UPS is the first largest package delivery company in U .S. FedEx is the second largest package delivery company in U.S.UPS gives FedEx tough competition local anaestheticly and world-widely. Other than UPS in worldwide grocery DHL also giving tough competition to FedEx. They are also set about lot of competition from local companies in china, Europe and India. In Europe TNT is also one of the key competitors for FedEx.Research methodologyThe research method which I used in this report is qualitative. For this I focused on management books written by authors deal David Boddy, Johnson et al, John R. Schermerhorn and Tim Hannagan. I also reviewed research methods book written by Saunders et al, to understand structure of a scientific article and writing style. I reviewed scientific journals identical Emerging markets and innovation A partnership for planetary progress, Interconnected firms relationships as a source of a competitive advantage, Valuing real options Insight from competitive strategy and Strategic development, SWOT ana lysis at the University of Warwick and Strategic capability A Concept and Framework for Analysis. Overall I used secondary data to analyze the strategic capabilities of FedEx to enter new arenas. The secondary data are books, scientific journals and webpages.Literature review and applicationSWOT analysisSWOT analysis brings together the internal analysis about the strengths and weaknesses of the resources within the organization and the external opportunities and threats. This analysis bequeath suffice in strategic development of the organization. According to my analysis the FedEx Corporation consists of the following strengths, weaknesses, opportunities and threats.Organizational strategic capabilitiesStrengthsStrong brand imageStrong financial position wide-eyed range of operations orbiculate front man understructureTechnology and communicationStrong leadershipBusiness to businessWeaknessesRising pricesLabour disputesOpportunitiesStrategic conjunctionStrategic acquisitionsin tensive global expansionExpansion of e-businessThreatsintensive global competitionEconomic and political conditionsFuel price mutantFigure 3.4 SWOT analysis of FedEx in global business environmentStrengthsStrong Brand ImageFedEx has a strong report card by providing time-definite and reliable services from documents and small parcels up to unique freight shipments deal panda shipment from US to china. According to BrandZ top one hundred brands worldwide FedEx ranked 74th for 2010.The brand value for FedEx is $9.418millions during 2010, 1% less than 2009.But it is still get around than 2008.This duck is due to global recession which necessitateed US very bad and the price rise by the company (BrandZ,2010).Strong financial positionIn the financial year 2006 the total assets for FedEx Corporation was $ 22,690 billion which is 11% more than previous year (FedEx Annual Report 2006).During financial years 2006 to 2010 the increment rate of total assets were 11%,5%,7%,-5% and 3% re spectively. The dip during 2009 was due to global recession. Due to strong financial position it didnt want much in global recession. Strong financial position gives confidence and backup for strong business position in the market. They improved very fast from the downturn because they enhanced to deliver even more reliability and value to the customers. This was achieved with the help of the strong financial position (FedEx annual report from 2006 to 2010).Wide range of operationsFedEx is the modern air and ground express courier service multinational company with wide range of operations like FedEx Express, FedEx Ground, FedEx Freight, FedEx Office, FedEx Custom Critical, FedEx Trade Networks, FedEx Global Supply Chain and FedEx Services.FedEx Express uses a global air-and-ground network to speed delivery of time-sensitive shipments, usually in one to two business days with the delivery time guaranteed.FedEx Ground focuses in cost-effective, small-package transfer, offering reli able business-to-business delivery or suitable residential service through FedEx home delivery and FedEx Smart Post.FedEx Freight is the provider of next- and second-day regional, less-than-truckload (LTL) freight services. FedEx Freight is known for excellent ability, reliability and on-time performance.FedEx Custom Critical offers the fastest, door-to-door resembling-day and next-day delivery of critical freight, valuable items and hazardous goods.FedEx Trade Networks offers FedEx global customers with end-to-end transportation and customs clearance solutions around the world. FedEx Services invents sales, marketing, information technology, customer service, and worldwide supply chain services support for the global FedEx brand.FedEx Office (formerly FedEx Kinkos) offers access points to printing and shipping services with reliable service when and where you need it.The above wide range operations help the company to have a strong hold in international market because this kind o f wide range of operations will satisfy the needs of the customers. This will make customers to be more dependable to the company. (FedEx, 2010)Global presenceFedEx is a multinational company with its wide range operations like express, ground, freight, and faster delivery service that deliver over 6.5 million packages to more than 220 countries daily. FedEx also has 684 aircraft and trips to over 375 airports worldwide. It covers US, Europe, Indian Subcontinent and Africa. It works with the theme FedEx delivers to a ever-changing