The Federal Express’s Value Creation Frontier Strategy

Market dominance, growing market, technology, and globalization are enabling factors for both companies. In a more specific approach, FedEx’s enabling factors are their adaptation to modernization, being able to really take an advantage of technology. Also, their more

In the case file for FedEx, Fred Smith the founder of FedEx mentions how business were having trouble figuring out how to get urgently needed packages to the right places quick and Smith knew that the need for business to move packages fast would only grow with time. From the beginning, FedEx was built on a foundation of obsessive customer focus (“FedEx,” 2015). Needs in marketing is the state of self-deprivation (Vander Schee, 2016). The tenacious pursuit of fulfilling customer needs in FedEx’s early days led to developing what is known at the company today as the purple promise, a

FedEx has two major customers who consist of businesses and individual customers. These business customers have accounts with FedEx to arrive at their location to pick up packages daily or weekly. Two-thirds of FedEx’s business comes from these customers so FedEx curves their operations to satisfy this clientele. Since FedEx’s competition is trying to acquire some of this clientele they have begun to operate and market to this clientele more effectively. Individual customers are also in FedEx’s internal environment. These customers represent one-third of their business. With increased competition from competitors FedEx has marketed to this market substantially. They have created boxes that are prepaid for shipment as long as the contents fit into the box. This has effectively increased business amongst individual customers for FedEx.

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.

The evolution of the express mail industry had become a quick on-time shipping and delivery of packages. The service had become effective, reliable, and prompt, which most of the top companies could deliver on these guaranteed promises 96-99% of the time. But, delivery services were only a portion of the services being offered to their customers. Carriers had mastered information management that they shared with their customers. Customers were now able to fill out labels, track the route of their package, and assisted in billing using both via carrier provided software or the Internet.

By 1976, at a volume of 1,300 packages per day, FedEx’s Courier Pack service was only fulfilling one tenth of a percent of the “emergency rush” market, which totaled 870,000 packages delivered per day. By comparison, at 13,400 deliveries per day, the company’s Priority One “emergency rush” service accounted for one percent of the total market. Clearly both services have potential to gain more share of the rush delivery market, but the Courier Pack’s untapped potential is nearly limitless. Surely, the remaining 98 percent or so of customers using competing services for emergency rush delivery, including Emery Air Freight and USPS Express Service, are not familiar with Fed Ex’s less expensive, and more consistent Courier Pack service, and would switch brands with heightened awareness gained through careful marketing.

FedEx’s new product Courier Pak makes sense because of its’ high profit margin and potential to generate new volume. Out of the 3 services that Fed Ex provides, CP yields the highest profit margin at 66% while Priority-One is at 55% and SAS is only at 27%. In addition to this, the company believes that it will be able to boost up sale of CP from 1300 to 6000 packages per day. This shows that CP is the most profitable and huge potential for growth.

FedEx is a logistical service company specialized in transportation, e-commerce and business services. The success of FedEx lies on an efficient information system. The business process is as follows:

FedEx was first established in 1973 as a logistic company with the name Federal Express that be created by founder and first CEO Frederick W Smith. The Headquarters is in Memphis, Tennessee in the US. The company became well known for its fast and reliable delivery service around the world. On its first night of operation FedEx delivered 186 bundles to 25 urban locations in the US with only 389 employees and a 15 Dassault Falcon aircraft. In 1980 FedEx purchased a system for live updates on the packages. In this system, FedEx drivers share the current locations from the trucks to provide updates of the packages to the customers. This information was sent to a central computer of FedEx then the company improved the update system by introducing FedEx.com webpage. This webpage allowed the tracking data to be easily accessible. However, recently, FedEx uses Savvy bundle for packing and tracking the products across couriers. (Baldwin, 2016)

FedEx has not fared as well as UPS in financial performances. FedEx¡¦s total revenue has grown 60% from 1996 to 1999 while their net income has doubled in the same period. FedEx¡¦s acquisition of RPS will challenge UPS for the ground delivery business and affect the sustainability of UPS¡¦s advantage in the ground deliver business. FedEx has been competing well in the higher-end, high-service segment of the package delivery market. Although, digitations of documents and emergence of electronic signatures is threatening the express business which FedEx has the advantage over UPS.

The return on Assets is 8.52% whereas the industry figure is 11.10%. Two of FedEx strategies that have worked are its tie up with the US postal system and its first mover advantage in introducing the tracking system for packages. My assessment of the sustainability of UPS's current performance does not change.

These are their daily volumes for those services. FedEx has many service areas. They service over 220 countries, territories and every single address in the U.S. FedEx tends to make more than 6 million package tracking requests daily. This is an outstanding number for a company dealing with packaging and locator with tracking numbers. Their express facility has 1,057 stations, and 10 air hubs. While their ground services has 32 hubs and over 500 pickup/delivery terminals. Freight has approximately 355 service centers and nearly 2,000 office locations. Despite all their services FedEx has a mission. Their mission is to produce outstanding financial returns for their shareowners. However, all customer requirements will be met while providing high value logistics, transportation and related business through operating companies. According to FedEx website, “FedEx will strive to develop mutually rewarding relationships with its employees, partners and suppliers” (About FedEx). Safety is their number one concerns and first considerations in all operations. However, all their corporate activities will be conducted according to the highest ethical and professional standards. FedEx values their people, service, innovation, integrity, responsibility, and most of all loyalty. This company strategy consists of three levels; compete collectively, operate independently, and manage collectively. These strategies will help the company accomplish their goals. Standing, as

The main station is located in Memphis, Tennessee in the United States. The company started off by delivering couriers to some American cities, which was the first time for parcel delivery to take place at that time. As stated before, the industry’s goal is to fulfill the needs of customers, developing relations with different companies, and ensure a high investment for its shareholders. This is made possible through their six shared principles: people, service, innovation, integrity, responsibility and loyalty (FedEx). In order to satisfy its clients, FedEx has3 branches which provide customers with different services regulated on different demands; this include FedEx Corporation, FedEx Express, FedEx Kinko’s, FedEx Ground, FedEx Freight, and FedEx Services. It delivers more than 10.5 million shipments daily, covering more than 220 countries. Monthly, it has over 50 million visitors. In order to… it has 1250 express stations, 33 ground hubs, 370 freight service centers, and more than 1800 offices. The company also possessed 656 aircrafts and more than 100,000 motorized vehicles for express, ground, freight and expedited delivery service (FedEx). Through these aspects and values, Smith achieves to develop a company with a productive way in controlling time, space, and

When it comes to strategy, FedEx has done a great job of staying on top in the market place after all these years. FedEx has built a very powerful empire over the last decade, insuring customers with different global delivery services. Different companies have different strategies that work with their company to reach a specific goal, at FedEx the main strategy for success would be customer service. Customer service would have to be the number one strategy FedEx is mostly concerned with and constantly researching new ways to make it easier and more convenient for customers to deliver packages across the world. To help accommodate customers, FedEx has established online databases to ensure customers of package delivery; customers are able to track packages from the convenience of their homes or offices. Something else that FedEx has established are flights, and freights for those international customers, they have also improved services to and from all over Europe as well as Asia, in

FedEx Corporation, situated in US, is one of the leading supply chain management solution providers in the world. With annual revenues as high as USD33 billion, the company offers incorporated business