Executing Strategies in a Global Environment: Examining the Case of Federal Express - Essay Example

Executing Strategies in a Global Environment: Examining the Case of Federal Express Tutor: Date: Introduction In the modern business environment, businesses have been trying to ensure that they maximize their returns from their activities. This is happening in order to take advantage of the business opportunities across borders; however, these opportunities call for advanced and effective strategies that that can reduce operating costs for businesses that are expanding, while giving them maximum returns. This means that businesses that expand their operations across borders must employ strategies that can enable them create and sustain their market share. In the 1990s, the term globalization became the buzzword, the beginning of the twenty first evident does not have evidence that globalization is actually diminishing at a certain point in time (Ghiani, Manni & Quaranta, 2010). The term globalization is often used to describe growth that happens in trade and other forms of business investments, which are often accompanied by increase in international transactions. Globalization features prominently in aspects of economic integration, which has become common across the world. When it comes to business activities, globalization is often characterised by various strategies and approaches that aim at positioning businesses to reap from the perceived opportunities across the world. For instance, creating effective and efficient supply chains, increasing marketing and product promotion strategies like the use of internet among others. When the business begins reaching markets beyond its borders, it has to ensure that it adopts strategies that can help it to enter these markets and consolidate their presence (Ghiani, Manni & Quaranta, 2010). For this reason, these businesses have to ensure that their businesses approaches appeal to the new business environment, enabling them to create and expand their market share. This paper examines the concept of globalization, focusing on how this development influenced the creation and execution of business strategies at Federal Express, an American multinational company that deals in courier delivery activities across the world. Company Background Information FedEx was founded by Fred Smith in 1971 and incorporated in 1973 (Birla 2005). Initially, the company was headquartered at the national airport in Little Rock, but later moved to Memphis international airport where it has its current headquarters (Birla 2005). The company has a long history, which details its path of growth and development. FedEx officially began its operations is 1973, having Dassault Falcon 20s that connected about twenty-five cities in the US. During this time, the company offered a variety of services that related to document handling and delivery including envelope and parcel delivery and Courier Park services among others (Trefis 4). Having a good market acceptance, the company to market itself extensively, being the only company that could effectively manage 550-per-hour delivery trucks (Birla 2005). With this kind of growth, it was upon the company to ensure that it created successful strategies that would enable it exploit the unexploited courier industry at that time. At the time of the company’s development, the founder, Fred Smith had the main objective of establishing a business system that would deliver parcels and other kinds of cargo for its passengers in the most efficient and reliable manner (Hull, 4). In fact the company created a target of managing next-day deliveries for small packages, this made Smith establish the company with approximately $ 8 million, which were his family inheritance and a further $ 90 million, which was his venture capital (Hull 8). Federal Express’ value creation frontier Following the company’s unprecedented growth, it later created the hub-and-spoke route system, making it the first airline company in the United States to make such a move. The system had its hub in Memphis, which was chosen for the fact that it had better geographical conditions that would enable it achieve its goals. Additionally, Memphis was a central location, which made it easier for its clients to reach the company and use its services. It is also important to note that this city was also the hometown of Fred smith, the company’s founder. In its new strategy, the spokes represented regular routes that occurred between Memphis and the rest often shipping facilities that would be found at most of the public airports that were located in cities serviced by the company, Federal Express. During this time, aircrafts would often leave their particular home cities, carrying loads of parcels and other packages, then fly all the way to the cities that had the services of FedEx. When the aircrafts would reach Memphis, their loads would be unloaded, the sorted according to their destinations and reloaded again to be taken to their respective locations. On the other hand, the planes that had these loads would fly back to their destinations. Building competitive advantages The success of FedEx express has been built around a good and strategies market opportunity identification and executing of effective strategies. However, with the increasing globalization, many companies are developing in order to take advantage of the vast opportunities that exist across the world in this particular courier industry, for this reason, the success of FedEx depends upon a carefully crafted approach towards establishment of competitive advantages. The success of the company stands to benefit from the establishment of a successful competitive strategy that depends on the four main categories including superior quality, innovations, efficiency as well as customer responsiveness. This can be effectively represented as shown. Fig 1. Building an effective competitive strategy (Heizer & Render 2014) It is important to note