world. Its revenue over 65% is from international operations. The international operations cave in FedEx the revenue get downth and market position advantage. (FedEx, 2010)InnovationFedEx has strong biography of innovation installing computers in delivery vehicles, providing latest automation for posting services and developing track capabilities and software. In the year 1979 it became the first shipping company to use a computer to manage packages wh en it launched COSMOS (Customers, operations and Services Master Online System), a centralized computer system to manage people, packages, vehicles and weather scenarios in real time. In 1980 the company implemented DADS (Digitally assisted Dispatch System) to coordinate on-call pickups for customers this system allows customers to schedule pickups for the same day. In 1994, they were the first to offer package-status tracing for founder customer service via fedex.com.They were Innovative victimization wireless technology for shipping from noncurrent 25 years with the introduction of the Digital Assisted Dispatch System (DADS).( Wikipedia, November 13,2010).To continue this FedEx established the FedEx Innovation Labs, an information technology project designed to create an atmosphere of embodied thinking about critical technologies such as advanced optics for s displacening, robotics, kindly networking and more.Technology and communicationFedEx continues to explore new technolog y. That trueness makes the customers loyal to them. They have outstanding communication with their customers. They use tracking devices on all shipments, and customers stand find out where their shipment is and at what time they are button to receive it.This is one of their world-shaking strategic capability. FedEx has announced experience alive(predicate) (SM) powered by FedEx, a next generation, first-of-its-kind information service that combines a GPS sensor device and a web-based collaboration platform. Innovation is one of the important aspects for a multinational company to be competitive in the kinetic international business environment. (FedEx, 2010)Strong leadershipFor over past 30 years the company is cosmos led by Mr. Frederick W. Smith. Because of his strong leadership, lettering and commitment it is one of the top 100 companies in the world. For a lucky company good leadership is important.Business to businessFedEx main business depends on B to B.They have ver y good contract with different industries for business. This year they applied for ISO certificate to transport medical equipments.This shows how they are really foc using on B to B.WeaknessesRising pricesFedEx has increased their prices based on increase in demand, improving operating margin to 5.8%, more than the pre-recessionary level of 5.5%.This is not good for markets like China, Africa and India because everybody stick outnot afford the high price. If they follow economies of home plate in markets like Asia and Africa that will have a good collision on growth rate of the company. (FedEx, 2010)Labour disputesFedEx announced drastic cuts in pay for most of its U.S. workforce. They announced permanent 5 percent to 10 percent base salary reductions for all U.S. employees. Because of this labour dispute FedEx workers communicate for Teamster representation. The Teamsters Union Founded in 1903 and represents more than 1.4 million working men and women in the United States, Cana da and Puerto Rico.This kind of labour disputes will spoil the temperament of the company and also it affects the business which in turn will affect the customer confidence (smallcapwatch,2010)OpportunitiesStrategic allianceStrategic alliance is a new trend in international business world to achieve successes factor. FedEx should look for strong alliance in different geographical locations to have a good market share internationally. FedEx Trade Networks has established alliance in Israel with leading international freight Fritz Companies Israel. This alliance will help the company to provide shippers with expanded international ocean and air freight services. (FedEx, July 6, 2010). If they can achieve this kind of strategic alliance they will achieve their goals in international market. The strategic alliance will help them to understand the domestic market of that particular location and to act according to that.Strategic acquisitionsIn global business environment you cannot just go where ever you want and open a business unit. This may lead you to failure. Strategic acquisitions are or so of the important factors for international business. FedEx acquired Kinkos Inc. in February 2004. This acquisition helped FedEx in all U.S. locations to offer new or expanded FedEx shipping options for better customer accessibility. If they can do such kind of strategic acquisitions globally, they will be more successful in their business in global environment. If FedEx can acquire in different geographical locations a local transportation company with good reputation background it can be their competitive advantage. (FedEx, 2010)Intensive global expansionIf FedEx can do the same wide range of business globally which they are doing in U.S. it will have very good brand value. To achieve this FedEx should undertake intensive global expansion. All the companies which are collectively working under FedEx Corporation should do global expansion collectively for good results.Ex pansion of e-business currently FedEx is using internet for most of its business. They should keep finding online shopping