Examining the Case of Federal Express - Assignment Example

Examining the Case of Federal Express Answer The modern world has become very fast paced. In this fast paced world time is money for human being. Founder of the organization had identified that opportunity. The main aim of the organization is to provide seamless services to the clients across the world. Over the years the Federal Express has been the pioneer for providing courier services across the world. The courier company has given innovation as its top priority. It was very evident when the company came up with 10.30 am priority overnight delivery. It costs the organization almost $18 million. The industry is highly competitive and competitors like UPS with their strong distribution model are competing very hard but Federal Express with its innovative product designing captures 54% overnight express, 48% differed and 22% ground of total US market share. It is the product innovations and customer’s facility that has kept this global courier organization sustainable and competitive in the market. Modern day courier industry is ever-changing. According to different statistics shown in the case it is very clear that the company over the years has maintained its profitability with the help of continuous innovation. Innovation should be the building block through which the company should maintain above average profitability. For that reason the organization can go for extensive product differentiations. As the competitions from UPS are cut throat so cost leadership strategy will not be suitable building block for the organization, because maintaining above average profitability is not possible with the help of this strategy. Figure 1: Value creation frontier After analyzing value creation frontier of the company it is easy to say that customers of the organization are ready to pay extra bit of money for the innovative high quality and timely services. Federal Express has very strong and reliable brand image in the mind of customers. Only innovation building block can reinforce that image. It will provide the company long term profitability and supreme competitive advantages. Answer 2 Product differentiation and capacity control is very important for Federal Express to remain competitive in the market. The organization can take the help of modern technology which will help the organization to manage their vast inventories. Over the years the organization spend substantial amount of money for technological improvement. In 2004, the organization purchased Kinko for $2.4 million dollar. With the help of this purchase the organization was able to spread its network in the United States. The main aim behind this purchase was to provide different official services to different organizations. The company can further increase these networks to gain the competitive advantage in the market. In this highly competitive industry capacity controlling is very important for Federal Express. The capacity control can be achieved with the help of modern technology like the usage of internet and ecommerce. The organization with the help of its modern tracking system of in-transit products has been able to create a unique image in the minds of the global customers. But the organization must come up with more advanced technology. The company serves across 200 countries around the world. The company has recently created its Asia pacific Hub in China. It will provide the company a stronger presence in the highly potential Asia pacific market. Acquiring different local players could give the organization extra bit of benefit and will be able to differentiate their products very effectively. Globalization can be a main aspect for product differentiation and capacity control the company can maintain competitive advantage over rivals (Cantrell, 2009). More trained employees with supreme productivity and efficiency can provide the organization competitive advantages in this highly competitive market. The organization can further improve its quality of services. The organization must be more prepared for maintaining any contingency situations. If the organization can differentiate its products properly and can control their capacity then the company will be in a superior position. Answer 3 The organization has a legendary brand image in the courier industry. Current business model of Federal Express is supremely efficient. With its technological up gradations, productive inventory system and strong distribution networks the business model is super efficient. The organization always maintains timeliness and quality deliveries to the customers. In 2010 the organization had achieved a net profit of staggering $ 1.12 billion and the main reason behind this wonderful financial performance is the highly efficient business model of the organization. The organization has five subsidiary organizations. Without super efficient business model managing all these five subsidiaries would have been impossible. All the five subsidiary models have their own infrastructure. Inventory management, logistic management all is separate for each subsidiary. It avoids any kind of confusion of overlapping between the whole systems. In fact leadership styles and strategic decisions are also different for each subsidiary. This business model has helped the organization to insulate itself from different risks. Each and every subsidiary is considered as different cost centers (Hill and Jones, 2013). All the above arguments are clearly indicating that the current business model of Federal Express is very much efficient and its customers around the world are utterly satisfied with its top quality services. Currently organization is very much dependent on the local players in the global markets. Due to this the organization has often spend huge amount of money for acquiring local players. The organization can identify some super potential global markets and can create their own installations in those markets. It will reduce the dependency of the organizations on local players. On the other hand, the company can design diverse work forces. It can increase market share for Federal Express (Frock, 2009). It may be a risky recommendation but it can be very effective as far as the business profitability is concerned. It will help the organization to control their businesses in more structured way. Answer 4 The modern day business world is ever changing. Change is the only constant thing in this industry. In this ever changing context, no strategy is free from limitations. Global competition can impact the new business strategy significantly. Another US based organization UPS also has significant global presence. It also can increase its global wings more aggressively. Different local players can also provide significant challenges for the organization. This kind of business strategy requires lots of investments from the side of the company. The investment can go in vain if the organization cannot manage cultural differences in different countries. Global competitive environment can result in business sabotage. Local competitors can easily manage their inventory and logistics in different countries. In the modern world maintaining secrecy of different strategies are very difficult, with the help of market intelligence global competitors can easily replicate the business strategy of Federal Express. All the above discussion is clearly telling that overall global competition may impact the new business strategy significantly. The organization must conduct extensive research before expanding their business to foreign markets. The proper research will help the organization to find the appropriate market, it will safe guard valuable investments of the organization. The company has to come up with an all round, consolidated proactive measure to confront those global competitive impacts. In that measure the organization has to upgrade itself technically and should maintain the secrecy of their strategy. Federal Express must monitor all the business developments around the world and especially must keep a close look at its main competitor UPS and its global business policies. There is no place for complacency for the company as the business world is significantly uncertain. It must be prepared with its back up plans to confront any future contingency. References Cantrell, R. L. (2009). Outpacing the Competition: Patent-Based Business Strategy. New Jersey: John Wiley & Sons. Frock, R. (2009). Changing How the World Does Business: Fedexs Incredible Journey to Success - The Inside Story. New York: ReadHowYouWant.com. Hill, W.L.C. and Jones, R.G. (2013). Strategic Management Cases: An Integrated Approach, 10th Edition. London: Cengage Learning. Read More