FedEx was established in 1971 by Frederick Smith who was a former US Marine (Rushton & Walker, 2007, p. 183). At the very beginning, the company had only 14 planes and they could carry cargo only 25 cities in the United States (Rushton & Walker, 2007, p. 183). Originally, this business was located in Little Rock, but later its headquarters were moved to Memphis (Rushton & Walker, 2007, p. 183).
It should be noted that the companys growth can in part be attributed to the deregulation of the airline industry that took place in the early seventies. For example, when the corroboration was allowed to use large planes, the managers of this organization were able to increase its profitability (Lucas, 2012, p. 169). Apart from that, FedEx was the first delivery company that enabled clients to know where their packages were (Birla, 2012, p. 8).
One should take into account that this corporation made several important acquisitions; for example, they purchased such a company as Flying Tigers in 1989; in this way, they were able to enter foreign markets, especially in Europe (Rushton & Walker, 2007, p. 183). Additionally, they acquired many logistics companies such as Caliber System Inc. These acquisitions helped FedEx become effective in supply chain management. At this point, FedEx is the largest airlines according to such a criterion as freight tons.
Moreover, the fleet of this corporation numbers more than 661 airplanes and it can deliver goods to more than 375 destinations. Apart from that, one should take into account that this corporation also specializes in truck delivery, especially if one is speaking about the United States. Thus, it is possible to argue that this organization was able to grow dramatically during the past 40 years.
Financial Performance
Although the global economy passed through a period of crisis, FedEx was able to remain sustainable and competitive. Despite numerous problems, the services of FedEx were enjoyed significant demand. In 2012, the gross profits of this corporation constituted $ 42.7 billion while their net revenues were 2,03 billion (FedEx 2013, p. 8).
Airline delivery of goods still remains a critical component for the profitability of this corporation. In particular, it comprises approximately 50 percent of their revenues. Apart from that, this organization was able to reduce the costs of by improving their supply chain. However, one should take into consideration that the cost of fuel poses a significant problem for this corporation (FedEx 2013, p. 14).
Furthermore, the company increased the expenses related to the compensations of their employees (FedEx 2013, p. 28). Nevertheless, these costs are justified because in this way, the company can gain the loyalty of workers. These are the main aspects of their financial performance. The main trend that one can identify is that the profitability of this corporation began to improve, especially in comparison with the previous years. These are the main points that can be made.
Operations
Overall, it is possible to say that FedEx offers a variety of services to their clients. One of them is the overnight delivery of goods (Pride & Ferrell, 2011, p. 228). This organization often works with customers who are pressured by time and it has been able to meet rigid timelines set by their customers (Pride & Ferrell, 2011, p. 228).
The growth of this company can be explained by their ability to deliver packages within 24 hours (Lussier & Achua, 2009, p. 318). As it has been said before, FedEx enabled clients to track the delivery of their goods (Lussier & Achua, 2009, p. 318). This is one of the reasons why they achieved competitive advantage over other firms (Lussier & Achua, 2009, p. 318). At present, this airline company delivers cargo to more than 375 destinations every day and one can argue that FedEx operates at an international level.
It should be taken into consideration that the success of their operations depends on their coordination between airline fleet and trucks that should act a single entity. At first, packages should be delivered from airports to sort-out facilities early in the morning (Alt, Fu, & Golden, 2006, p. 334). Later these goods are loaded on delivery trucks, and they are transported to customers before 10: 30 (Alt, Fu, & Golden, 2006, p. 334).
In this case, much attention should be paid to the efficiency of employees who work at these sort-out facilities because they should place packages into the right trucks (Frock, 2009). Researchers believe that the operations of FedEx can be regarded as a series of deliveries and pickups (Alt, Fu, & Golden, 2006, p. 334). It is possible to say that this organization offers other services to their clients.
For instance, one can speak about freight management, brokerage, customs clearance, warehousing, and so forth (Rushton & Walker, 2007, p. 183). This company works with corporate and individual clients. Overall, this organization support supply chain activities of many manufacturers and firms that are strongly dependent on FedEx. These are the main activities that this corporation is engaged in.
Personnel
The policies of FedEx place much emphasis on the effectiveness of their labor force (Jackson, Schuler, & Werner, 2011, p. 13). In particular, this organization focuses on such aspects as open-door policy, the use of surveys in order to receive employees feedbacks, and the adoption of performance appraisal systems that can better recognize the individual contribution of workers (Jackson, Schuler, & Werner, 2011, p. 13).
The senior management of FedEx views the companys employee one of the main factor that contributes to the success of this organization. Their HR policies help this corporation increase workers commitment to organizational goals and their loyalty to the company.
At present, this corporation employs approximately 5000 pilots who are well-trained and experienced professionals (Holley, Jennings, & Wolters, 2011, p. 203). Their expertise is critical for the timely delivery of cargo. However, one should bear in mind this corporation also employs more than 100.000 package handlers, dispatchers, and truck drivers (Holley, Jennings, & Wolters, 2011, p. 203).
The performance of these professionals is also critical for the effectiveness of FedEx, and its ability to meet the timelines set by their clients (Alsop, 2010). Thus, this organization focuses on their effectiveness and commitment of their workers. This is one of the main arguments that one can make. Yet, FedEx is often criticized for its labor relations because this corporation does not allow the workers to be unionized (Truitt, 2010, p. 211). This is how this company interacts with its workers.
Marketing efforts
It is possible to say that this corporation is also engaged in marketing activities that are supposed to attract and retain customers. First of all, one can speak about some of their advertising campaigns. The most recent one is called The World on Time (Thompson & Martin, 2010, p. 362).
Overall, it emphasizes the ability of the company to deliver the goods to every destination on time. Other advertising campaigns developed by this company also stressed the speed and effectiveness of their operations. Moreover, their customers have an opportunity to track the delivery of their cargo (Lussier & Achua, 2009, p. 318). Moreover, this company lowers prices for their long-term customers, especially corporate ones (Rothberg & Erickson, 2005, p. 220).
It is also possible to say that the marketing strategies of this corporation are very flexible. At the very beginning, FedEx focused on the delivery of documents, but the rapid development of Internet made their services unnecessary. This is why FedEx begin to attach more importance to the shipment of physical goods (Capon & Hulbert, 2007). These are the main elements of their marketing strategies. Overall, the services offered by FedEx continue to attract clients from different countries.
Recommendations to maintain or achieve profitability
It is possible to provide several recommendations that can benefit this organization. First of all, they should invest more into their Asian operations. In particular, they need to increase the number of flights and trucks that operate in such countries as China, Japan, South Korea, and Singapore because in the future, the economic activities within these states will only intensify. Secondly, this organization should pay more attention to the renovation of their fleet.
They should acquire aircrafts that are more fuel-efficient such as B777F or B757 (FedEx, 2012, p. 25). This issue is particular important because a great proportion of the companys expenses can be attributed the consumption of fuel. Thirdly, the management of this organization should pay more attention to the corporate image of FedEx. Currently, they only allow pilots to be unionized, but one cannot say the same thing about truck drivers or dispatchers (Truitt, 2010, p. 211).
As a result, this corporation is often involved in many scandals (Truitt, 2010, p. 211). This is why this organization should establish partnership with national trade unions. In this way, they can avoid both public criticism and litigation. These are the main suggestions that one can make to the managers of this company.
International operations
Currently, the corporation operates in different regions and countries with different cultures, religions, and political systems. First of all, this organization operates in China, South Korea, Japan, and Singapore (Ferrell & Hartime, 2010, p. 533). These countries passed through a period of economic growth, and the services of FedEx were required by many businesses. Additionally, this company operates in European countries such as France, Germany, Italy, or the United Kingdom (Ferrell & Hartime, 2010, p. 533).
However, at this point, the European market is of lesser importance for FedEx, especially in comparison with the United States or Asian countries. Furthermore, FedEx entered the Russian market and very soon it became a leading airline delivery company in the country. Despite various challenges, this corporation was able to adjust itself to the international market. Moreover, it was able to meet the labor relations standards set by different states. These are the main aspect that should be kept in mind.
Reference List
Alsop, R. (2010). The 18 Immutable Laws of Corporate Reputation. Philadelphia: Simon and Schuster.
Alt, F., Fu, M., & Golden, B. (2006). Perspectives in Operations Research: Papers in Honor of Saul Gass 80th Birthday. Boston: Springer.
Birla, M. (2012).Innovating and Outperforming the Competition. Boston: John Wiley & Son.
Capon, N., & Hulbert, J. (2007). Managing Marketing in the Twenty-first Century. London: Wessex Publishing.
FedEx. (2013). 2012 annual report. Web.
Ferrell, O. & Hartime, M. (2010). Marketing Strategy. New York: Cengage Learning.
Frock, R. (2009). Changing How the World Does Business: Fedexs Incredible Journey to Success the Inside Story: Easyread Super Large. London: ReadHowYouWant.
Holley, W., Jennings, K., & Wolters, R. (2011). The Labor Relations Process. London: Cengage Learning.
Jackson, S., Schuler, R., & Werner, S. (2011). Managing Human Resources. New York. Cengage Learning.
Lucas, H. (2012). The Search for Survival: Lessons from Disruptive Technologies. New York: ABC-CLIO.
Lussier, R., & Achua, C. (2009). Leadership: Theory, Application, & Skill Development. New York: Cengage Learning.
Pride, W., & Ferrell, O. (2011). Marketing. New York: Cengage Learning.
Rothberg, H., & Erickson, G. (2005). From Knowledge to Intelligence: Creating Competitive Advantage in the Next Economy. London: Routledge.
Rushton, A., & Walker, S. (2007). International Logistics And Supply Chain Outsourcing: From Local to Global. Boston: Kogan Page Publishers.
FedEx Company has a key strategy, which it uses in the market place in order to maintain its success. This is to leverage and extent one of its greatest assets, the FedEx brand, and to provide the customers with convenient, seamless access to their entire portfolio of integrated business solutions (Berger, 2011). In addition, FedEx Company performs well because of its operational excellence. The company is working hard to incorporate its business divisions so that customers have a main point of contact. This is very important as it helps them access the companys products at a central place (Lussier, 2009).
FeDex has adopted customer intimacy since, companies who attract customers by understanding and responding effectively to individual needs better than their competitors, succeed in the market place. Therefore, the operational excellence is and remains the most important aspect of FedExs strategy. The evidence of the companys customer intimacy and operational excellence is clear since the company declares that their strategy is to provide customers with convenient, seamless access to their entire business solutions (Lussier, 2009). The companys effort to enhance customer experience, like improving the qualities and abilities of the sales professionals, is another evidence of this strategy.