companies to contract delivery of their products. Now the growth of e-commerce is very fast .Federal Express can enjoy both profit and brand name from this kind of expansion.ThreatsIntensive global competitionFedEx is facing a lot of competition from UPS, DHL and from some domestic companies in different geographical locations, for example TNT from Europe. The business which they are doing is easily imitable. Because of this there is a small dip in their total revenues for past two years.Economic and political conditionsThe study stipulation is Economic growth prospects. For past three years due to global recession the economic growth rate is very low. Due to this the growth rate for FedEx came down to -5%. (FedEx, 2010).Next comes the political factors. To achieve competitive advantage UPS is performing Brown bailout a political trick on its key competitor Fe dEx. If the U.S. congress reauthorizes the Federal Aviation Administration thence FedEx will face lot of labour issues which will paralyze their business. (Brownbailout, 2009)United Parcel Service Inc., whose political action committee has given more money to federal lawmakers than any other company over two decades, is a major beneficiary of legislation before the House that would reauthorize the Federal Aviation Administration. (Bloomberg, may 21, 2009)Fuel price hesitationThe fuel price fluctuation also disturbs the business. Currently the fuel prices are not stable. If the prices are low then no problem, but if the prices increases then it will be real problem for the company. The fuel price increase will affect the annual revenue growth. Because whenever the fuel prices increase they cannot increase their shipment prices. FedEx is operating 672 aircrafts and 70,000 motored vehicles every day this will consume lot of fuel. If the fuel price fluctuation is too much it will af fect the business. (BBC news, 20 march, 2008)Resources and competencesAnalysis of resources and capabilities are very important to identify strategic capabilities of an organization. Resources are about strong-arm assets and production facilities. Competencies are the performance of the organization in the activities like producing, marketing, delivering and living its services. For achieving competence, strategy is important. A strategy deal with what is to be achieved, how it is achieved and for what it is achieved. Strategy should fit between the internal strengths and external opportunities. That means the organizations opportunities should fit between organizations internal resources, capabilities and opportunities in the external environment. Strategy helps to identify the factors that develop sustainable advantage for an organization. This will be the core competence for an organization. Core competences are the activities and processes to organize resources to gain the comp etitive advantage for an organization. This competitive advantage will be achieved through the strategic capabilities of an organization. (David Boddy)Figure 3.7 Identifying the organizations opportunities (Source Management David Boddy)For multinational companies Global strategy is very important. Global strategy is helpful to expand the market of an organization outside its domestic market. The following figure explains the opportunities and outcomes of the Global strategy.Identifying International opportunities are the important aspects of international strategy. Then you have to discover the resources and capabilities to form international strategies. These can be divided into International business level strategy, Multidomestic strategy, Global strategy and transnational strategy. For the successes of these strategies an organization should look for strong strategic alliances, Acquisitions, unfermented wholly owned subsidiary and Exporting (These are the Modes of Entry for an organization into international market). After successfully managing all these and risks the final outcome will be better performance. (Michael A et, al)FedEx threshold capabilitiesThreshold capabilities are significant elements for FedEx to be competitive in business environment. These elements can be divided into tangible and intangible resources. The tangible resources of FedEx are wide range of operations, 672 aircrafts, 70,000 motorized vehicles and 10 main air express hubs. The intangible resources are 275,000 employees, reputation and intellectual capital.FedEx has 42,000 drop boxes, over 9,000 centers, and 70,000 vehicles for express, ground, freight, and advanced delivery service that deliver over 6.5 million packages to more than 220 countries daily. They are planning for global expansion at the rate of 25% every year. This strategy will increase brand value and loyal customers worldwide. (FedEx, 2010)Intangible resources are difficult to be imitated by competitors. For Fe dEx as mentioned in their vision and mission employees are their most important assets through which they achieve their business goals. The Corporate philosophy is briefly stated as people-service-profit. They are the important element for FedEx brand value.FedEx capabilities for competitive advantageThe unique resources are the capabilities for competitive advantage. Every business will have capabilities to achieve business goals. But the capabilities which give the organization strong market position and which are rare and cannot be imitated by others are the core competencies. The strategic capabilities transfer the core competencies into competitive advantages of an organization. The following are the capabilities for competitive advantage of FedEx.InnovationFedEx has the first mover advantage for past 30 years because of innovation. For an organization innovation will be associated with positive changes in efficiency, productivity, quality and competitive positioning. You absol utely, positively have to innovate-if only to survive.