Business Analysis: FedEx Essay

By the end of 2003, FedEx had nearly $15.4bn in assets and net income of $830million. The company has 50000 ground vehicles, 625 aircraft, 216500 full and part time employees, and shipped more than 5.4 million packages daily

FedEx created overnight delivery service and second-day delivery service in order to satisfy customers’ need in a way that its competitors cannot. Both services guaranteed delivery time to every customer, they willing to pay the premium price. In this case, customers self-select the option based on their preferences, depending on the relative values of prices or their situational needs. If there is an urgent package, the customer can select overnight service. However, a second-day delivery is a cheaper choice for customers if they do not need to send the package right away. However, these services are still not much different from its rival such as UPS or DHL. FedEx has to add capacity control strategy, which allows it to maintain its revenue.

FedEx has two major customers who consist of businesses and individual customers. These business customers have accounts with FedEx to arrive at their location to pick up packages daily or weekly. Two-thirds of FedEx’s business comes from these customers so FedEx curves their operations to satisfy this clientele. Since FedEx’s competition is trying to acquire some of this clientele they have begun to operate and market to this clientele more effectively. Individual customers are also in FedEx’s internal environment. These customers represent one-third of their business. With increased competition from competitors FedEx has marketed to this market substantially. They have created boxes that are prepaid for shipment as long as the contents fit into the box. This has effectively increased business amongst individual customers for FedEx.

I chose FedEx, formerly Federal Express, as the company that I will be reporting on this semester. FedEx’s presence in my text books is quite frequent as an example of entrepreneurship and I hope to learn more about the business brain of Frederick Smith, the founder, chairman, president and CEO FedEx. I have several family members employed by FedEx and I have always been impressed on how they treat their employees even though they are not unionized. As a global enterprise, FedEx embraces and reflects the diversity of the communities they serve. Their culture fosters an environment where a person 's performance matters. FedEx is consistently recognized for its progressive and innovative policies, programs, benefits, and stimulating working environment.

By capitalizing on this strategy, FedEx was able to boost its average delivery volume in 1976 to 20,726 packages per day via its three services, Priority-One, Standard Air, and Courier Pack, compared with an average of 10,521 delivered daily the prior year. Clearly the company’s calculated use of strategically-located hubs, nighttime flight routes, and limited package size allowed the company to carve out a niche by reliably delivering packages on an immediate, overnight basis.

FedEx’s new product Courier Pak makes sense because of its’ high profit margin and potential to generate new volume. Out of the 3 services that Fed Ex provides, CP yields the highest profit margin at 66% while Priority-One is at 55% and SAS is only at 27%. In addition to this, the company believes that it will be able to boost up sale of CP from 1300 to 6000 packages per day. This shows that CP is the most profitable and huge potential for growth.

FedEx was first established in 1973 as a logistic company with the name Federal Express that be created by founder and first CEO Frederick W Smith. The Headquarters is in Memphis, Tennessee in the US. The company became well known for its fast and reliable delivery service around the world. On its first night of operation FedEx delivered 186 bundles to 25 urban locations in the US with only 389 employees and a 15 Dassault Falcon aircraft. In 1980 FedEx purchased a system for live updates on the packages. In this system, FedEx drivers share the current locations from the trucks to provide updates of the packages to the customers. This information was sent to a central computer of FedEx then the company improved the update system by introducing FedEx.com webpage. This webpage allowed the tracking data to be easily accessible. However, recently, FedEx uses Savvy bundle for packing and tracking the products across couriers. (Baldwin, 2016)

In this short essay, the author will analyze the tenure Frederick W. (Fred) Smith Chairman, president, and CEO at FedEx Corporation. While this paper will not just be a report Smith's tenure, but it will actively analyze his leadership of the FedEx Corporation and how he has affected the placement of the company in the market against its competitors such as UPS. We will see how he has combined the best of Yale and the Marine Corps to give the company a leading edge in the package delivery business.

FedEx Corporation provides customers and businesses worldwide with a broad portfolio of transportation, e-commerce, and business services. FedEx was founded in 1971. Headquarters is currently located in Memphis, Tennessee. There are currently more than 340,000 employees working throughout FedEx Corporation. FedEx Corporation is the parent company of operation divisions, currently known as FedEx Express, FedEx Ground, FedEx Office, FedEx Freight, and FedEx Services. Even though all of the listed companies are managed cooperatively under the FedEx brand name, they operate independently from one another.