In addition, the company allocates a single agent for every given customer to handle their issues effectively. Moreover FeDex allows allows each segments to operate independently because this strategy allows them to respond to the customer demands well. Extra evidence is seen where the company states that it is a leader of reliable global delivery and freight services. Evidence of product leadership is evident where the company states that it believes that seamless information integration is important in obtaining a single point of contact for their customers (Birla, 2005).
The four business segments of FedEx include; FedEx Express, FedEx Ground, FedEx Freight, and FedEx Kinkos. The FedEx Express is categorized as the worlds largest express transportation company that offers timely delivery. This segment serves more than 90% of the worlds gross domestic product market (Berger, 2011). FedEx Ground mainly provides small package ground delivery while FedEx Freight is a re-known provider of freight services in the United States. Lastly, is FedEx Kinko, which offers document solutions, finishing, and presentation services (Berger, 2011).
The traceable and observable fixed costs for any company first of all exists simply because the firm exists (Lussier, 2009). For FedEx Express segment, the traceable costs are the costs incurred in operating its main sorting facility, which is located at Memphis, in Tennessee. The costs include the high expenses incurred in maintaining the aircrafts, cost of training flight workers, fuel for the aircrafts, and the other administrative costs like rents and salaries for the administrators.
Moreover, another example would include the cost of running the regional hubs or central focal points of the company in Newark, Oakland, and Fort Worth. The FedEx Ground segment traceable fixed costs comprise of the compensation costs paid to the president and chief Executive Officer of FedEx Ground, and operating its numerous facilities and hubs in the regions throughout the world (Berger, 2011).
One of the companys cost centers is FedEx Express,and specifically its sorting facility that is situated at Memphis, Tennessee while an example of a good profit center would be represented by FedEx Kinkos Office and Print Centers (Berger, 2011). In addition, FedEx Kinko, FedEx Express, FedEx Ground, and FedEx Freight which are the four segments of the company can be categorized as the as the companys investment centers (Birla, 2005).
A fixed cost is defined as a cost that does not change with an increase or a decrease in the amount of goods or services produced. The cost is not dependent on the level of production of the company. One of the traceable fixed cost for this company is the cost incurred in maintaining or operating its facilities at Memphis International Airport. This may comprise of costs incurred in paying for administrative offices and warehouse. Others include cost of owning airplanes, vehicles, and trailers. Furthermore, one common cost, which is likely to be invisible, is the cost incurred in paying the salary of the Chief Executive Officer, Fredrick Smith and sponsorships offered by the company (Birla, 2005).
The Return on Investment is a measure used in evaluating the efficiency of an investment or a number of investments so that a firm can make a decision. On the other hand, residual income refers to the income an individual remains with after paying debts. Since the ROI of $20 million is 20%, which is less than a previous rate of 24%, it is not logical for the managers to select such an investment, which is 4% less in terms of the Rate of Return. Similarly, it is advisable for the FedEx Express managers to undertake this investment if evaluation is done on ROI. This is because ROI of 20% is greater than the previous one calculated at 11.1%, which would increase the total ROI. Therefore, the managers should only pursue the investment if calculated using residual income (Lussier, 2009).
References
Berger, A. (2011).Case Study FedEx Corporation: Strategic Management. New York: GRIN Verlag, 2011.
Birla, M. (2005). FedEx Delivers: How the Worlds Leading Shipping Company Keeps Innovating and Outperforming the Competition. New York: John Wiley & Sons, 2005.
Lussier, N. R. (2009). Leadership: Theory, Application, & Skill Development. New Yoprk: Cengage Learning, 2009.
FedEx has identified the role that the right of health policy plays in employee productivity. When a group of adults from diverse backgrounds is brought together by the management to work for the general good of a given firm, the firm should avoid negative consequences of failing to involve members of the staff to make a contribution to the firms decision making especially if the issue at hand directly affect them.
The diversity in background, culture, religion, among others, goes a long way in determining the level of ones personality. There are those who do not give much attention to their health or that of their families, but there are others whose health comes first before any other thing. These two diverse groups would, therefore, require different health plans. When the firm limits them to one conventional service provider, then it becomes hard to satisfy both groups.
When the firm decided to introduce the provision of the several health care plans for their employees, the result was that every individual would choose freely the plan to subscribe to. This instilled in them an increased sense of self-worth, respect as well as a feeling of belonging. Consequently, the level of productivity went high.
From the case study, benefits increased for the firm, this is because employees subscribed to cheaper plans than the company had compelled them to enroll earlier. With a cheaper plan, the firms were remitting less in tax and, thus, saving a lot more than they previously did.
Health care provision is the greatest form of employee motivation that a firm can ever invest in. People can only increase productivity when they are in good health. Health coverage for employees also takes care of the situation when an accident takes place at the place of work. Employees work with increased zeal and passion for the job that they do while well aware that incase of an accident then their employer has them covered. Additionally, some health care policy providers offer several incentives. These incentives vary and offer a wide variety of benefits to clients who do not make a claim for a certain period of time. This makes employees exercise caution while carrying out their daily activities, thereby, minimising instances of accidents. This makes both the firm and the employee benefit in the long run.
Disease management programs would vary depending on the specifications of the firm. FedEx, for example, has most of its employees lifting boxes most of the time. It, therefore, ensures that it has a wellness centre to keep their employees physically fit. Other companies with the different situation would have different programs. A manufacturing firm would enroll its employees on different programs such as firefighting skills. These programs help reduce instances of injuries, with few cases of injury in the firm very little claims get forwarded. The company saves a lot of money through such preventative measures. An employee who lifts very heavy cartons would easily break aback if not physically preconditioned, and with a broken back, the employee becomes less productive and would most definitely make a claim to his/her policy. Chances of fires breaking out in manufacturing firms are normally very high. Skills on how to fight fire outbreak or escape safely from fire accidents prevent fire accidents at the workplace and, hence, the number of claims or court cases surrounding fire accidents.
Training programs make employees exercise caution in their health. Training helps employees avoid habits and activities that people innocently pick up without knowing the effects that these would have on their health in the long term. Having training programs within the firm that enlighten them on some of these and their possible consequences would encourage them to exercise caution and, in this way, the firm lengthens the lives of its workforce and, concurrently, reducing the number of claims it would have otherwise paid.
A firm that has a nursing hotline just like FedEx minimises its spending rate. Accidents at the place of work require urgent attention. With this urgent attention, a bad situation is prevented from degenerating into a worse one. Some inconsequential injuries that would lead to fainting or just mere strains receive immediate first aid attention, and this discourages the individuals from taking sick leaves and going to the hospital. Admission into a hospital would mean that the cover gets into play and the firm is made to begin paying bills.
In retrospect, health is the number one determinant of the level of productivity in every firm. A firm that takes care of its employees health, just like FedEx is likely to receive positive growth. Health services provision is a good strategy to motivate employees and helps the firm to retain its current employees as well as attract other, more competent staff. Additionally, the fewer claims that the firm would be required to pay to reflect positively in the firms books of account, and this is normally the overriding aim of any investor.
FedEx is a shipping company that was founded in 1971in Memphis. The founder of this company was a former Marine with the United States of America: Fredrick W. Smith. Beginning its services in 1973, it majorly used its name: Federal Express, to enable it to acquire quick contracts from the government. It quickly became a leader in its line of business through various steps that it undertook. One such move was application of jet planes in service delivery, especially after cargo airline deregulation. Further still, there was the pioneering of a distribution paradigm called spoke hub. With the change of name from Federal Express to FedEx in 2000 it aggressively started its advertising campaigns thus becoming more popular. This can also be attributed to the fact that it employed overnight shipping. Its major competitors in its line of business include USPS, UPS and DHL.
Sending an international mail via FedEx while in the United State of America is quite simple. All that is needed to be done is just putting the mail that is to be sent in an international destination into a FedEx bag that is designated as international mail service. Next, a call to FedEx using their known number i.e. 1.888.339.6245 would enable you order supplies for packaging airways bills that are preprinted. Before sending, these mails are sorted after being stamped. This is usually done by FedEx personnel or if not possible then their designee would do that. After stamping, they are then shipped to their respective designate countries and handed over to the authorities in charge of postal deliveries in that particular country. Normally this mode of shipment is used for commodities that are considered low valued for example goods for household use, CDs, or films.
Personal Experience with FedEx
While sending printed materials mostly in form of books to a friend of mine in Saudi Arabia, I decide to use FedEx. This was especially so since these materials were urgently needed. I did follow all of the FedEx procedure involved while sending materials to international designations and within a short while, I had paid for the postage and they were off. I was however promised that they would be received in Saudi Arabia within a maximum of 11 days. I did track the mail via their web enable service. True to their words, it only took 4 days to arrive in Saudi Arabia. The mail was now in the Hands of there Saudi Arabia Authorities. I was even prompted to tell my friend to give it maximum 2 days. However, 24 hours did not lapse before my friend finally called me to let me know that she had received the mail.
Therefore my little encounter with the FedEx services was just fine. Their staffs were so willing to help and could give you any information that you did want to have. This was such a nice pleasure and I can now even comfortably send something of a higher value via FedEx to people around off course after insuring it. They simply know how to keep their word. Most importantly however is the fact that although I paid for a standard service, my sent mail got delivered in time period that is designated as premium. That was quite cool.
Experiences Form Other FedEx Ground Service Customers
While that is just part of my experience, there are other various people with varying views about FedEx. One of the many FedEx customer that I got chance to talk to was Jar Hum. He rates the company as fast in delivery. His experience with FedEx is through his regular purchases at Newegg.com and Buy.com. Since these two merchants mostly use FedEx to deliver his purchased products, he has had positive encounters with the company. He fondly calls the serve by FedEx as reliable. He states that even sometimes, the maximum period of delivery i.e. 5-7 days is beaten.
Ahmed however has not been so lucky with FedEx. In his experience, after ordering for a computer part online, the online merchant decides to ship it via FedEx. Luckily, it required that the receiver signs for it on delivery. After waiting and checking on the FedEx website for 3 days, he noticed that information had changed from Package on FedEx Vehicle for Delivery to Delivery exception . To him, this meant the package had been delivered to a wrong address and there was therefore no one by the name Ahmed to sign for it. Ahmed however on contacting the customer care service was treated well and professionally. However the fact that he had to wait for one extra week to get his package delivered was most upsetting to him.
Mariah on the other hand had some package whose label implied that it contained materials that were hazardous. Since she runs a company, she thought well, it might have delivered to the right address. But later while confirming the address, she noticed that it was meant to be delivered to another company across the street. When she contacted FedEx, she was put on hold for over 20 minutes before some lady explained to here that the package was going to be collected the following day. However, after 2 weeks of continuously calling and no one from FedEx showing up, they decide to call the destined company to come and collect their package. Surprisingly, a week later, someone from FedEx did show up claiming to have come to collect a package.