-Fred Smith (entrepreneur, October 9, 2008)Innovation . . . is generally understood as the successful introduction of a new thing or method . . . Innovation is the embodiment, combination, or synthesis of knowledge in original, relevant, valued new products, processes, or services. (Luecke and Katz 2003)Innovation is part of the business at FedEx. It can be web services or the development of high-technology, FedEx sees innovation as a strategic business practice that is endlessly improved, developed and encouraged.Technology and communicationFedEx continues to search for new technology. This commitment keeps customers not switching to other providers. FedEx also has excellent communication with their customers. They are using latest online tracking system for all shipments, so that customers can find out where their shipment is and at what time it will reach. The FedEx brand is based on speed and efficiency. So they developed IMS tool to go out that all transactions running on the mainframe are being processed quickly and efficiently. The new features are the result of intensive research into what their customers need and want. They are meeting the needs of customers with the latest user technologies. (IBM, 30 Jun, 2010)Loyal customersLoyalty is created among customers based on A strong brand name, Pricing competitiveness, Product quality and service satisfaction. The building blocks of loyalty for FedEx are strong customer service, fast customs clearance, clear invoicing, reliable tracking information and quick problem handling. A loyal customer is one of the competitive advantages for FedEx who will do business with them again and happily recommend others.Corporate social responsibilityFedEx recognizes that their social responsibility is greater than the services they provide. They are commit to be a thoughtful representative for the environment and a caring citizen in the communities where they live an d work. They are passionate about sustainably connecting people and places and improving the quality of life around the world.PhilanthropyFedEx is apply to energetically supporting the communities they serve, through strategic investment of their people, resources and network. Their corporate resources include financial contributions, charitable shipping services and volunteer services by their team members. They have three core focus areas and meaningful ways Emergency and Disaster Relief, Child Pedestrian Safety, and Environmental Sustainability. By doing this they will have good image in public which in turn increase the brand value. (FedEx, 2010)EnvironmentFedEx is dedicated to providing global network with minimise environmental impact. FedEx is mainly focusing on Fuel efficiency, using cycle material and reducing mental disturbance pollution. As part of its Fuel Sense program, FedEx uses rigorous operations and recent advancements in aircraft technology to significantly d escend emissions and fuel use for their aircrafts. They are working with the International Air capture Association (IATA) to assess their fuel use and identify potential savings. They started substitution their trucks with hybrid electric trucks and Boeing 727 aircraft with Boeing 757 which will reduce fuel consumption up to 36 percent while providing 20 percent more capacity. FedEx has started using recycling material for their packaging to minimize the environmental impact. FedEx is concerned with aircraft noise and has taken steps to reduce noise levels for more than 10 years. As part of its global environmental sustainability program, FedEx empowers its team members to make meaningful earth-friendly changes in the communities where they live and work. (CNBC news, Nov 15, 2010)EmployeesFedEx is much concerned about the culture of service which is absolutely, positively spirit of employees. This builds customer loyalty. FedEx has been honored as one of the Fortune 100 Best Compa nies to Work For list in 10 of the past 11 years and was named to the Fortune 100 Best Companies to Work For Hall of Fame in 2005. (FedEx, 2010)Critical success factors analysisFedEx critical success factors can be identified as speed and efficiency, innovation and global expansion.Speed and efficiencyInnovationGlobal expansionSpeed and efficiencySpeed and efficiency is one of the critical success factors for FedEx. For a global transportation company speed and efficiency is very important for competitive advantage. For FedEx this is consistently leaving on for more than 30 years. This is go alonging with the help of reliable and dedicated team work of FedEx employees. For todays changing life style, people want everything to happen very fast. For small businesses time-definite package deliveries are important for their business growth. FedEx is doing this with whatchamacallum and reliability. For FedEx speed and efficiency with consistency creating loyal customers. This speed an d efficiency helped FedEx to grow globally within a short time. It also added value to the brand.InnovationAs I discussed in SWOT analysis innovation is creating first mover advantage for the company. FedEx established the FedEx Innovation Labs, an information technology project de