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“The Evolution Of The Small Package Express Delivery Industry, 1973 2010”

1785 words - 8 pages

Case 7- “The Evolution of the Small Package Express Delivery Industry, 1973-2010”
The small package express delivery industry is a very complex and competitive Industry that take a lot of combating and strategic approach to get them to a profitable state. Many of the companies in the industry have integrate the Porter’s Five Forces model to give each of the companies the possibility to make profits with a low risk of entry and a weak bargaining power of suppliers. There has been an intense rivalry between these company and the strong bargaining power of buyers has had a negative impact over the prices which have begun to lower revenues for some of the companies. The most interesting ...view middle of the document...

Over the years the company has greatly invested in their information technology systems and since the launch of the internet in 1994 have further integrated their systems to provide services throughout its customers’ supply chains (Hill & Jones, 2013). The company has also built a powerful technical architecture that pioneered into Internet commerce with the investment in the system’s infrastructure throughout the years and with the acquisition of Caliber Systems, Inc in 1998 (Hill & Jones, 2013). Despite having all the essential ingredients for developing a successful e-business, FedEx’s logistics and supply chain operations were struggling to succeed through the historical image of the company. Additionally, competition in the transportation/express delivery industry had intensified with reports that states FedEx’s transportation volume growth was decreasing even though they were self-confident about taking advantage of the rush in traffic that e-tailing and electronic commerce were generating. Thus, in 2000, FedEx had announced major reorganization in the Group’s operations in order to make it easier to do business with the entire FedEx corporation (Hill & Jones, 2013).
Federal Express’s Value Creation Frontier

FedEx’s strategic competiveness has been based on the entire focus of cultivating a delivery speed and reliability as its core value creation frontier for customers. This creation has been a critical one for the pursuit of opportunities that were related with the founder’s (Fredrick W. Smith) early vision of today’s fast pace global economy (Hill & Jones, 2013). The company believes that value could be added to the business firm’s operations if they were to collect urgently needed materials on an overnight basis lead FedEx to be the pioneers of what is now seen as a fast, reliable; yet expensive delivery system. Recently, many companies that have been customers of FedEx and have been relying on FedEx’s speed and reliability are now carefully studying the ‘supply’ component of their value chains and trying to duplicate it business model. This is causing many companies to coordinate with their incoming and outgoing logistic activities resulting in a number of firms reducing their cost and being able to create value by managing their own supply chain and reducing the need of companies like FedEx. The main value creation for many of its non-commercial customers have come from the innovation of digital technology by letting customers instantly access and track the physical whereabouts of their package through its virtual website (Pine II & Korn, 2011). Using the building block of innovation is needed in its core business development for commercial clients in order to maintain its competitive advantage. Its competitor UPS is creating value by using technological capabilities to facilitate improve management of their client’s supply chains. Thus, FedEx needs to follow suit by innovating its technological capabilities to match that of...

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