Finally, Zulia seems to be particularly annoyed at this issue of FedEx loosing her packages that were being sent to hare clients. To her, the refund that she often receives does not cover up for discontented customers on the other end of the line. She out mostly dislikes the FedEx services but still she continues using them. This is because of their cheap FedEx ground which is cost effective to her business.
FedEx Employees
The employees, especially responsible for receiving phone calls, handle all frustrations from customers. While most of them do argue that they try their level best to solve their clients issues, they cannot assure them that packages that have been delivered wrongly would not get another wrong delivery. Mostly it is out of their hands and is only there to try and calm down their customers. To them, the best they can do is call the driver and let them know of an error that they had made in delivery and hope the driver correct his or her mistake as soon as possible.
Conclusion
The various encounters that customers have with their service providers are very critical. This is because hardly a client would recall a smooth flow of services extended after some time. However, these same clients would keep that one bad experience with their service providers almost for the whole eternity. Therefore to ensure satisfaction in case of any mishap in service delivery, it should be resolved the soonest time possible.
This report provides the benchmarking of two delivery services providers, Aramex, to FedEx. The former is Emirati-based, while the latter is a global leader in the market. The comparison is based on the results of the marketing mix analysis. Such aspects as a product, price, place, promotion, people, process, and presence will be considered. It is found that Aramex employs various strategies that have been used (and some of them developed) at FedEx that can be regarded as a revolutionary leader in the industry.
However, there are also considerable differences due to historical and geographical aspects. FedEx has the largest aircraft fleet and one of the biggest land transportation fleets in the world. Aramex is one of the leading delivery services providers, and it has the biggest land fleet in the Middle East. The availability of vehicles is one of the illustrations of the major difference between the two corporations. FedEx has considerable resources to innovate and expand, while Aramex has limited options to develop.
It is noteworthy that even these comparatively scarce resources are not allocated effectively to ensure the sustainable growth of the company. Aramex has to change some of its approaches in order to win a larger market share in the Middle East and become a global operator in the long-run. These strategies include acquiring larger companies and developing more effective partnerships, increasing fleet, innovating, raising peoples awareness of Aramexs sustainability-related projects, and employing more effective promotional methods. The company should also continue investing in its efforts linked to their staff training and development.
Introduction
Delivery is one of the key aspects of running a successful business as people are no longer ready to wait until they receive the products they need. The associated operations are often outsourced, especially when it comes to small businesses, entrepreneurs, individuals, or if some occasional delivery services are necessary.
FedEx is regarded as one of the worlds leading companies providing delivery services. This corporation is seen as an innovative role model introducing revolutionary strategies that can be used by smaller companies. Aramex is one of the top logistics and transportation companies in the Middle East ( Aramex Delivery Unlimited 2). The delivery services provider now has offices in 58 countries across the globe.
FedEx provides a range of services, including express delivery, transportation, and logistics solutions, hazardous materials and perishable goods delivery, consulting, and print materials development. Aramexs portfolio includes such services as express delivery, transportation, logistics, and supply management solutions, consulting, as well as mass mail and return service. The two companies are characterized by a high level of their services accessibility.
Both companies make active use of online resources, but they also have pickup facilities and can pick up packages in any required place and at any time. Both organizations have established effective processes, which enables them to provide high-quality services. However, FedEx has more resources, which makes their services more accessible compared to Aramex.
The pricing approaches are quite different, as FedEx charges higher rates and draws peoples attention to the high quality of the provided services. Aramex offers its services at a lower rate, which makes it attractive to a wide audience. Another area where companies employ different strategies is promotion. FedEx has launched numerous advertising campaigns involving catchy videos broadcasted through television and available online.
FedEx is a well-established brand that is recognizable globally, but Aramex is known locally. One of the reasons for this limited awareness of the Emirati-based company is its insufficient promotional efforts. This report benchmarks Aramex against FedEx and includes a set of recommendations to make the Emirati-based company as prominent as its US-based counterpart. Human capital is another sphere where differences between the companies in question are apparent. FedEx has no serious issues related to hiring high-profile top managers or skilled (as well as unskilled) workers. Aramex relies on the experience and professionalism of expatriates and invests in the development and training of its employees.
Companies Background
FedEx
Frederick W. Smith founded his company in 1971 when he acquired controlling interest in Arkansas Aviation Sales ( Our Story par. 4). The entrepreneur decided to name his delivery business Federal Express in order to stress its nationwide outreach and attract the general publics attention. Soon, however, the company moved its headquarters to Memphis, Tennessee, as the location was more appropriate for the operations.
It was in the center of the country, and the citys airports were rarely closed due to bad weather conditions. The first packages were delivered in 1973 when Federal Express aircraft flew to New York and Miami.
Smiths vision was instrumental in the establishment of a new leader in a new market. The head of Federal Express worked on the development of innovative strategies that could ensure one- or two-day delivery. The organization was one of the first delivery companies that introduced a tracking service for its customers. This service has been highly valued by people who obtained a considerable degree of control over their packages.
This vision and effective management enabled the company to report $1 billion in revenues in 1983, only ten years after the companys creation ( Our Story ). The corporation has made several successful acquisitions of delivery companies. FedEx is now operating in over 220 countries and territories, and its value reached $18 trillion in the 2010s ( Our Story ). The corporation reports 9% growth since the 2017 fiscal year, and the current revenue has reached $65.5 billion ( Superior Networks: Power Performance ii). These results make FedEx one of the top delivery companies in the world.
Aramex
Aramex is one of the leading providers of delivery services, as well as transportation and logistics solutions. The company that offers express delivery services was founded in 1982 ( Aramex Delivery Unlimited 1). It was initially established as an express wholesaler for leading American delivery services providers, including FedEx. Aramex is also one of the founding members of the Global Distribution Alliance that serves people in over 240 countries ( Aramex Delivery Unlimited 2).
Through a number of successful acquisitions and the implementation of innovative strategies, the organization managed to earn a substantial market share and become one of the leading delivery companies in the Middle East. At present, Aramex is expanding its operations and boasts of its high performance. The company reports that in 2017, its full-year revenue was as high as 4,721 million AED (approximately $1,285 million in 2017) ( Aramex Annual Report 2017 116). The corporation showed 9% growth of the revenue as compared to the 2016 full year.
Marketing Mix
Product: FedEx
The range of products and services provided by FedEx these days is not confined to the delivery of packages, although this service is still central to its portfolio. One- or two-day delivery (which was once Smiths strategic goal) is one of the basic services the company offers ( Our Story ). In addition, customers can order a specified-day delivery, which is also a popular service. Furthermore, FedEx has the necessary facilities to deliver hazardous, urgent, and valuable items. For instance, customers can send via FedEx such products as medication, hazardous waste, livestock, money and valuables, and the like.
Transparency and accessibility, as well as rapid delivery, can be regarded as characteristic features of the services provided by the company. As mentioned above, FedEx was one of the first companies to offer tracking opportunities for customers.
This transparency is associated with added value as the companys image of a reliable partner is increased with the help of tracking services. The company has the biggest aircraft fleet and a large fleet of trucks for ground delivery that is less expensive but as high-quality as the rest of the provided services. The use of its own fleet enables FedEx to have competitive prices and ensures the timely delivery of packages.
Apart from overnight delivery and freight services provision across the United States and internationally, the corporation offers consulting services associated with insurance, customs, logistics, and transportation services ( Our Story ). The corporation also provides e-commerce services, as well as IT and marketing solutions. One of FedEx divisions, FedEx Office, offers such services as copying and digital printing, professional finishing, signs, computer rental, and corporate print solutions ( Office Fact Sheet ). It is noteworthy that these services are managed by different divisions, which contributes to the compliance with the highest quality standards.
The use of innovative strategies enables FedEx to improve the quality of provided services and decrease costs. For instance, the company collaborates with aircraft designers and producers to develop aircraft capable of delivering various types of items ( Our People ). The designers come up with spaces that are more appropriate for big-volume loads. The use of blockchain is another strategy that is regarded as a revolutionary solution for the industry ( Our People ).
FedEx is involved in the process of the incorporation of this technology into the sphere of logistics and supply chain management. The companys officials claim that blockchain can ensure transparency, data security, and cost reduction. It is stressed that information sharing, which is a key process in the modern business world, can be optimized, and costs can be decreased substantially while the quality of services will be improved.
Product: Aramex
Aramex has a wide range of services that help businesses and individuals to address various challenges they can face on a daily basis. Same-day delivery for domestic operations is one of the highly-valued services ( Aramex Delivery Unlimited 4).
The company also ensures the timely delivery of packages internationally. Aramex has the largest land freight networks in the region and an advanced truck fleet, which contributes to the provision of high-quality services. The use of multi-modal transportation is instrumental in the provision of cost-effective delivery services. The aircraft fleet enables the corporation to provide services related to the delivery of perishable products.
Apart from delivering packages, the corporation offers a variety of solutions for businesses and individuals ( Aramex Delivery Unlimited 5). The company provides cash collect services that involve collecting charges from the sender. Mass mail services are provided to businesses that need to send certain documents on a regular basis (notifications, promotional materials, and the like). Aramex offers a return service that implies a free return of goods, which is a popular service among people buying online.
Like other modern delivery companies, Aramex utilizes advanced tracking systems, which adds transparency to its operations. Furthermore, the company offers services associated with consolidation, logistics, facility management, co-loading, warehousing, customs clearance, and so forth. The organization provides shop and ship services that involve the provision of a mailing address in the UK or the USA to the companys customers.
When benchmarking Aramex to FedEx, it is clear that the Emirati-based company has limited opportunities for one- or two-day international delivery. Same-day delivery is possible with domestic operations only, which is not enough for the company that aims at becoming a global leader. Although Aramex delivers perishable foods, it has no facilities to manage hazardous and urgent packages. At the same time, these services could diversify the range of products provided and attract more customers. The top management of Aramex emphasizes that the company strives for innovation ( Aramex Annual Report 2017 33). However, this effort is still confined to the use of tracking systems and advanced logistics-related equipment and software.
Place: FedEx
As mentioned above, the accessibility of FedEx services is remarkable and can be seen as one of the factors contributing to the corporations success. Customers can use toll numbers to obtain the required information or order a delivery. The company has pick-up facilities across the USA and globally. These units include retailer-based facilities where people can receive or send a package. The services can be ordered online, which is specifically important for people involved in e-commerce operations. Moreover, FedEx representatives can come to any location to pick up a package and deliver it to any place.
