Fedex Five Porter's Forces and Swot Essays

2618 Words Nov 29th, 2014 11 Pages
Introduction
There is no doubt that FedEx Freight is a leading U.S. provider of less-than-truckload (LTL) freight services. It is known for exceptional service, reliability and on-time performance. (History of FedEx Operating Companies About FedEx) With the rapid rise of virtually instantaneous electronic mail, some wondered if FedEx overnight mail delivery was as important as it was in the past. Margaritis pointed out that the company received only 9.3 percent of its revenue from overnight express mail, and that much of that mail could not be delivered electronically, such as gifts, electronic components, and medical equipment. (FedEx Cooperation) Nevertheless, “While FedEx Ground and FedEx Freight posted solid financial results, the
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The threat of new entrants
Considering the extensive obstacles for new entrants, it is very difficult for firms who want to enter the freight market. First of all, firms need to overcome the problem of purchasing aircrafts as it involves substantial cost, which means that small and medium firms are not able to compete with FedEx in the first step. Besides, a large network of distributions must be set up for the sake of convenience to compete with FedEx. Moreover, new entrants must spend amounts of money into marketing to draw attention of consumers. In addition, FedEx has been running for the business over thirty years so many major suppliers and buyers have signed long term contracts with FedEx. Furthermore, customers may not want to switch to new company due to brand loyalty since they already get used to the services offered by FedEx. In this case,
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getting access to new market is very hard for new entrants. Last but not least, FedEx business is spread all over the world so it can exploit economics of scale which can lower the cost and earn lofty level of profit. In other words, the threat of new entrants is low for FedEx.
The threat of substitutes
With the development and innovation of technology, emails and fax are used more frequently in everyday work and life. For instance, every bank provides internet banking for individuals to check their bank statements which can reduce the waste of paper. Additionally,

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