Airborne Express Harvard Business case Essay

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Executive Summary:
Airborne Express the current underdog in the express mail business has been able to compete with market leaders due to innovation and optimization strategy. The company built on cutting cost and emphasizing reliability now faces pressure from the leaders UPS and FedEx to change their pricing strategy. This change from standard rate pricing to distance-based pricing puts Airborne in a dilemma in which they must choose to match the competition which will make them lose what sets them apart in the market or stay with the current strategy. Changing will increase their flexibility and could open them up to new consumers while staying the same
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Such new moves by both “gorillas” like companies may sweep the corners of the market described by some industry analysts. For years, the industry set the prices without consideration of distance, which means, a same sized letter from New York to New Jersey has the same cost as if the letter is shipped to California from New York. In 1996, UPS officially moved to distance-based pricing, and Federal Express followed same action in 1997. There is no denying that what actions Airborne take is significant affecting the development of the company, while facing this big change in industry.
Section 2: The problem/Opportunity: Airborne Express has long differentiated itself in the market by structuring itself as a big business only carrier. They have specialized in large unit deliveries through metropolitan areas. Everything they do is aimed to optimize the delivery process and slash cost where ever possible. However, Airborne is now faced with a huge decision. They must decide whether to step away from their differentiation strategy to match the new pricing tactics of the market UPS and FedEx or to continue the old norm of delivery pricing. The new distance-based pricing strategy threatens Airborne’s consistent strategy to cut prices. Clients will seek to ship packages at the lowest cost. The short distance deliveries will be ruled by UPS and FedEx since they are the once who are
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