Key Success Metrics of DHL Express - Case Study Example

?DHL Table of Contents Table of Contents 2 Segmentation 3 Focus Strategy 3 Key success metrics 4 SWOT analysis 5 Internationalization 8 Recommendation 9 Reference 10 Segmentation Understanding the target market is one of the important aspects for the company to be successful in implementation of the strategies. Offering different products for the different target market can be of great advantage for the firm to handle its operation according to the needs of the customers. DHL segments its customers in respect their operating platform whether it’s global or regional or just local. All the operation of the firm is based on this segmentation strategy of the company. The company believes to segment and operate their business based on buyer behavior which gives a more accurate approach for DHL to satisfy their customers. The first segment is dominated by the price and the supply chain capacity of the customers which aligns with the administrator producer coding metric. The second segment is driven by performance reliability. This integrates with integrator administrator coding metric and the third segmentation of DHL is based on highest value based attributes like customers interaction, innovators of supply chain. Then each segment is further controlled by collaborator, perfectionist and price zealots approach (Coltman, Gattorna and Whiting, 2010, p. 16-18). Focus Strategy Focusing a particular market is done by any company with mainly three techniques. Porter’s Generic Strategy acts as a very important tool for the company to identify the focus strategy to follow for the business. The below figure shows a Porter’s Generic model- Figure 1: Porter's Generic Model (Source: Botten, 2007, p. 264) The focus strategy adopted by DHL is differentiation strategy. It differentiates its services from the competitors with their focused approach towards the specific customers with their uniqueness in service for them. By the improvement of the infrastructural development the company is providing remote location services which many of the competitors are not able to offer to the customers. Selected market segment gets benefits from the company with their focused differentiation strategy. The company mainly focuses on the mid level and the smaller business units for their businesses and offers service benefits to the niche segment of the market with their customized approach. This customer centric approach of the company gives greater flexibility for the customers to adopt their service and at the same rate provided by other companies in the market. Key success metrics The key success factor of any company depends on its adaptive capability with the changing environment. The change in the trend of consumer behaviors and the market trend are needed to be analyzed by the company to maintain a sustainable position in the market. DHL main success factors can be referred as the changes in the company’s strategy due to changes in the market trend with its market fragmentation due to competition and saturation at particular market. The changing taste of the customer also forced the company to implement customer centric strategies which matched with the customer preferences from time to time (DHL-a, 2011). The sector approach of DHL is the main reason for the success of the company. The growth in each sector of Retail, Consumer, Technology, Automotive, Health care and others have constantly influenced the company to implement strategies to suit the need of the market. The sector oriented logistic system is another reason for success of DHL. The business of the company sector wise in the year 2011 is shown in the figure below. Figure 2: Sector wise business of DHL in Q1 2011 (Source: DHL-b, 2011, p. 33) SWOT analysis In order to understand the position of the company it is very essential for the firm to understand its strength, weakness, opportunity and threats in the market. Strength The strong brand name is one of the major reasons for the success of DHL in the long run of their business process. The quality standard maintained by the company in their services set the standard for the industry to match the standard with the company. DHL with its worldwide operation operating in over 220 countries have a large market to grab its business and generate tremendous revenue from its business. It helps the company to great extent to accomplish economies of scale. The company spend huge amount of its revenue in the implementation of new technologies to provide excellent service to the customers. The eService facility of the company facilitates the process of supply chain management of the firm track its operation and online requests. The smart truck project of the company gives greater flexibility to adopt the smartest route for the delivery process and track the volume of traffic in a location with its route planning system. Weaknesses DHL with its higher price than the market may act as weakness for the firm if the services provided by the company don’t differ from its competitors. The major weakness of the company is the estimation of market share. It’s very difficult for the business process to estimate its market share even when the market is stagnant with very few competitors operating. The company