The Success of a Business Entity that Depends on an Interplay of Internal and External Factors - Essay Example

SWOT Analysis of DHL Company Introduction The success of a business entity depends on an interplay of internal and external factors. Internal factors take into account people skills, company’s resources, systems and processes needed to efficiently operate and manage the business. External factors are inherent in the firm’s environment which directly or indirectly affects its operations. In this current time of financial crisis, more and more companies declare bankruptcy and render thousands of workers unemployed. Still, there are exceptional enterprises which seem not to be weathered by the financial crunch affecting the global market. One of these companies is DHL. DHL is an express shipping multinational company operating in 220 countries and territories around the globe. It employed more than 22,000 people and delivers more than 1.2 million packages daily (Scott 2007). It is the objective of this essay to discuss the underlying strategies that make DHL a global leader in their field of endeavor using SWOT analysis. The SWOT analysis proffers DHL Company’s strengths, weaknesses, opportunities and threats in both their internal and external environments. Company Background The first question that comes to mind when one hears the name of DHL is: where did this company name come from? According to the history of DHL, the name came from the first letters of the last names of the owners or founders of the company: Adrian Dalsey, Larry Hillblom and Robert Lynn (DHL 2008). These founders started the company in September 1969 at San Francisco, USA. It was a milestone when “the founders began to personally ship papers by airplane from San Francisco to Honolulu, beginning customs clearance of the ships cargo before the actual arrival of the ship and dramatically reducing waiting time in the harbour” (ibid). Using this concept, delivery of documents was rapidly done through international air express. In a span of less than twenty years, DHL expanded its operations to countries such as Hawaii, the Far East, Middle East, Africa and Europe. A major change in ownership occurred in 2002 when DHL was consolidated with Deutsche Post World Net. At present, DHL is already 100% owned by Deutsche Post World Net, but still retained the brand name, DHL. Considering brand association and retention, customers all over the world acknowledge DHL as “the global market leader in international express, overland transport and air freight. It is also the worlds number 1 in ocean freight and contract logistics. DHL offers a full range of customized solutions - from express document shipping to supply chain management. DHL offers a complete range of customized solutions - from express document shipping to supply chain management.” (DHL 2008) DHL currently operates under five major divisions such as: DHL Express (global dispatch and delivery of parcel and express shipments); DHL Exel Supply Chain (customized, IT-based solutions); DHL Freight (national and international transport solutions); DHL Global Forwarding (air and ocean freight and a project logistics services provider operating worldwide) (DHL Divisions 2008). The mission of DHL is to provide excellent customer service in the field of international express transport and logistics. In doing this, they have adhered to preserve and protect the environment in the course of their journey for express delivery and in the products they utilize. SWOT Analysis STRENGTHS. As aptly indicated by FAI Consulting Services (2009), one of the greatest strengths of DHL is its ability to manage complexity. According to their study, “the company has employed cross-functional teams around the world to plan, design, and manage facilities”. This multinational company is equipped with a highly professional staff that is capable of sharing the needed detailed information across borders and transcends time elements. The other strengths of DHL are as follows: (1) a global network which spans 220 countries; (2) owns 60,000 vehicles and 250 aircrafts for transport services; (3) highly professional management and staff composed of 160,000 employees worldwide; and (4) uniquely positioned to offer a one stop shop transport service and logistics needs. DHL was successful in steering strategic growth. From the humble beginnings in 1969 with the three founding partners of DHL, this transport company expanded dramatically over a span of two decades. Listed below are important historical events and growth strategies implemented by DHL (History of Success 2008): DETAILS/GROWTH STATEGIES DATES Expansion in Far East and Pacific area 1971 Services were offered in Hong Kong, Japan, Singapore 1972 and Australia First office opened in the UK. Customers number more 1974 than 3,000 Expansion in the Middle East, Latin America and Africa 1976 – 1978 First office in Frankfurt, Germany. 1977 DHL offered services in Eastern European countries 1983 DHL entered into a joint venture with China 1985 DHL invested $60M in a new facility in Bahrain 1993 Deutsche Post World Net owned DHL 2002 The incredible growth story of DHL was made possible utilizing the managerial expertise of the owners who strive to delivery customer service with the highest degree of professionalism and at an affordable price. Several expansion and joint ventures over the two decades all contributed to the growth of DHL. In addition, with the entrance of Deutsche Post World Net, which strategically purchased other companies acknowledged to be leaders in the field of transport delivery and logistics, the market leadership of DHL is globally entrenched. Likewise, DHL is an example of a multinational company whose mission statements include satisfying the customer’s needs, to wit: “DHL enhances the business of our customers by offer­ing highest quality express and logistics solutions based on strong local expertise combined with the most extensive global network presence. DHL attracts, develops and retains exceptional people by creating a truly global working environment and placing value on our multi-cultural heritage. DHL delivers above-average returns by providing supe­rior quality and solutions at all levels of the business processes. DHL is a responsible cor­porate citizen in all coun­tries in which we operate, taking into account the social and environmental needs of our employees, local communities and the public.”