2012 Marketing Management Case Study: vs. Group Members: Mohammad Mahdi Mesbahi GM04701 Mina Ali Ab Bar GM04665 Wong Cing Yee GM04616 Atousa Jafarian GM04704 Azhan Bin Mohd Husain GM04423 Somayeh Rezaei GM04675
• Started by Frederick Smith in 1971• First Investment• 1980’s: – FedEx reached its maturing stage. – First US company to reach $1 billion in revenues.• FedEx handles 3.3 million packages• History of FedEx Express• Frederick W. Smith incorporated Federal Express in June 1971.• Officially began operations on April 17th, 1973, delivering 186 packages to 25 cities.• Rapid growth in the industry began in 1977 following air cargo deregulation.• In 1984, the company expanded to global coverage with services in Europe and Asia.
• Founded in 1907 in Seattle, Washington by Jim Casey.• Headquartered in Atlantic, Georgia.• UPS’s early fleet of delivery included a Model T and a few motor cycles.• Has a fleet of 15,000+ trucks & over 500 planes, and serves every company in Fortune Magazine’s list of the 1,000 largest companies in US.• Service to and from more than 200 countries & territories.• 423,300 employees worldwide (9th largest global employer)
• In spring 2000 – FDX was under attack from UPS• UPS handled three times as many packages as the FedEx• UPS practically owned the business of moving packages economically by ground and delivering them to any address in the country• Kelly , the company’s president : “ The consumer will have a access to goods anywhere in the world “
• UPS ‘s return on equity for the past ten years was almost 20%• UPS was the owner of 150,000 trucks• UPS almost spent $1 billion a year on information system.• UPS announced a money-back guarantee for its ground delivery
• UPS had been gaining on FedEx in its core business by buying the airplanes in the early 1980s.• UPS sales reps seemed more aggressive than ever in taking business away from FedEx.
•Bought a trucking company and named it FedExGround.•Created a new operation called FedEx HomeDelivery.
•Invested $ 100 million in operations•Noticing the world’s build-to-ordermanufacturing trend, JIT inventory and deliverysystem and trying to grab opportunitiesin that regard.•Sponsoring golf events•Installation of the tracking equipments
Strengths Opportunities Direct delivery capability Global business growth Can serve from existing site (e-commerce) Online consumer services Spare manufacturing capabilities Increase demand in logistics Details customers list Alliance with USPS Ongoing product innovation Expanding China market Brand image Pizzazz marketing Large scale operation International Overnight air fleetWeaknesses Threats Limited budget due to low operating income Foreign competition entry into home (declining operating efficiency) Economic standing Lack of ground transportation forces Online competitive advantages of rivals Delivery staff need training Gain in competition service costs Judgment for late delivery Market demand very seasonal Costly technology innovation Discrimination issues FedEx
Strengths Opportunities Higher sustainability Increase economic scale by improving B-2-B Ongoing expanding network services Great financial strength (Grade AAA credit Increase market by producing high quality rating) product High operating margin Increase business by increase logistic High dividend value solution Well-known brand Adding new facilities to accommodate rapid Better on-time-performance (ground growth in healthcare delivery) Increase profit margin by having more price controlWeaknesses Threats Limited flexibility Rising fuel prices Unionized labor force (result in high labor Weather conditions cost) Intense competition Less innovative Government regulation Brand Lag (people may don’t know its full capability) UPS
• Improve services reliability by implementing “text message before send”• Implementing mobile application to improve the accessibility – “FedEx always with you”• Expansion of Money-back Guarantee (currently applicable at U.S. and to Canada only)
• Expanding its market in China as the demand growing• Globalized its business to all uncovered area (25 countries) such as North Korea, Central African Republic• Expanding its business by providing alternative ocean shipping which is less costly
• Enhance its ground transportation services by provide training to driver or using GPS• Stay in contact with existing or past client on a consistent basis to improve customer satisfaction such as sending a warming email or postcards on certain date
• Improving its public image by involving in charity program or sponsoring in the larger sport activities such as Olympic“Improve Customer Loyalty, Improve Services Reliability, Increase Business Revenue”