that all the four strategies in this approach are essential in the process of creating competitive advantages. FedEx needs to ensure that it offers the best services above its competitors in order to have superior and effective customer responsiveness. However, this can only be achieved if the company develops a reliable market research in order to determine the exact needs and market trends. For this reason, having superior innovations becomes the most effective strategy for building competitive advantages. It is important to note that in the globalised business environment, technology is the chief driver of company success for many businesses in their respective industries. FedEx needs to exploit all the technologies and other kinds of innovations that increase their customers’ experiences across the world. the company needs to ensure that it examines the strategies used by its competitors and use its innovativeness to create strategies that deliver more successful and effective strategies for its customers. Product differentiation and capacity control Product differentiation is an important marketing strategy used by businesses in the process of creating effective distinctions between other products in the market. For small businesses, product differentiation is an effective way of creating competitive advantages in markets dominated by large companies. The differentiation strategy employed by companies is supposed to effectively target the particular market segments for the company and deliver messages that the particular products is quite distinct from those being offered by other companies (Trefis 2013). For FedEx, one of the ways of maintaining its competitive edge over its rivals is ensuring that it creates an effective differentiation and capacity control. One of the main ways of achieving this is undertaking an effective branding, which will enable customers to identify with the company’s branded services effectively. According to Viaene & Hertogh (2010), many researches and study findings have illustrated that most customers always want to identify themselves with effective and successful brands. In this highly globalised business environment, it is imperative that FedEx identifies the most effective ways of how it can create successful business brands. The company needs to move and exploit other ways of how they can create and undertake this branding, in order to have an effective and reliable product differentiation that will enable its achieve its goals and objectives. Business-level strategies that can the company a competitive advantage So far, it is important to note that FedEx has established itself as the global leader as far as transportation and logistics with an effective market leadership position in the airfreight service industry is concerned. Currently, the company competes alongside other players in the industry like DHL and TNT in the expansive industry (Hull 2004). The company’s service model features extensive express airfreights, which seem to effectively differentiate it from its competitors who seem to have a large footprint in the industry as far as ground operations are concerned (Heizer & Render 2014). One of the best and effective business-level strategies that can be recommended for FedEx is that which involves creation of an effective association with a large company or industry in order to offer its services. For instance, FedEx should ensure that the recent alliance that the company has made with Cardinal health, an expansive and multi-billion dollar company is well sustained (Trefis 2013). The company should ensure that it launches strategic alliances with other multinational companies, whose relationship will see the company expand and reach other corners of the globe and thus maximum returns. Effects of global competition to the company’s new business strategies It is important to note that currently, globalization has brought several changes in technologies that business have adopted in order to manage the dynamics of the current business environment. For this reason, technology and innovation would play a critical role in ensuring that FedEx succeeds in its growth strategies. FedEx needs to ensure that it relies on an effective market research in order to know how to effective create innovation and other aspect of technology that can be used in the process of advancing its goals and objectives in the competitive business world. By carrying out persistent market research, FedEx can be better placed to understand and manage the changing market trends in its favor, something that will ensure that it creates and manages its growth and development above its competitors (Trefis 2013). The company will have a perfect understanding of the changing customers’ tastes and preferences and deliver services in tandem with the changes (Heizer & Render 2014), this managing its respective market share. References Birla, M. (2005). FedEx delivers: How the worlds leading shipping company keeps innovating and outperforming the competition. Hoboken, N.J.: John Wiley & Sons. Ghiani, G., Manni, E., & Quaranta, A. (2010). Shift Scheduling Problem in Same-Day Courier Industry. Transportation Science, 44(1): 116-124. Heizer, J., & Render, B. (2014). Principles of operations management: Sustainability and supply chain management (Ninth ed.). Boston: Prentice Hall. Hull, E. (2004). Radiation Detection Field Test at the Federal Express (FedEx) Air Cargo Facility at Denver International Airport (DIA). Washington, D.C.: United States. Dept. of Energy. Trefis T. (2013). FedEx Could Boost Supply Chain Revenues with the new Cardinal Health Alliance. Retrieved from, < http://www.forbes.com/sites/greatspeculations/2013/11/29/fedex-could-boost-supply-chain-revenues-with-the-new-cardinal-health-alliance/> Viaene, S., & Hertogh, S. (2010). Enterprise-wide business-IT engagement in an empowered business environment: The case of FedEx Express EMEA. Journal of Information Technology, 25(3): 323-332. Read More