(DHL Mission, Vision and Values 2009) In this regard, by taking into account the needs of the customers and creating strategies that work on satisfying customers’ needs, DHL continue to exhibit strength and success in their fields of endeavor. Finally, since a business’ environment is ever changing, continuous monitoring is necessary to ensure that operations proceed as originally planned. Most organizations, DHL included, engage in environmental scanning to determine the specific factors that are most likely to change in the firms’ immediate future. “Environmental scanning is the process of monitoring and analyzing the marketing environment, usually with the intention of identifying trends and developments in the environment that may require (production, operations, and) marketing strategies or tactics to be adjusted” (Wilson, n.d.). During this activity, management is constantly identifying strengths and weaknesses in the internal organization, as well as opportunities and threats from the external environment (Koontz 2006). To enable this multinational company to keep tract of environmental factors affecting all its operations and branches, it recently opened an Innovation Center, a place for research, meetings and a place to present innovation in logistics (DHL Global 2009). WEAKNESSES A study on the Express Delivery Service written by Apostolopoulos, et.al. (1998) revealed that at DHL there is a tendency for complacency among employees. This might be possible due to the benefits that the company gives to the present workforce. The satisfaction level and work condition seems to be productive enough not to be disrupted nor challenged. OPPORTUNITIES. The same study written by Apostolopoulos, et.al.(1998) averred that “DHL has a unique opportunity to sustain its market leadership by investing on Information Technology and motivate its employees in order to meet the future challenges”. Only recently, an innovative research center was opened to develop marketable, highly innovative logistics solutions that are flexible and ecologically sound - solutions to meet the challenges of the future. Therefore employees from DHL work together with scientist and engineers from industry and research partners. The laboratory of the future represents a key element of the Groups corporate strategy, which aims to position Deutsche Post World Net as both the biggest and the most innovative global logistics company.” (DHL Innovation Center 2008) THREATS. The strategical measures from competition such as FedEx and UPS provide continuous threat in the market leadership of DHL. Recent updates revealed that there are efforts by management of DHL for a cooperation agreement with UPS due to a restructuring of DHL Express delivery in the US (Journal of Commerce 2008). As a result of this, there is a threat of impending decline in market share of DHL for domestic dispatch of parcels. In addition, the effect of the global financial crisis in the environment has significant repercussions for DHL. In the political front, the newly elected president, Barak Obama, had made strategic moves to save the financial markets. In so doing, the political environment poses positive outlook for the future of DHL and other enterprises affected by the financial crunch. The economic environment is closely related to factors affecting the financial markets. With more people becoming unemployed, there is a significant decrease in purchasing power of individuals. People would rather buy basic commodities rather than spend it on other items. This would have an effect in the number of people and businesses opting to send documents and parcels domestically or internationally. As such, there was already an imminent threat with the cooperation agreement mentioned with UPS. A projected decline in domestic parcels in the US might also affect other markets internationally due to the financial crisis. CONCLUSION The management of the process of strategic decision must be concerned principally with continuous surveillance of the environment and determining if the internal capability of the firm is congruent with the external factors of change that affect its operations. It is of utmost importance to consider initially that product design and delivery of services satisfy customers’ needs. The success of a firm in terms of product design and delivery depends not so much on its ability to reduce the environmental impact affecting these activities, but more so, on its ability to utilize the changes in their environment to their strategic advantage Despite the problems that beset the world market, DHL continues to pursue their goals of commitment for customer service and environmental protection, The company still adheres to its vision that “customers trust DHL as the preferred global express and logistics partner, leading the industry in terms of quality, profitability and market share.” (DHL Vision, Mission and Values) Their success stems from offering high quality products, ensuring customer satisfaction, continuously scanning their environment, and retaining the most professional league of personnel who are all committed to making DHL the one brand in the global express and logistics market. Reference List Apostolopoulos, G., Katsibras, K., Silabros, F. & Mavropulos, M. (1998). Express Industry. Viewed on 26 March 2010 from C-TPAT Needs Work, GAO Report Says. (2008). Journal of Commerce. Viewed 26 March 2010 from < http://www.joc-digital.com/joc/20080602/?pg=10> DHL Global (2009). Innovation Center. Viewed 26 March 2020 Read More