Ix) Fed Ex

Despite FedEx being one of the most admired organisations in US, the market for its main product, over-night express delivery, in the US has flattened owing to the popularity of e-mail and a shift to cheaper shipping

To handle this situation, FedEx has adopted some interesting strategies and good acquisitions with excellent execution, ie

- has focused on Asia (buying Flying Tigers) and more recently on China which is now around half of its business by volume

- entered less-than-truckload freight hauling business in the U.S. such as for items that are too big to be sent by regular ground service but too small to fill an entire truck. FedEx purchased 2 successful firms in this industry and with the synergies provided by FedEx has been able to demonstrate that the "whole is greater than the parts". Currently this market is booming. Furthermore, FedEx has implemented a money-back guarantee system and provides superior tracking technology

- established a hub in Anchorage (the rationale for this was that Anchorage, a remote Alaskan city, is within 10 hours of 90% of the industrialised world and its airport never closes)

- owns and operates its own cargo planes which gives FedEx an advantage over competitors who buy cargo space in the belly of passenger planes and, as a result, are more vulnerable to capacity fluctuations. Furthermore, in China competitors rely upon state-owned Chinese parcel carriers for local pickup and delivery, while FedEx has a joint venture with a Chinese firm rather than the government

- uses latest technology, such as outfitting its loading-dock forklifts with wireless scales which weigh pellets and transmit the data instantly to dock managers; this cuts out the need to move pallets to separate buying areas, ie reduces time)

- Kinko's copy centers (this is proving tougher to integrate than first expected as it is outside core business)

FedEx is well-positioned because of the breadth of services it can offer, the expanding Asian market with sea shipping delays to Asia that makes airfreight more attractive, and its labour is not unionized.

Remember: FedEx has

"...39 hubs around the world with 677 airplanes, over 90,000 vehicles, and more than 200,000 employees delivering 6 million packages a day in 220 countries..."

Geoffrey Colvin, 2006a

 

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