facing strong competition from FedEx and UPS is not very well known at USA market which looses huge revenue of the firm in the particular market. Opportunity The global expansion plan of DHL with other companies under it has a great potential for the firm to reach the remote corners of the world. Joint venture plan in future can be very effective for the firm for the growth strategy and integrate huge customer base. The e-Commerce technique can be used by the company to utilize in their rapid growth strategy. Along with this the company will also be able to enjoy more profit and build a strong brand name with its online presence and expansion plans. With more number of manufactured goods in recent future creates more room for the company to grow in their business and expand their network worldwide along with world trade. Threats Relation with foreign country is one of the major threats for the company. With the increase in global expansion plan DHL is operating in many countries of the world. But the laws and regulation of the foreign country plays a vital role in handling the cost of operation for the firm. With the rise in price for foreign regulation the company can face huge threat to operate efficiently in those countries. With the changes in the political and economical condition of the country the change in oil price and services from the government can affect the company to great extent. The logistic section of the company can also face several challenges due to the restrictions in many countries like China with their import regulation. The changes in the economy also affect the business operation for the firm. With economic slow-down there is decrease in the number of products in the production which can be a possible threat for the company if this affects badly in future. The rise of fuel price can be of great concern for the company as it will directly influence the cost of service for the company. The company needs to take measure to cope with these issues to operate in a more efficient way in their business process. Internationalization Internationalization strategy can be of two different types for any company to enter a new market to expand their business reach. The two strategies followed by the company are Waterfall and Sprinkler strategy to enter in a step by step and all at the same time respectively into the new market. In the Sprinkler strategy the entry for any firm in different countries can done at the same time thus the operation is in a very small time span as compared to the Waterfall strategy which helps the company to understand the market performance from one country and implement its strategy for another country in a sequential manner. Figure 3: Waterfall Strategy (Source: Andexer, 2008, p. 37) The strategy followed by DHL in its Internationalization plan is primarily Waterfall model which helps the company reduce its cost of resources and operate with less risk. It also helps in the co-ordination of the different countries market and finds its interdependencies. But this technique of the country also give rise to more competitors with the process of product imitation from one country and applied to another from the other players of the industry (DHL, 2011). Recommendation DHL with the quality service is primarily focused towards the differentiation strategy for placing its service in the market. The customer centric approach of the company is holding good position in the market which is mainly focused for the specific needs of the customers. But this increases the cost of service for the company. Thus the company needs to evaluate its policies and implement new strategies for the cost sensitive segment of the market. Offering cost sensitive services to the customers can grab the lower segment of the market and increase the revenue of the company to great extent. But to maintain the brand name the company will have to maintain the quality along with reduction of price for the service. The company now operates with the mid and small business units. With the efficient service the company can also approach towards large corporate with their services. Reference Andexer, T. (2008). Analysis and Evaluation of Market Entry Modes Into the Asia-Pacific Region: Based on the Example of a German SME in the Industrial Goods Business. Germany. GRIN Verlag. DHL. (2011). Internationalization Strategies. Retrieved on August 02, 2011 from: http://www.dhl.com/en/mail/mail_essentials/dm_guide/international_direct_marketing/internationalization_strategies.html. DHL-a. (2011). Factors of Success. Retrieved on August 02, 2011 from: http://www.dhl.com/en/mail/mail_essentials/dm_guide/international_direct_marketing/factors_of_success.html. DHL-b. (2011). Deutsche Post DHL Roadshow presentation. Retrieved on August 02, 2011 from: http://www.dp-dhl.com/content/dam/Investors/Publications/Interim_Reports/2011/DPDHL_Q1-Roadshow-Handout.pdf. Coltman, T., Gattorna, J. and Whiting, S. (2010). Realigning service operations strategy at DHL express. Retrieved on August 02, 2011 from: http://ro.uow.edu.au/cgi/viewcontent.cgi?article=1815&context=infopapers&sei-redir=1#search=%22DHL%20SEGMENTATIOn%20strategy%22. Botten, N. (2007). CIMA Official Learning System Management Accounting Business Strategy. UK. Butterworth-Heinemann. Read More