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Airbone Express Essay

3082 words - 13 pages

1. What is the history of airborne express?
Airborne express is the third largest express delivery company in the United States. The company keeps a lower profile than rivals FedEx and United Parcel Service of America Inc. (UPS). Airborne boasts the lowest cost structure and targets high-volume corporate customers.
It had grown faster than either of its bigger, better known rivals. In 1997 it held 16% of internal market. Progress came slowly and competition was stiff. To begin with, Airborne of California merged with Pacific Air Freight of Seattle. The airline moved there headquarters and changed its name to Airborne Freight Corporation.
In 1980, the airline changed their name to Airborne ...view middle of the document...

To get a clear understanding of Airborne’s position and make recommendations about future moves. It is critical to inspect the industry environment, competitors, distributors, customers, and suppliers and observe the firm. So, the Porter’s five forces framework and resource and capability analysis will be synchronized.

* The threat of new entrants into the industry:

* Since express transportation industry requires large capital investments, therefore it can discourage the entry of new firms into the industry. Airborne has already its own aircrafts not only that but also operate its own airport, and it could be tough for a new firm to compete with airborne.
* Since in this industry the distribution channel was mostly own and controlled by the company, so for new comer it is hard to enter into this industry and operate their business in this segment.
* Airborne express industry services are well differentiated based on time and distance therefore it would be hard for a new firm to compete with them.
* The company does not spend much on advertising on newspaper rather than the ads they see on television or other forms of publicity which new entrants can do.

* Bargaining power of buyers:
The main target of Airborne’s is the business level and corporate level clients, then their bargaining power are much higher compared to individual clients, the ask for the substantial discounts. So, company’s profitability was lower.

* Bargaining power of suppliers:
Labor are always important factor of supplier’s power. In case of the express mail industry, the labor is highly signified and important, which generates a decrease in profitability? Many of the raw materials like as fuel and components such as airplanes and trucks are provided by large air companies, air carriers do not have much power over them. However, they can ask for volume of discounts.
Since Airborne provides services which might be effective to its clients, like those who need to send packages and other papers to any part of the world. Therefore the bargaining power of suppliers are likely to be high..
* Nature of rivalry within the Industry:
There may be an intense competition between air-express transportation companies, but over time, Airborne cannot keep up with its larger rivals, FedEx and UPS. Clearly, these two companies are the industry leaders with large percentages of the market share though there are numerous competitors others such as DHL, U.S. Postal Service and BAX Global is just a small player in the industry.
The express mail industry is highly concentrated. The two main players have over 70% of the industry’s market share. The third player is Airborne which held 16% among domestic, and the other players were focused on international delivery rather than domestic express mailing. The remaining of market share was held by The United States Postal Service. It was prohibited by law from offering volume...

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