Place: Aramex
The company has a substantial network of facilities that contribute to the accessibility of its services. However, in contrast to FedEx that has pick-up units globally, Aramex has such facilities primarily in the Middle East, which limits the use of their solutions. Although customers can use door-to-door services, many people find this service expensive and choose to bring their packages to pick-up units of international companies.
Aramex customers can order various services online, which is convenient for businesses and individuals. It is noteworthy that Aramex utilizes technology extensively, but the services it provides are still confined to the Middle East.
It is possible to note that Aramex employs various strategies that are utilized by the majority of companies operating in the industry. The extensive use of online platforms for interaction with customers and partners helps Aramex to become a leading delivery company in the region. The company also uses the approach many successful delivery firms (including FedEx) employ. Aramex acquires other logistics and transportation organizations in order to increase its network and obtain facilities in new locations ( Aramex Delivery Unlimited 1). Nevertheless, the Emirati-based company is not as successful as FedEx in this sphere due to the fact that Aramex acquires small firms, which limits its expansion and growth.
Price: FedEx
The international leader has a wide range of services at different prices. As mentioned above, the company has a network of pick-up facilities, which helps it to attract price-sensitive customers. FedEx mainly uses the premium pricing approach, and it draws peoples attention to added value. The quality of the services FedEx provides, as well as innovation and time-saving solutions, are always central to the companys marketing efforts. Being one of the leaders in the global market and a revolutionizer of the industry, FedEx charges premiums for these features.
At the same time, the corporation provides numerous solutions and discounts, which is especially effective in developing countries. FedEx uses these packages to enter new markets or increase their market share. It is possible to state that the international delivery services provider is customer-oriented and tries to address the needs of different groups. The use of advanced technologies helps the organization to reduce costs and increase revenues.
One of the innovative strategies the company developed is the use of multiple measures. Previously, delivery companies charged their customers in terms of their parcel weight. However, this often led to inappropriate management of space associated with higher costs. The company started charging people in terms of the weight and dimensions of packages. This approach was instrumental in increasing the corporations margins and revenues.
Price: Aramex
Aramex uses a similar customer-oriented pricing strategy and offers a variety of services at different rates. For example, the corporation has standard-duration delivery at lower prices and higher charges for express delivery. The company also has several measures to develop rates, including weight and dimensions. Packaging, types of transportation, distance, time, and many other variables affect the price. On the whole, it is possible to note that Aramex offers its services at a lower price as compared to FedEx (regarding the delivery in the Middle Eastern Region). For instance, a basic shipping rate is considerably lower at Aramex as compared to FedEx.
For instance, for a 5-kg parcel (50x50x50cm), FedEx will charge 224,5 AED for the express delivery from Dubai to Abu Dhabi. At Aramex, customers are charged 109,20 AED for the same service. This is a substantial competitive advantage for the Emirati company that is often seen as an affordable alternative to FedEx. Aramex tries to provide offers characterized by added value, but these services are not charged much higher (relative to standard services).
Promotion: FedEx
FedEx is famous for its high-quality services and memorable promotional activities. The company uses various channels to promote its services, products, as well as the brand itself. Its videos are regarded as exemplary advertisements that are highly effective ( FedEx: Whats Inside? ). In their videos, the company stresses such concepts as quality, trust, professionalism, speed, and care. It is necessary to note that these aspects are consistent with the vision of the delivery services provider. The articulated message through FedEx advertisements is the provision of possibilities. The primary channels are television, print sources, and the Internet. The company also uses social media extensively (Facebook, Twitter, Instagram, YouTube), which contributes to the establishment of proper relationships with its customers.
One of the peculiarities of the companys promotional efforts is its focus on sports as an effective promotional medium. FedEx has sponsored Formula 1 and other significant sports events such as ATP World Tour or UEFA Europa League. The corporation has been a sponsor of sports teams, which is an effective promotional strategy as teams participate in various events and projects, so the company is associated with potentially every appearance of members of the team.
Nevertheless, the most remarkable promotional activities are associated with corporate social responsibility. Modern companies try to create an image of corporate citizens who contribute to making the world a better place. FedEx is quite successful in its effort to leave a positive footprint. The company has a department (FedEx Cares) that focuses on this area. FedEx concentrates on such aspects as sustainability, global entrepreneurship, road safety, and caring for people.
The company donates funds to numerous projects and launches a variety of campaigns to reach the goals they set. Some of the activities include the increase in electric vehicles fleet to reduce emissions. FedEx also encourages its partners across the globe to participate in sustainability initiatives related to biofuels, solar energy, and the like. The corporation reports investing approximately $200 million in projects implemented in over 200 communities worldwide ( Social Responsibility ).
The areas of the companys major concern include delivering for good (providing resources to address the aftermaths of disasters), sustainable transportation, employment pathways (empowering and providing employment to underserved groups), road safety, global entrepreneurship (with a focus on females and minority entrepreneurs).
Promotion: Aramex
Aramex does not use television as one of its primary communication channels, which can be justified by the need for substantial resources. The company does not invest in the development of such promotional videos, as FedEx does. Aramex videos are aimed at businesses rather than individuals. The corporation uses print media to promote its services and products, as well as its brand. New customers are often addressed through online channels with a focus on the companys official website and social media.
The range of social networks the company employs is not as wide as compared to FedEx. However, Aramex employs such most popular social media as Facebook, Twitter, YouTube, Instagram, and LinkedIn. These platforms are highly used in the Middle East, so the Emirati delivery services provider reaches a wide audience.
Similar to FedEx, Aramex also sponsors various events and projects. For example, the company launches a conference for leaders in the e-commerce sphere (for example, Aramex Annual Conference) each year. Nevertheless, the organization does not sponsor any popular happenings such as sports competitions or tournaments. Unlike FedEx, it is not visible in global-scale cultural activities. This can be regarded as a lost opportunity as the company could reach a very wide audience.
The area where Aramex uses an approach that is similar to the strategies utilized by FedEx is corporate social responsibility. The Emirati company sees sustainability as one of its core priorities. Sustainability is deeply incorporated into the companys vision. Aramex claims that the three pillars of their sustainability effort are young generations education and empowerment, the support of entrepreneurs, and the focus on environment and climate change.
Aramex pays specific attention to supporting entrepreneurs, especially those involved in the sphere of logistics, transportation, and e-commerce. The organization invests considerable funds in numerous start-ups, which has multiple implications. For example, this support leads to the development of innovative solutions that can be employed by Aramex and other stakeholders. By supporting start-ups and entrepreneurial culture in communities, the company contributes to the improvement of different groups quality of life. It is noteworthy that this area is extensively highlighted in the media mentioned above. Aramex tries to inform people about the projects associated with sustainability.
Physical Evidence: FedEx and Aramex
The analysis of physical evidence is closely linked to branding strategies. The development of the two brands and the companies efforts in this area have been discussed in detail in the previous section. Here, it is possible to note that FedEx has a strong global brand, which contributes to the increase in the organizations revenues. In simple terms, when considering express delivery, FedEx tends to be one of the first options that come to peoples minds. Aramex has limited resources to allocate in branding, which has led to the development of a brand that is recognizable locally. Therefore, it is possible to note that the presence of Aramex is local, and the company needs to change this strategy in order to expand and continue its sustainable development.
Process: FedEx
The company is one of the leaders in the delivery business due to the efficient management of its operations. The company employs effective information systems that ensure the proper flow of data ( Superior Networks: Power Performance 33). FedEx has advanced facilities (including its fleet) that contribute to the effective flow of packages as well as their timely delivery. It is possible to note that the company has substantial resources that enable it to arrange the process of the provision of its services effectively. As mentioned above, FedEx is constantly investing in innovation, which results in the use of the most effective strategies and tools. For instance, the use of electric vehicles, mobile-based systems, blockchain technology contributes to the reduction of costs and the increase in revenues.
Process: Aramex
Aramex utilizes recent strategies and instruments used in the industry. They employ module truck systems and electric vehicles, mobile-based information systems, effective tracking, and warehouse management solutions. However, in contrast to FedEx, Aramex has comparatively limited resources to innovate, especially when it comes to such areas as aircraft fleet, advanced transportation and information systems, infrastructure development. A limited capacity to innovate can be seen as a considerable obstacle to the companys expansion. Aramexs acquisition choices are also questionable as they do not provide an opportunity to improve the existing facilities and processes to the needed extent.
People: FedEx
Being a US-based multinational corporation, FedEx benefits from the diverse labor force. The company has the resources to locate and hire talent, as well as invest in their employees training and development, which makes it a respectful employer. The company offers high salaries, as well as various perks, so FedEx does not have significant issues associated with hiring people ( Superior Networks: Power Performance 33).
It is noteworthy that such an established brand as FedEx attracts people of different backgrounds and capabilities. Apart from high salaries, attractive pension packages, and various perks, the corporation offers favorable working conditions where people have all the necessary tools to complete tasks efficiently and timely. On top of that, the company has managed to create an effective organizational culture where innovation and entrepreneurial approaches are highly valued.
People: Aramex
Aramex is a corporation operating in different countries, so it has quite a diverse workforce. However, the companys human capital is characterized by some peculiarities that arise due to the challenges many Middle Eastern countries face. Aramex is one of the leading delivery firms, so it has the necessary resources to ensure proper working conditions as well as attractive salaries and benefits. The company is regarded as a respectful employer who innovates and places a high value on its human resources.
Nevertheless, Aramex has certain difficulties with attracting qualified managers. Gender diversity among top management positions is not sufficient, as only 17% of top managers are females ( Aramex Annual Report 2017 30).
The rate of expatriates working at Middle Eastern companies is quite a sensitive issue authorities and businesses try to control. The rate of expatriates among Aramex top management is 52%, which indicates that the companys demand for high-profile leaders cannot be satisfied ( Aramex Annual Report 2017 30). The lack of trained local people with the necessary experience and background is still comparatively low. The company allocates significant funds to employees training and development. Interestingly, it is reported that female employees receive approximately 65% of training ( Aramex Annual Report 2017 30). The corporation is working on the development of the organizational culture, where innovation is a key priority.
Recommendations
In order to improve its performance as well as its status in the global market, Aramex should consider implementing changes and using the strategies that have proved to be effective in the practice of such leaders as FedEx. It is necessary to note that Aramex is unlikely to become FedExs competitor in the global market in the most recent future, but it can win a larger market share in the Middle East. Although FedEx is unlikely to be replaced, Aramex will be able to attract customers who have to use FedEx.
The Emirati-based company complies with the highest international standards and employs the most effective instruments and strategies existing in the industry. Some changes are necessary for such areas as technologies utilized, but the major focus can be on promotional efforts. The company seems to fail to establish its brand in a way FedEx did it years ago.
