Airborne Express
Case 8 Airborne Express: The Underdog 1. What generic strategy is Airborne Express pursuing? Justify. Is this a sound strategy in the context of the air express industry? Why or why not?
Entrance barriers (high): it is hard to entry this industry, the top three carriers already dominate 86% of the industry. And it need a large scale of capital to entry this industry. For instance, with the development of business, global express demand increases. Airborne Express international strategy can conclude as utilize existing international airlift and passenger airlift to take their packages overseas and cooperate with foreign companies to deliver overseas packages. However, FedEx and UPS were investing enormous capital to build international airlift and international ground operations.
Rivalry (high): The two main competitors are UPS and FedEx. In the mid-1980s, Airborne Express compete with FedEx in Television advertising, the consequent of the advertising campaign is Airborne Express become a niche company in the industry that focus on serving high-volume corporate account and the other two companies serving the whole market. The delivery time of Airborne Express is one hour and half delay than FedEx that makes Airborne Express more flexibility that could pick up the packages thirty minutes late than FedEx pickup time. The delivery quality of Airborne Express is hard to compete with UPS and FedEx, Airborne is 96% and UPS and FedEx are 99% or higher.
Buyer power (high): the buyer power is strong. Airborne express serving a niche market B2B business, there is no brand loyalty, the customer choose your company is depend on the price offering by the company. Mail express service is low product differentiation. The client of Airborne is high-volume that is large quantity. The express industry is low switching cost.
Bargaining power of suppliers (low): the company just purchase used truck and airplane from big company, and Airborne have their own system for planes
Entrance barriers (high): it is hard to entry this industry, the top three carriers already dominate 86% of the industry. And it need a large scale of capital to entry this industry. For instance, with the development of business, global express demand increases. Airborne Express international strategy can conclude as utilize existing international airlift and passenger airlift to take their packages overseas and cooperate with foreign companies to deliver overseas packages. However, FedEx and UPS were investing enormous capital to build international airlift and international ground operations.
Rivalry (high): The two main competitors are UPS and FedEx. In the mid-1980s, Airborne Express compete with FedEx in Television advertising, the consequent of the advertising campaign is Airborne Express become a niche company in the industry that focus on serving high-volume corporate account and the other two companies serving the whole market. The delivery time of Airborne Express is one hour and half delay than FedEx that makes Airborne Express more flexibility that could pick up the packages thirty minutes late than FedEx pickup time. The delivery quality of Airborne Express is hard to compete with UPS and FedEx, Airborne is 96% and UPS and FedEx are 99% or higher.
Buyer power (high): the buyer power is strong. Airborne express serving a niche market B2B business, there is no brand loyalty, the customer choose your company is depend on the price offering by the company. Mail express service is low product differentiation. The client of Airborne is high-volume that is large quantity. The express industry is low switching cost.
Bargaining power of suppliers (low): the company just purchase used truck and airplane from big company, and Airborne have their own system for planes