Airborne Express: Harvard Business School case.

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Q1) What is the industry attractiveness like in 1997? Has it changed in recent years?

Q2) Does Airborne Express have a competitive advantage? Is it sustainable?

Q3) What recommendations will you give Airborne Express?

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Industry Attractiveness in 1997

The industry is defined as the Domestic US Express Mail industry. This includes overnight and second day delivery. In order to assess the attractiveness of the industry, a Porters' Five Forces analysis has been conducted as follows.


The industry consists of three major players and six second-tier players. There is intense competition between the players as shown by the price wars between UPS and Federal Express. Although the market is
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However, the power of employees has grown considerably since the early 1990s. Even though UPS was a manager owned private firm, the employees went on strike in 1997 and successfully obtained wage rises and other benefits. Federal Express handed out $20 Million worth of bonuses at the same time to thank their employees as well as make sure that they did not consider similar actions. This shows that employee power has increased in recent times leading to lower industry attractiveness.


Since the early 1990s, the players in the market have copied each other's innovations and this has led to very little differentiation of products in the market. Customers in this industry are very price sensitive and little differentiation allows them to shop around for the best deal. In businesses, there was also a trend towards contracts with multiple suppliers and this further increased customer power. These factors combined have led to lower industry attractiveness since 1990.


In 1990, email was not a viable substitute as it was still a part of the research network and not commercially available. The only substitute was standard mail and facsimile. Therefore, in recent years, attractiveness has lowered due to the introduction of another substitute.

New Entrants

It would be more difficult for a new entrant to enter in 1997 than it would have been in 1990 as the current incumbents have had 5-7 more years of benefit
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