Increase Fleet
In order to expand, Aramex has to increase its fleet with a focus on air transportation. As mentioned above, the company has the largest land fleet in the Middle East, which enables the corporation to provide high-quality delivery services locally. However, to enter new markets, several new aircraft can be necessary. The provision of air delivery services at premium prices can help Aramex to increase margins.
The increase of the fleet should involve certain diversification as Aramex should have vehicles appropriate for the transportation of hazardous materials. At present, FedEx is an alternative to using local delivery firms (including Aramex). However, the Emirati corporation under analysis can acquire several vehicles, which would ensure the satisfaction of needs, at least, in the local market. Aramex has a well-established image of a reliable delivery service provider, so it will easily attract new customers willing to send hazardous materials.
Acquisitions and Partnerships
Successful acquisitions can be instrumental in enlarging Aramexs fleet and facilities. The company has acquired several companies, but they were quite small. The acquisition of large facilities can increase the companys capacity to provide diverse services to more people and more locations. This strategy can be beneficial in terms of existing competition. The Emirati delivery market is characterized by quite a considerable saturation level.
Hence, Aramex may acquire companies that can be regarded as existing or potential competitors. The corporation should also seek more effective partnerships, especially when it comes to transportation. Following the example of FedEx, Aramex can collaborate with transportation providers who will make vehicles more appropriate for the satisfaction of particular needs.
Innovation
Although Aramex boasts its use of innovative strategies and instruments, the company can innovate more effectively. For example, through upgrading their fleet, they would be able to reduce costs. The increase in the fleet of electric vehicles should be one of the priorities that is properly communicated to the public. Aramex claims that they plan to reduce their GHG emissions to be among the companies that try to minimize their environmental footprint ( Aramex Annual Report 2017 47).
However, these messages often reach the corporations employees and partners but are still largely unvoiced to the general public. The experience of FedEx indicates that the involvement of sustainable technologies in transportation is cost-effective. One of its implications is the maintenance of a positive image and attraction of more customers.
Aramex has collaborated with authorities and NGOs addressing some challenges communities faced ( Aramex Annual Report 2017 53). For instance, the company invested substantial funds in the construction of Amman Station facilities in Jordan ( Aramex Annual Report 2017 47).
Aramex should also collaborate more effectively with local governments and authorities in order to line up their mutual effort to develop sustainable infrastructure. Roads, as well as charging stations for electric vehicles, will contribute to the sustainable development of communities. It can support the companys image of a corporate citizen. The company does not have to work on the establishment of relationships with governmental entities, but can focus on the enhancement of these partnerships.
The use of more advanced tracking systems is key to the organizations success. Mobile platforms and their integration into the existing information systems can improve the companys operations. It can be possible to participate or launch a blockchain-related project or program similar to the ones involving FedEx. Blockchain technology can be utilized to reduce paper documentation flow and optimize information exchange. All these innovations will result in cost reduction and increased margins.
Increase Aramex Sustainability Awareness
According to the companys annual report, raising awareness regarding Aramex sustainability-related efforts is one of the goals they plan to achieve in the recent future ( Aramex Annual Report 2017 53). At the same time, the focus is still on internal awareness that targets employees, shareholders, and partners, including NGOs and authorities. Nevertheless, the company is involved in various projects and actually contributes to the development of communities across the region, so the general public should be aware of these efforts.
Brand Promotion: Social Networks and Television
As mentioned above, Aramex utilizes social networks quite effectively to communicate with its customers. The company shares information concerning products, services, and sustainability-related projects through these platforms. The major peculiarity of these messages is their news-like style. Aramex has no effective advertisements that could grab peoples attention and make their brand memorable. Unlike this Emirati company, FedEx has come up with numerous videos that are brief, catchy, and informative in terms of the organizations vision and values. The major outcome is a high level of brand awareness worldwide.
Although significant funds can be needed to create several videos, this investment can lead to an increase in the companys market share in the Middle East and even other countries. Television can be one of the platforms to market the Aramex brand, but this may require certain investments. The Internet may be used more extensively as it is more cost-effective. The videos can be delivered through social networks and in the form of advertisements.
The videos should be characterized by the features mentioned above. They must be brief and effective messages that concentrate on such concepts as care, speed, quality, innovation, and entrepreneurial nature. It can be beneficial to use humor when creating videos as such advertisements often receive a lot of peoples attention making brands and firms more recognizable.
Sponsorships
Aramex should follow the example of FedEx and sponsor sports events that attract the general publics attention. These can be international cups and competitions, as well as local venues. In this way, the Emirati corporation will reach a wider audience through print media and television. Additionally, Aramex can be a sponsor to festivals, conferences, and shows. These sponsorships will be instrumental in developing new partnerships, which is also essential for the development of the business.
Hiring Talent
It can be beneficial for the company to invest in young people willing to be involved in the industry. Aramex can fund various educational projects for students of the corresponding departments of higher educational establishments. Although the company has launched and participated in similar projects in certain communities, these activities should be implemented on a larger scale. Aramex should continue working on attracting a more diverse workforce. The companys future competitiveness may depend on its ability to grow and hire talent.
Conclusion
To sum up, Aramex and FedEx are companies offering express delivery and associated services. Aramex is mainly operating in the Middle East, while FedEx is a global company that operates in over 200 countries and territories. Although Aramex strives for innovation and tends to employ the most effective and recent strategies and instruments, it has limited resources compared to FedEx. However, the lack of resources is not the only or primary reason for Aramex local presence. The company has made a number of strategic errors, but they can be addressed, which may help the company to develop and enter a global market in the long run.
One of the areas to pay attention to is the promotion and brand development. The companys presence is insufficient, even in the Middle Eastern market. Aramex should develop a far-reaching promotional campaign that implies the use of catchy videos communicating certain messages, sponsorships, and partnerships. The continuous investment in the development of the companys facilities, fleet, and information systems is another key to its success.
One of the ways to achieve this goal is to implement successful acquisitions (acquiring big companies). Finally, the company is a responsible corporate citizen, but it fails to raise the general publics awareness of their sustainability projects.
The major implications of this report include the identification of certain gaps in Aramex operations and approaches, as well as the provision of recommendations that could improve the situation. The benchmarking of Aramex to FedEx is instrumental in revealing the most effective strategies and their application in another setting. Aramex can follow the recommendations provided in this report and improve its position in the market. The short-term benefits will be the growth of the market share in the Middle Eastern region. Long-term benefits can be the gradual transformation into a multinational operating globally.
FedEx was established in 1971 by Frederick Smith who was a former US Marine (Rushton & Walker, 2007, p. 183). At the very beginning, the company had only 14 planes and they could carry cargo only 25 cities in the United States (Rushton & Walker, 2007, p. 183). Originally, this business was located in Little Rock, but later its headquarters were moved to Memphis (Rushton & Walker, 2007, p. 183).
It should be noted that the company’s growth can in part be attributed to the deregulation of the airline industry that took place in the early seventies. For example, when the corroboration was allowed to use large planes, the managers of this organization were able to increase its profitability (Lucas, 2012, p. 169). Apart from that, FedEx was the first delivery company that enabled clients to know where their packages were (Birla, 2012, p. 8).
One should take into account that this corporation made several important acquisitions; for example, they purchased such a company as Flying Tigers in 1989; in this way, they were able to enter foreign markets, especially in Europe (Rushton & Walker, 2007, p. 183). Additionally, they acquired many logistics companies such as Caliber System Inc. These acquisitions helped FedEx become effective in supply chain management. At this point, FedEx is the largest airlines according to such a criterion as freight tons.
Moreover, the fleet of this corporation numbers more than 661 airplanes and it can deliver goods to more than 375 destinations. Apart from that, one should take into account that this corporation also specializes in truck delivery, especially if one is speaking about the United States. Thus, it is possible to argue that this organization was able to grow dramatically during the past 40 years.
Financial Performance
Although the global economy passed through a period of crisis, FedEx was able to remain sustainable and competitive. Despite numerous problems, the services of FedEx were enjoyed significant demand. In 2012, the gross profits of this corporation constituted $ 42.7 billion while their net revenues were 2,03 billion (FedEx 2013, p. 8).
Airline delivery of goods still remains a critical component for the profitability of this corporation. In particular, it comprises approximately 50 percent of their revenues. Apart from that, this organization was able to reduce the costs of by improving their supply chain. However, one should take into consideration that the cost of fuel poses a significant problem for this corporation (FedEx 2013, p. 14).
Furthermore, the company increased the expenses related to the compensations of their employees (FedEx 2013, p. 28). Nevertheless, these costs are justified because in this way, the company can gain the loyalty of workers. These are the main aspects of their financial performance. The main trend that one can identify is that the profitability of this corporation began to improve, especially in comparison with the previous years. These are the main points that can be made.
Operations
Overall, it is possible to say that FedEx offers a variety of services to their clients. One of them is the overnight delivery of goods (Pride & Ferrell, 2011, p. 228). This organization often works with customers who are pressured by time and it has been able to meet rigid timelines set by their customers (Pride & Ferrell, 2011, p. 228).
The growth of this company can be explained by their ability to deliver packages within 24 hours (Lussier & Achua, 2009, p. 318). As it has been said before, FedEx enabled clients to track the delivery of their goods (Lussier & Achua, 2009, p. 318). This is one of the reasons why they achieved competitive advantage over other firms (Lussier & Achua, 2009, p. 318). At present, this airline company delivers cargo to more than 375 destinations every day and one can argue that FedEx operates at an international level.
It should be taken into consideration that the success of their operations depends on their coordination between airline fleet and trucks that should act a single entity. At first, packages should be delivered from airports to sort-out facilities early in the morning (Alt, Fu, & Golden, 2006, p. 334). Later these goods are loaded on delivery trucks, and they are transported to customers before 10: 30 (Alt, Fu, & Golden, 2006, p. 334).
In this case, much attention should be paid to the efficiency of employees who work at these sort-out facilities because they should place packages into the right trucks (Frock, 2009). Researchers believe that the operations of FedEx can be regarded as a series of deliveries and pickups (Alt, Fu, & Golden, 2006, p. 334). It is possible to say that this organization offers other services to their clients.
For instance, one can speak about freight management, brokerage, customs clearance, warehousing, and so forth (Rushton & Walker, 2007, p. 183). This company works with corporate and individual clients. Overall, this organization support supply chain activities of many manufacturers and firms that are strongly dependent on FedEx. These are the main activities that this corporation is engaged in.
Personnel
The policies of FedEx place much emphasis on the effectiveness of their labor force (Jackson, Schuler, & Werner, 2011, p. 13). In particular, this organization focuses on such aspects as open-door policy, the use of surveys in order to receive employees’ feedbacks, and the adoption of performance appraisal systems that can better recognize the individual contribution of workers (Jackson, Schuler, & Werner, 2011, p. 13).