The main station is located in Memphis, Tennessee in the United States. The company started off by delivering couriers to some American cities, which was the first time for parcel delivery to take place at that time. As stated before, the industry’s goal is to fulfill the needs of customers, developing relations with different companies, and ensure a high investment for its shareholders. This is made possible through their six shared principles: people, service, innovation, integrity, responsibility and loyalty (FedEx). In order to satisfy its clients, FedEx has3 branches which provide customers with different services regulated on different demands; this include FedEx Corporation, FedEx Express, FedEx Kinko’s, FedEx Ground, FedEx Freight, and FedEx Services. It delivers more than 10.5 million shipments daily, covering more than 220 countries. Monthly, it has over 50 million visitors. In order to… it has 1250 express stations, 33 ground hubs, 370 freight service centers, and more than 1800 offices. The company also possessed 656 aircrafts and more than 100,000 motorized vehicles for express, ground, freight and expedited delivery service (FedEx). Through these aspects and values, Smith achieves to develop a company with a productive way in controlling time, space, and

FedEx plans to focus on several strategies. Among these strategies the main mission of FedEx is to grow internationally by increasing the supply chain capabilities through e-commerce, technology and alliances. Also, the company continues to implement revenue enhancement and cost reduction programs to provide long-term revenue and profit growth and to reduce costs by taking initiatives such as Airport-to-airport transportation of Priority, Express and First-Class Mail for the U.S. Postal Service, which began on August 27 and expansion of the FedEx home delivery network to 80% of the U.S. population, beginning September 25. FedEx Home Delivery will open 63 additional locations in regions throughout the U.S., including 56 co-located terminals with existing FedEx Ground facilities, minimizing capital expenditures. The nationwide placement of up to 10,000 FedEx Drop Boxes outside U.S. Post Offices is another strategy that the company uses for development.

Organizational structure and cultural in FedEx, as stated in the book “The key component in internal environments is organizational culture, or the set of key values, beliefs, and attitudes shared by members of the organization” (Williams, 2013 pg. 60). As stated by Frederick W. Smith Chairman, President and Chief Executive Office “FedEx name is synonymous with integrity and reliability our reputation is an important strategic asset”. FedEx has a reputation for providing fast friendly customer service and satisfaction. “Lawful and ethical behavior is critical to our continued success and it is required, you must comply with those laws and regulations relating to your business conduct” (According to FedEx code of business conduct and ethics 2013, pg. 5).

Company Background FedEx Express is part of transportation powerhouse FedEx Corporation, providing fast and reliable delivery to every U.S. address and to more than 220 countries and territories around the world. FedEx uses a global air-and-ground network to speed delivery of time-sensitive shipments, usually in one to two business days with the delivery time guaranteed. FedEx Corp. provides customers and businesses worldwide with a broad portfolio of transportation, e-commerce and business services. With annual revenue of $32 billion, the company offers integrated business applications through operating companies competing collectively and managed collaboratively, under the respected FedEx brand. In 2002, FedEx became the first and only international carrier to offer a Money-Back Guarantee to customers across Mainland China and opened a new China headquarters in Shanghai in November of 2004, enabling the company to be more responsive and fully focused on the needs of its customers. Currently FedEx serves more than 30 countries and territories in the Asia Pacific market with more than 10,000 employees. The new domestic services, expected to be fully operational in June 2007, will serve China’s burgeoning market with an overnight, time-definite delivery service to 19 cities and a day-definite service to more than 200 cities throughout the country. Realtime package status tracking will let customers know where their shipments are at every step of

When it comes to strategy, FedEx has done a great job of staying on top in the market place after all these years. FedEx has built a very powerful empire over the last decade, insuring customers with different global delivery services. Different companies have different strategies that work with their company to reach a specific goal, at FedEx the main strategy for success would be customer service. Customer service would have to be the number one strategy FedEx is mostly concerned with and constantly researching new ways to make it easier and more convenient for customers to deliver packages across the world. To help accommodate customers, FedEx has established online databases to ensure customers of package delivery; customers are able to track packages from the convenience of their homes or offices. Something else that FedEx has established are flights, and freights for those international customers, they have also improved services to and from all over Europe as well as Asia, in

FedEx Express now delivers about 3.7 million packages per day throughout the United States and to some 210 countries worldwide.