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Fedex Comparison Essay

5164 words - 21 pages

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Introduction

FedEx Corporation (FedEx) is a US based company mainly engaged in offering logistics solutions. The company, through its subsidiaries, provides transportation, e-commerce and business services under the FedEx brand. The major benefit of using the company is its ability to provide “day-certain” service to every business address in the US and Canada, as well as provide “time-certain” delivery to those areas within one to three business days.

The company was founded in 1973 by Frederick W. Smith, whose vision was to provide overnight delivery services for his clients. The company is divided into eight major divisions:

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The mission of FedEx is to ...view middle of the document...

The financial performance of FedEx can easily be seen in the following chart:

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The company reported a revenue increase of 13.6% during the fiscal year ending May, 2011, in conjunction with an increase of operating profit of 19.02%. This reflected an increase of net profit by 22.64% over 2010 (FedEx Corporation – Financial and Strategic Analysis Review, 2011). The marketing goals of FedEx are to continue to maintain its competitive presence in the minds of the consumers and to provide timely courier delivery process in order to increase its revenue and develop new customer bases.

Customer Needs

Through the years, FedEx has developed a solid foundation and infrastructure to guide the company’s growth. Frederick Smith has taken a novel approach in expanding FedEx into the different market segments. Recognizing early on that transportation service was extremely competitive with customers constantly comparing different choices and prices to get the best delivery deal, FedEx started to focus on a differentiation strategy to set itself apart from its’ competitors. By dividing the business unit into different segments, FedEx was able to develop a foundation that will help the company achieve a high level of quality services. Their services include customer responsiveness, customer support functions and logistics support. To meet the dynamic demand in the delivery process, FedEx established the first tracking application on the website and provided each customer with a unique bar code to individualize each shipment. This has now expanded to downloading the information to I-Phone and personal data assistance (PDA) devices, allowing customers to access tracking information from anywhere and anytime (SRI International).

Companies must also develop a global strategy that will allow for the maximum use of their existing product and market activities through standardization while simultaneously taking advantage of the local culture to adjust to the unique aspects of any market (Keillor, Kohut, Walsh & Hausknecht, 2011). FedEx utilized a holistic strategy approach as they forecasted the trend in the global shipping market. To further meet customer needs worldwide, FedEx has invested heavily in global infrastructure as well as investments in local countries to position the company to penetrate into the different key markets internationally (SRI International).

Competitive Structure and External Analysis

To understand the competitive structure and the challenges of different market segment, the Porter’s Five Forces model was applied on two of the top FedEx subsidiaries; FedEx Express and FedEx Ground.

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(Source - Crane, Landthorn, Miri, Relph, Sanchez & Vernerova, 2003)

I. Risk of new entry by potential competitors is low since there is a high fixed cost associated with establishing the international transportation network, including hubs, grand transportation vehicles and air fleet.

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