The senior management of FedEx views the company’s employee one of the main factor that contributes to the success of this organization. Their HR policies help this corporation increase workers’ commitment to organizational goals and their loyalty to the company.
At present, this corporation employs approximately 5000 pilots who are well-trained and experienced professionals (Holley, Jennings, & Wolters, 2011, p. 203). Their expertise is critical for the timely delivery of cargo. However, one should bear in mind this corporation also employs more than 100.000 package handlers, dispatchers, and truck drivers (Holley, Jennings, & Wolters, 2011, p. 203).
The performance of these professionals is also critical for the effectiveness of FedEx, and its ability to meet the timelines set by their clients (Alsop, 2010). Thus, this organization focuses on their effectiveness and commitment of their workers. This is one of the main arguments that one can make. Yet, FedEx is often criticized for its labor relations because this corporation does not allow the workers to be unionized (Truitt, 2010, p. 211). This is how this company interacts with its workers.
Marketing efforts
It is possible to say that this corporation is also engaged in marketing activities that are supposed to attract and retain customers. First of all, one can speak about some of their advertising campaigns. The most recent one is called The World on Time (Thompson & Martin, 2010, p. 362).
Overall, it emphasizes the ability of the company to deliver the goods to every destination on time. Other advertising campaigns developed by this company also stressed the speed and effectiveness of their operations. Moreover, their customers have an opportunity to track the delivery of their cargo (Lussier & Achua, 2009, p. 318). Moreover, this company lowers prices for their long-term customers, especially corporate ones (Rothberg & Erickson, 2005, p. 220).
It is also possible to say that the marketing strategies of this corporation are very flexible. At the very beginning, FedEx focused on the delivery of documents, but the rapid development of Internet made their services unnecessary. This is why FedEx begin to attach more importance to the shipment of physical goods (Capon & Hulbert, 2007). These are the main elements of their marketing strategies. Overall, the services offered by FedEx continue to attract clients from different countries.
Recommendations to maintain or achieve profitability
It is possible to provide several recommendations that can benefit this organization. First of all, they should invest more into their Asian operations. In particular, they need to increase the number of flights and trucks that operate in such countries as China, Japan, South Korea, and Singapore because in the future, the economic activities within these states will only intensify. Secondly, this organization should pay more attention to the renovation of their fleet.
They should acquire aircrafts that are more fuel-efficient such as B777F or B757 (FedEx, 2012, p. 25). This issue is particular important because a great proportion of the company’s expenses can be attributed the consumption of fuel. Thirdly, the management of this organization should pay more attention to the corporate image of FedEx. Currently, they only allow pilots to be unionized, but one cannot say the same thing about truck drivers or dispatchers (Truitt, 2010, p. 211).
As a result, this corporation is often involved in many scandals (Truitt, 2010, p. 211). This is why this organization should establish partnership with national trade unions. In this way, they can avoid both public criticism and litigation. These are the main suggestions that one can make to the managers of this company.
International operations
Currently, the corporation operates in different regions and countries with different cultures, religions, and political systems. First of all, this organization operates in China, South Korea, Japan, and Singapore (Ferrell & Hartime, 2010, p. 533). These countries passed through a period of economic growth, and the services of FedEx were required by many businesses. Additionally, this company operates in European countries such as France, Germany, Italy, or the United Kingdom (Ferrell & Hartime, 2010, p. 533).
However, at this point, the European market is of lesser importance for FedEx, especially in comparison with the United States or Asian countries. Furthermore, FedEx entered the Russian market and very soon it became a leading airline delivery company in the country. Despite various challenges, this corporation was able to adjust itself to the international market. Moreover, it was able to meet the labor relations standards set by different states. These are the main aspect that should be kept in mind.
Reference List
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Birla, M. (2012).Innovating and Outperforming the Competition. Boston: John Wiley & Son.
Capon, N., & Hulbert, J. (2007). Managing Marketing in the Twenty-first Century. London: Wessex Publishing.
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Frock, R. (2009). Changing How the World Does Business: Fedex’s Incredible Journey to Success – the Inside Story: Easyread Super Large. London: ReadHowYouWant.
Holley, W., Jennings, K., & Wolters, R. (2011). The Labor Relations Process. London: Cengage Learning.
Jackson, S., Schuler, R., & Werner, S. (2011). Managing Human Resources. New York. Cengage Learning.
Lucas, H. (2012). The Search for Survival: Lessons from Disruptive Technologies. New York: ABC-CLIO.
Lussier, R., & Achua, C. (2009). Leadership: Theory, Application, & Skill Development. New York: Cengage Learning.
Pride, W., & Ferrell, O. (2011). Marketing. New York: Cengage Learning.
Rothberg, H., & Erickson, G. (2005). From Knowledge to Intelligence: Creating Competitive Advantage in the Next Economy. London: Routledge.
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FedEx is an international company that specializes in offering its clients top-notch business services, which include transport and ecommerce. It is a highly respected brand that makes up to 32 billion dollars yearly and its operations are characterized by massive collaborations with other respected companies of the world.
The FedEx company boasts of an employee base of up to 260,000 employees who are very dedicated towards its far-reaching success. The staffs of FedEx are highly professional and focus on meeting the customer’s needs with a positive attitude and high ethics (FedEx 2010).
The FedEx Company has received many awards for its top performance and is among the world’s most trusted companies. FedEx has a large market base with its services being enjoyed in up to 220 countries all over the world though its main market is in the United States. Their services are familiar with a majority due to its convenience that includes reliability and promptness and people looking at speed deliveries can trust FedEx to offer them fast and safe deliveries which they do via trusted fastest networks (FedEx 2010).
The FedEx Corporation runs under different names according to the type of services it offers and some of these companies under its umbrella include the FedEx trade networks, FedEx express, FedEx custom critical, FedEx ground, FedEx trade networks, FedEx services and FedEx supply chain.
FedEx mission is to provide top notch services to its customers and ensuring that they are highly satisfied by the superior quality of their services. Also to be noted is that FedEx strives to be the best employer through healthy relationships with its employees, suppliers and partners (FedEx 2010).
It also looks at offering its clients the safest and fast deliveries through its highly qualified employees governed by professionalism and ethics. FedEx strategies are in three levels the first one being complete collectively which means that they use one brand name in all the countries where they operate and offer the same high quality services. Their second strategy is to operate independently in an effort to meet their client’s needs which vary from one client to another. (FedEx 2010).
Their third strategy is to manage collaboratively which means that they gear at working closely as a team to promote healthy and lasting relationships with the clients, its staff as well as its investors. FedEx values include diversity among its staff, offering world class services, innovation in how it operates, integrity in how they carry out their operations, responsibility through security for services and a conducive working environment and lastly earning loyalty from the staff, clients and investors (About FedEx 2010).
This case study seek explores the roles of the Chief Information Officer’s (CIO) current and future role in FedEx operations in Malaysia and how this department can be beneficial to the company.
The roles of the chief information officer of FedEx Malaysia
The chief information officer (CIO) is a key figure in any business and his/her role is diverse depending on the organization he is working with. The roles of the chief information officer of FedEx Malaysia includes heading the information technology (IT) department and ensuring that it performs credibly. Information Technology is the heart of operations in any company and it has to be developed and updated to meet the changing market demands (Leadership expertise 2010).
The CIO also has the duty of laying strategies for the IT department to ensure that the business priorities are met. This involves a lot of reorganization and setting up the right strategies in an effort to get the best out of the system which will translate to high returns for the company.
As their title dictates, Chief Information Officers ensure that the information they posses about the company and its products are valuable and this way, the department will operate smoothly and the information structures will function as per the stipulations (Leadership expertise 2010).
The information must also be well researched and at per with the worlds dynamic needs. The CIO also has the chief role of ensuring that the company uses a friendly budget and that it makes profits through an information department that works right.
The CIO is a leader and has the mandate to control his department to ensure that it is productive and up to date with the company’s needs this therefore means that he initiates projects geared at making the company flourish and beat the competition in the market. Information is very expensive and his ability to ensure that the company spends less without compromising its profits and stature in the business world is a plus (Leadership expertise 2010).
The CIO is in charge of the information technology department and makes sure that the staffs under him are performing highly. This means that he is the supervisor and mentors his juniors towards achieving great successes which are synonymous with the FedEx Company.
Information technology department, just like any other department in the company requires proper management for it to reach its targets. Management is vital and this is entitled to the CIO who has the duty to ensure that information technology is well used and available to the relevant systems (Leadership expertise 2010).
He has the duty to ensure that information is being used responsibly and effectively just like any other resources such as finance. Efficiency is vital in the information technology department since its failure can be detrimental to the company which will definitely translate to losses. Budgeting is a must and so is evaluation to confirm that the strategies being adopted are working positively towards the company’s set objectives (Leadership expertise 2010).
The CIO has the role of setting the information technology’s objectives and ensures that the staff works hard towards their achievement. He has the duty of making the FedEx’s objectives clear to the staff under him to ensure that they work as a team and towards a common goal.
It is important for them to know what the company requires of them and what they have to do to meet the set targets as performance is essential in FedEx. The CIO of FedEx Malaysia has the role of controlling the performance of his staff through constant evaluation and appraisals to ensure that the company performs well and that the staff is equipped with the right knowledge and materials to carry out their activities as desired (ejob description 1999).
When it comes to service, the CIO has the duty of ensuring that his staff have the right materials for their operations. This means that he has to get them the hardware and software they require for the information technology department to run smoothly.
The information world has several IT providers and it is the duty of the CIO to carry out a detailed research on the services they offer as well as the total cost and give recommendations to the finance department for procurement. The CIO of FedEx Malaysia also takes over the duty of managing the service providers they have short listed; in this era, business process outsourcing (BPO) has taken root in the business world (ejob description 1999).
The CIO therefore is faced with another duty or ensuring that the outsourced services are well managed to meet the company’s objectives and this means that the CIO has the chief role of promoting internal services against the outsourced ones. Outsourcing means an extra cost and the main idea here is to maximize the profits by minimizing the expenses.
In-house talent therefore needs to be put in use to limit outsourcing as much as possible. The CIO has the duty of ensuring that a healthy relationship exists between the company and the service providers (ejob description 1999).
Business ties are important and so these partnerships have to be respected and highly upheld to ensure that they give them the best services. The CIO has the duty of risk management whereby he has to come up with strategies which limit risks to the overall industry.
The productivity objectives must be strategic to avert any risks that may crop up within the operations. The company also must have set up a risk management strategy and the IT department must align with it. The CIO has the duty of ensuring that the business process is functional in terms of productivity (ejob description 1999).
