Fedex Corp. vs United Parcel Service, Inc Case Study

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I. Executive Summary

In this report we focus on the two main competitors in the package delivery industry: Federal Express Corporation (FedEx) and United Parcel Service of America, Inc.

Studying FedEx, UPS and their competitive relationship in the decade from mid - 80's to mid - 90's gives a good insight for the companies' and industry's future. The two companies have different strategic goals and are operating in the same industry but in different main markets: FedEx is working on "producing outstanding financial returns" and focuses on the overnight air market while UPS is looking for "earning reasonable profit" and its core business is the two-day ground delivery. However, by 1981, the two companies started to have a strong sense
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In addition to that, FedEx came up with new services such as Saturday deliveries, delivery by 10:30 A.M., customer interfaces (drop boxes, drive through stations and express delivery stores) and same day pickup of order. This is to distinguish its services. More on that, FedEx's philosophy of "People-Service-Profit" was successful in insuring a union free workforce devoted to customer focus. In 1978, deregulation in transportation helped FedEx to acquire larger planes therefore achieve lower cost. Trade deregulation in Asia-Pacific enabled FedEx to expand further. The acquisition of Gelco express, Tiger International, and establishment of Airport Hub in Brussels expanded FedEx internationally. Inflation and rising global competitiveness generated the need for "just-in-time" supply model, which was the advantage supported by FedEx advanced technologies.

Some inhibiting factors were the competition that has heavily evolved as a number of competitors (e.g. Emery, USPS, and UPS) entered the overnight delivery market as well as imitate other FedEx new services. More on that, they were able to acquire similar IT solutions with lower costs and as a result presented these services with cheaper prices. Moreover, in the attempt to expand internationally, some acquisitions were over-priced and revealed insufficient market studying. Europe low demand that resulted in the shutting down of Brussels hub as well as Tiger international operations caused a loss of $1 billion

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