He therefore has to work according to the company’s set objectives and has to consult with other senior people in the company before making any chief decisions that involve the company. He also has the duty to make sure that the System Development Methodology (SDM) as per the Information technology regulations is followed to the word.
The CIO has the duty of using IT for the optimization of the business process in the industry. Information technology is dynamic and the CIO therefore has to be well versed with the newest technologies and standards that are being launched (ejob description 1999).
He also has the duty of ensuring that all the departments are wired and have the latest information on the newest IT products for a smooth running of activities in the FedEx Malaysia.
The CIO has the duty of implementing IT initiatives and is therefore faced by the responsibility of managing all the IT projects. He also has to run the applications portfolio that comes with information technology. Managing the IT initiatives is also one of his many roles as well as proper management. He has the role of making decisions those maybe requiring improvements in his department (ejob description 1999).
He liaises with business process executives to ensure that the information technology department is being managed as it should. The CIO duties spread to the applications and infrastructure that are required by the industry. He therefore has the role of defining the architectures and standards that have to be put in place to counter them. IT consolidation is also part of his role in the industry and has the mandate to employ both internal and external resources to ensure that the service cost is optimized (ejob description 1999).
New roles of Chief Information Officer (CIO)
The changing market needs have affected the role of the chief information officer (CIO) and he is now faced with a role that is more inclined to business leadership. The old role of a CIO was more focused on the practical running and performance of the IT department as well as proper management of resources to ensure that the company spends less on information. The new role of the CIO is to ensure that the IT department is more productive to the company through business value (Koeppel 2008).
The CIO is faced with the role of bringing meaningful change to the IT department that will translate into business for the company. He also has to capitalize on what is working in an effort to create an opportunity for the company to bring in more money. This dynamic change in the CIO’s role is transforming him from an IT head to a leader in business.
The new role of the CIO demands that they be retrained to equip them with the necessary skills in leadership. Most of them may be just what their title says but in order to fit into the new role, training is inevitable (Koeppel 2008).
To fully understand the business process as demanded by the new role, a CIO has to be a leader first. He will have to make key decisions here which may either make or break the company.
As IT is the backbone of all organizations, he must be versatile enough to be able to work with skill and governance which now define his new role. In this new role, the CIO is a talent manager and has to keep track of the diverse talent base. The CIO therefore must possess excellent communication skills which will give him an edge in this dynamic department (Koeppel 2008).
The CIO’s new role will expect him to be a marketer and will have the duty of communicating the department’s objectives and efforts to bring in more business to the company. This will involve the use of appropriate metrics to communicate the importance of strategy in the IT department. Through these metrics, the CIO will be able to get over his primary duty of reducing the company’s expenses and concentrate more in delivery of revenue as well as improvement of operations (Koeppel 2008).
Benefits of Chief Information Officers
Chief information Officer (CIOs) is important in a company like FedEx Malaysia in many ways. Since the emergence of computers, operations at the work place have changed for the better and operations have been simplified. For a company to get the best out an IT department, a CIO must be present.
He oversees all the operations in this department and ensures that all the departments are well networked. This allows for a smooth operation and that all the technical details are handled professionally by the experts. The CIO supervises his staff and ensures that the computer networks are functional and embarks on training the staff on new innovations in the computer world. The CIO has now become a leader in business and this is profitable to the company since he uses IT to generate revenue.
This definitely makes money sense to any company and this makes the It department a worthy asset for the FedEx Malaysia (Parker 2005). According to Watson (2009), the perception that the IT department is a liability is changing with time and it is important to know that it is as profitable as any other department in the organisation.
IT has brought about various innovations and business opportunities which have made it a core part of any enterprise. CEOs need to view the It department as one of the most important systems in their companies and not as a liability since without IT the company may plunge into a demise (Alter 2006).
Recommendations
The FedEx Corporation has clearly cut a niche in the transport and information services industry. It has gone out of its way to provide its clients with the safest and fastest delivery services ever and is reaping fruits for its hard work. The role of its Chief Information Officers (CIO) has also shed light on what it takes to be in charge of one the company’s largest departments. Their role has changed with the dynamics of the market which require CIOs’ to couple up as leaders as well in an effort to make the department more business oriented.
The recommendations that I can suggest to improve efficacy in the Information Technology (IT) department include training. The new CIO is faced with a more challenging role of sourcing for business through his department.
This is hard work unlike his previous role which only required him to ensure that the systems are running and that the company is saving money. He now has to bring in money to the company through new strategies that he has to put in place. To fit in well in this role, the CIO has to learn about how the market functions and what is required of him as a CIO in this new era.
According to Qais international (2010), to be successful in this leadership role, the CIO has to learn how to communicate effectively. This way, he will be better placed to convey his strategies to his staff as well as the other company leaders based in different departments.
His new role will require him to govern the IT department and this will include the staff under him as well as liaising with other managers to chat a way forward as well as involving them in the decision making process. To be able to keep at per with new developments in the IT world, the CIO will have to scout for new talent which will bring in creativity and innovation required in his department.
According to Tucci (2010), this process will involve recruitment and management of these new people with the much needed expertise and skills which will be used to bring in business.
The CIO will be required to become more creative in his strategies and ensure that he comes up with profitable ones that will boost business in the organization. He will also be required to ensure that the staff is conversant with the changing IT trends and take it upon himself as the leader to educate them on new inventions. The CIO will have to learn how to optimize the business value of IT to a company.
According to Qais international (2010), the CIO will therefore have to align his strategies with those of the company and he has to ensure that they are practical. The CIO will have to be able to convince the company on the business value it will bring to the company and this means that he has to rebuild its credibility.
He has to be persuasive and this will help him get the support of the senior management by taking them through the impact of IT to the business. This way, he will be able to get the necessary funds that he may require to set up strategies which will bring money to the company (Qais International 2010).
References
About FedEx. (2010) Company information. Mission, strategy, values. FedEx, USA.
Alter, A. (2006) The evolving role of the CIO. Setting the innovation agenda: the IBM leadership forum summary, December 2006.
Ejob description. (1999) Chief information officer. Role of the CIO and CTO. The CIO’s HR department job descriptions – salary data.
FedEx. (2010) Who is FedEx? FedEx Express.
Koeppel, H. (2008). The new CIO: insights from the centre for CIO leadership. IBM corporation, USA. Leadership Expertise. (2010) Current and future challenges. The information officer. Mastering the power of information.
Parker, D. (2005) The importance of having a CIO, Windows Security. Web.
Tucci, L. (2010) Building IT business value, one word at a time. SearchCIO. Web.
Qais international. (2010) The chief information officer. Mastering the power of information. The future of the CIO leadership role.
FedEx has enjoyed regional dominance in parcel and cargo deliver in Southern China for a couple of years. When it entered Chinese market in 1995, FedEx enjoyed a brief monopoly of international deliveries in Southern China. It also had a stake in Hong Kong and other Cities in mainland China.
With at least 11 weekly flights to and from Hong Kong, Beijing, Shanghai, Guangzhou and Shenzhen, FedEx had a considerable Market Share in U.S.-China delivery.
While entering Chinese market in 1995, FedEx opted for frontal-assault marketing strategy which was used in Europe in 1980s. The strategy was successful despite the Asian devaluation currency in 1997. However, the company recorded its first international quarterly loss in 2008.
The 2008 loss and poor deliveries to China ware expected to be compensated by increased Chinese export to western countries especially the United States. The company had nearly locked out competitors from southern China market of Guangzhou and Shenzhen which represented the largest manufacturing base in China. FedEx controlled over 13% of international deliveries in the region by 2001.
It faced stiff competition from UPS, DHL, TNT and China post EMS international delivery express. It is now necessary for it to protect its market from competitors and venture into new ones.
However, domestic express deliveries have been limited by bureaucracy and biased regulations from Chinese Communist Party government with the aim of shielding local investors and China Post from international competition. Competitors like DHL and UPS entered joint ventures with Chinese firms like Sinotrans and China Post.
China joined World Trade Organization and agreed to remove some regulations by 2005. This would allow fair competition between local and international delivery companies. Competitors have entered agreements and bought local Chinese firms with hope of capitalizing on the situation.
Recommendation 1
FedEx should venture into un-tapped market in remote Parts of China though increased investment.
Justification
The Chinese economy accounts for slightly over 1% of world economy but its growth rate is one of the highest with an average of over 10% in the last few years. Several cities in China rely on local companies to deliver parcels and cargo to international destinations. However, the parcels and cargo take several days to reach their destinations.
Furthermore, Southen Chinese cities are increasing their manufacturing capacities which increase their exports too. Therefore, most business establishments require fast delivery services for mails and cargo. Although competitors like UPS and DHL have been expanding their markets recently, there are enough opportunities for expansion.
The investment should be based on the agreement between China and WTO to full deregulate domestic markets and lift foreign ownership restriction on local businesses by the year 2005. International companies can buy local firms or establish joint investments with Chinese citizens. FedEx can capitalize on this situation to expand its market to other Chinese cities which require international deliveries on daily basis.
Implementation
Before the final day of full deregulation of domestic markets and lifting of ownership restriction on local businesses, FedEx should keenly follow Chinese government steps towards achieving the WTO target. During every deregulation step, FedEx should invest to ensure that it is ahead of its main competitors.
Meanwhile, it should continue offering quality services to its current customers and expand in its traditional market of southern China. Continued quality services will earn FedEx recommendation to new companies and those experiencing delayed or poor delivery services offered by other companies.
Recommendation 2
FedEx should enter into joint ventures with existing companies which have reliable networks within China.
Justification
Transport and communication infrastructure is not fully developed in China. This means that there are several cities, towns and villages which are hard to gain access to yet they require delivery services. However, State owned China Post and some private companies have been operating in these areas for several years despite the poor accessibility.
FedEx can make use of these organisations to reach customers who have not gained access to reliable international delivery services. United Postal Services has gained access to the southern China through Yangtze River Express Airlines. DHL has acquired some percentage of Sinotrans to make it competitive in the region.
FedEx can counter ths competition by enhancing relationship with its existing partners and enter into agreements with new ones. Since TNT was expected to end its engagement with Sinotrans by 2003. FedEx can capitalize on that and enter into business agreements with Sinotrants to fill the gap left by TNT.
Although TNT is entering into joint venture with a subsidiary of China Post, customers who relied on its venture with Sinotrants will be left without reliable delivery service. This is a good opportunity for FedEx to explore.
Implementation
FedEx must establish weather partners are reliable or not before it enter into joint ventures with them. This will ensure that their reliable and quality services are not jeopardized. Back ground check should be carried out before an agreement is reached to keep off companies with poor public approval in their areas of operation.
Alternately, FedEx can identify local courier and delivery companies which can be trusted by customers in their respective areas and then enter into joint ventures with them. Finally, when the company has established enough links with customers, it can improve its services while it introduces other competitive services to their new customers.
While comparing three delivery companies – the UPSD, FedEx, and the United States Postal Service, it is necessary to highlight some fundamentals on each agency.
The main purpose of the current report is to compare the delivery services, which compete with each other and define the unique features these services provide clients with. The selection criteria the services can be compared according to involve the kind of the domestic service and the time of delivery.
Other characteristics are considered to be inappropriate, as there are no general data the chosen services can be applied to. It is necessary to define the speed of delivery of each company and therefore, to choose the most appropriate delivery service.
A historical background
The United States Postal Service
The United States Postal Service was established at the end of the 18th century in Philadelphia, Pennsylvania. The number of employees is approximately 574,001. Employees who work at the USPS are divided into several groups. They are classified according to the posts they fill. There are mail carriers, rural carriers, mail handlers and processors, and clerks. Non-managerial posts involve transitional employees. An independent agency of the USA is bind to serve all citizens of the country despite their geographical locations.
FedEx
A public company FedEx Corporation was founded in the early seventieth of the 20th century by Frederick Wallace Emma Smith. The number of employees is 290,000.
Depending upon the items a company is obligated to deliver, four Standard Carrier Alpha Codes are used: FedEx Express, FedEx Ground, FedEx Freight and FedEx Custom Critical. FedEx Express is used to provide home and international air services (delivery takes a day).
FedEx Ground is used to perform a wide range of deliveries, including parcels from merchants (FedEx SmartPost) and the business deliveries (within Canada). It operates trucks. One of the divisions of FedEx Ground, which is called FedEx Home Delivery, is used to carry packages only within the USA. FedEx SmartPost cooperates with the USPS to perform the final delivery.
FedEx Freight also operates trucks. FedEx Freight, Inc. and FedEx Freight Canada are the divisions of Red Ex, which specializes in freight services. FedEx Custom Critical operates aircrafts and trucks and performs pressing deliveries. Some goods are not allowed to be transported. These involve alcohol, money, etc.
The UPSD
The United Parcel Service Delivery or the UPSD appeared at the beginning of the 20th century. The company specializes in logistics services, freight services and the courier deliveries. The number of employees is 398,300. The company performs packages and documents deliveries.
The divisions of a package delivery company include U.S. Domestic Package, International Package and Supply Chain and Freight, which performs a wide range of services, including “worldwide supply chain design, execution and management, freight forwarding and distribution, customs brokerage, mail and consulting services in more than 175 countries worldwide” (“UPS” par. 4). A package delivery company competes with a variety of other postal services; however, its most serious competitors include such companies as FedEx and the USPS.
A comparative analysis of the major delivery services
The USPS
Domestic Shipping and Mailing Services
Express Mail® Overnight delivery
Express Mail Flat Rate™ Overnight delivery (Express Mail Flat Rate™ is obligated to serve most of the U.S. addresses. It also performs deliveries to military addresses. The allowable weight of items is up to 70 lbs.).
Priority Mail® 2-3 day delivery (Priority Mail® specializes in documents and packages deliveries).
Priority Mail Flat Rate Boxes and Envelopes® 2-3 day delivery (Priority Mail Flat Rate Boxes and Envelopes® is the USPS’s domestic service, which is recognized to be the simplest way to ship. The allowable weight of items is up to 70 lbs.).
Prepaid Forever® Priority Mail Flat Rate Packaging 2-3 day delivery
Priority Mail Regional Rate Box® 2-3 day delivery (The service requires no extra costs. Priority Mail Regional Rate Box® performs Saturday deliveries. The allowable weight of items is up to 70 lbs.).
First Class Mail® 2-3 day delivery
Parcel Post® 2-8 day delivery (The kind of the service is mostly appropriate for oversized packages. Parcel Post® performs non-urgent deliveries).
Media Mail® 2-8 day delivery (The service performs educational materials deliveries. Due to some circumstances transportation can be limited).
The UPSD
To calculate the cost of the services, special tools were designed. Thus, clients are to fill in a special form with certain data on weight, shipment date, origin, etc. to know the cost of deliveries.
Domestic Services
UPS Express Critical The same day (It specializes in urgent deliveries. The service performs deliveries to 50 states; although it is not available at locations of The UPS Store®, UPS Drop Boxes, UPS Customer Centers, UPS Alliance Locations (Office Depot or Staples), or UPS Authorized Shipping Outlets.
UPS Next Day Air Early A.M. Next business day by 8.00 a.m. (The service performs deliveries to 48 states. It specializes in early morning deliveries. The service area also includes Hawaii, Alaska, Anchorage, Oahu).
UPS Next Day Air Next business day by 10.30 a.m. (The service performs deliveries to 50 states).
UPS Next Day Air Saver® Next business day by 3.00 p.m. The service performs deliveries to 48 states. “Not available to destinations where UPS Next Day Air delivery is committed by end of day” (“UPS Next Day Air Saver®” par. 2).
UPS 2nd Day Air A.M. 2 business days (delivery by 10.30 a.m.). The service performs deliveries to 48 states
UPS 2nd Day Air 2 business days (delivery by the end of the day). The service performs deliveries to 50 states
UPS 3 Day Select 3 business days (delivery by the end of the day). The service performs deliveries to 48 states
UPS Ground 1-5 business days (delivery depends upon distance). The service performs deliveries to 50 states.
FedEx Corporation
The FedEx Rate Tool is used to calculate shipping costs and delivery time. To obtain the required information, it is necessary to access their website. “FedEx offers flexible options to obtain rates for shipments, depending on clients’ needs” (“FedEx Rate Tools” par. 1).
Same-day delivery
FedEx SameDay® cross-country delivery within hours
FedEx SameDay® City cross-city delivery within hours
The allowable weight is up to 150 lbs.
Next-business-day delivery
FedEx First Overnight® first thing the next-business-day morning
FedEx Standard Overnight® next-business-day afternoon
The allowable weight is up to 150 lbs.
2- or 3-business-day delivery
FedEx 2Day® A.M. 2 business days in the morning
FedEx 2Day® 2 business days
FedEx Express Saver® 3 business days
The allowable weight is up to 150 lbs.
Business delivery via ground
FedEx Ground® 1-7 business days, based on distance to the destination
The allowable weight is up to 150 lbs.
Residential delivery via ground
FedEx Home Delivery® 1-7 business days, based on distance to the destination
FedEx SmartPost® typically 2-7 business days for low-weight packages
The allowable weight is up to 70 lbs. (“U.S. Package Shipping: 150 Lbs. or Less” par. 1).
Conclusion
Each company provides its clients with a wide range of services. For this reason, it is not easy to define the most appropriate delivery agency, as all the compared delivery services operate at a high level of organization. They all possess unique features and satisfy a variety of clients’ requirements. The selection criteria the three delivery services have in common involve a wide range of the offered services and the time of delivery.
When comparing the time of delivery, it becomes obvious that the variable of all the companies depends on the kind of the service a client wants to use. As far as FedEx SmartPost cooperates with The USPS to perform the final deliveries, one can conclude that an independent agency has certain competitive advantages.
On the other hand, FedEx and the UPSD perform freight services; so, the range of their operations seems to be somewhat wider. Delivery time of the USPS varies; although the company mostly specializes in 2-3 business day deliveries. The UPSD has a wide range of services, which perform next business day deliveries.
FedEx specializes in the same day deliveries, next business day deliveries and 2-3 business day deliveries. Thus, it seems to be obvious that FedEx is the most appropriate delivery service people can use to satisfy the corresponding needs.
Works Cited
“FedEx Rate Tools.” Fedex.com. n.d. Web.
“UPS.” Mahalo.com. n.d. Web.
“UPS Next Day Air Saver®.” Ups.com. n.d. Web.
“U.S. Package Shipping: 150 Lbs. or Less.” Fedex.com. n.d. Web.
One of the factors affecting the external environment at FedEx is the current socio-cultural environment in its target markets. The socio-cultural environment consists of cultural elements like the values shared by the clients and the laws governing ethics for the company. The elements also include technology, and the aesthetics held paramount by the society in relation to the conduct of business with the company.
Social elements include client organizations, business groups and their partnerships with the company, and the social status of its clients. Over the past several years, the most influential socio-cultural issue in the company has been technology development. While the use of technology has increased over the past several years, only the younger generation has taken up the use of technological devices actively.
The older generation is yet to come to terms with the use of technology (Mc Namara, 2011). This element has affected the business processes at FedEx because the company has to develop strategies that satisfy the needs of the different generations of people it serves. Each generation has its specific needs, and this has affected the company in the marketing segment.
Technology provides an opportunity for the company to enhance its market share by luring higher clientele from the younger generation. It also poses a threat to the company because a shift to the use of technology exclusively would result in a huge loss of clients from the older generation.
The recommended strategy to solve this issue is for the company to stick to its traditional marketing strategies while targeting the clients from the older generation, and to use technology to lure more clients from the younger generation. The company should focus on maintaining its current market share while using technology to target new clients to increase its profitability (Grant, 2010).
Internal environment
Substitutes are part of the aspects that comprise the internal environment at FedEx. The company has been in the market for quite a long time, and it has established a very strong brand in the industry. The threat of new entrants in the business has always been low because of the operational costs of the business.
It is apparent that as more companies engage in diversified business strategies, there is a possibility that some companies may venture into the business. Current rivals to the company also pose high threats in luring its customers to use their services through competitive prices (Berger, 2011). The advancement in technology, especially the fast growth in the use of the internet is a very great force affecting FedEx.
The ability for clients to use their technological gadgets for faster communication has seen a decline in the demand for some services offered by the company. The internet has provided its clients with a faster and more convenient way to send messages and to access information, leaving FedEx in a disadvantaged position.
While this threat is all too real for the company, FedEx has developed a new platform that allows its clients to send their electronic documents through its website (Chen et al., 2004). This strategy has helped the company to maintain its younger clients, and to help the clients from the older generation to transition into the use of technology.
FedEx should continue to embrace technology in its service delivery to maintain the competitive nature of its brand because the world is shifting to the use of technology in service delivery (The Internal Environment, 2014). The company should also look into developing more channels for its clients to send and retrieve messages while maintaining loyalty to the company.
References
Berger, A. (2011). Case Study A FedEx Corporation. Munich: GRIN Verlag.
Chen, C., Duong, L., Yang, H., Susanty, M., Vellandi, M., & Betro, A. (2004). FedEx Corporation: Strategic Audit. Web.
Grant, R. M. (2010). Contemporary Strategy Analysis. New Jersey: John Wiley & Sons.