Airborne Express 8

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Perform a Five Forces analysis of the US express mail industry. Force
FedEx, UPS, Airborne Express, U.S. Postal Service and other second tier players like BAX global, DHL, Emery, RPS and TNT. High
E-mail, Fax, Telephone, Regular mail, Personal delivery
Buyer Power
Consumer, businesses
Med-High (Businesses can effectively negotiate prices and associated services) Supplier Power
Suppliers for postal material, aircraft, airport, trucks, Labor Low-Med (less pull on the aircraft, trucks area but labor is a considerable factor. Ex. UPS labor strike) Ease of entry
Low-Med (High capital infrastructure cost. High barriers to entry due to rich services provided by existing competitors. Still, a new entrant can try venturing into a market segment, by resorting to contracted services and other low-cost options)

Perform a competitive analysis of FedEx, UPS and Airborne. (express mail segment only) Factor
Airborne Express
Products offered Same day, next day early, next day, 2nd day, third day, international expressSame day, next day early, next day, 2nd day early, 2nd day, third day, international express, parcel service options - Predominantly next-day afternoon and 2nd day

- Customized same day and next day early AM to high-volume customers. - Warehouse space.
Target customers
Individuals, small, medium, large businesses, catalog retailers Individuals, small, medium, large businesses, catalog retailers - High-volume business customers (Xerox, Nike, Compaq etc)
- Metropolitan area customers
- Customers who would like a cost-effective, reasonably swift option - No focus on infrequent shippers
Competitive positioning (incl. price & cost)
- 45% market share
- Market leader
- #3 player low price-wise
- 25% market share
- #2 player in market
- #2 player low price-wise
- 16% market share
- #3 player in market
- #1 player low price-wise (exhibit 8)
Financial performance
The OM figures below are low or on-par when compared to ‘services-direct’ benchmarks for business and consumer (15% and 9% resp.).But, for the express mail industry, these are good numbers since the industry 5-year average OM is 3.26%. Operating margins of 6.1 (exhibit 2). Year-on-year 12% growth in revenue and OI which is good. Operating margins of 9.1 (ex 5). Revenue grew by 6% while OI grew by 13% indicating significant improvement in cost efficiency. Operating margins of 7.9 (exhibit 6). More than 100% growth in OI in Q1-3 of 1997 indicating stupendous growth. Culture & human resource management

- People focus
- Promotions within ranks
- No layoffs
- Extensive training programs
- Employee freedom
- Focus on communication
- Performance based incentives
- Profit-sharing plan
- Spot recognition programs
- Only flight crew in to a union
- Managers focus
- Promotions within ranks
- Private stocks issued to managers
- Non-management employee stock option
- Humility ethic
- Live by policy book
- Big gap between full-time and part-time wages
- Lesser full-time positions
- Disrupted labor-management relations in recent times
- Cost focus
- Frugal and conservative
- No-frills operations involving very less overheads
- Humility ethic
- Half of the workforce in union
Operations: pickup & delivery
- Data: 129000 employees, 38000 ground vehicles, 600 aircraft, 1400 retail sites, 32000 drop-off boxes, 2.8 million packages per day - Authorized shipcenters
- Supertrackers
- Data: 336000 employees, 160000 trucks, 500 aircraft,
1.6 million packages per day
- UPS parcel truck fleet to be used for ground transport of express mail also - Data: 12700 full time and 8000 part-time employees, 13300 vans, 175 aircraft, 0.9 million packages per day, 11000 drop-off boxes - No retail service centers

- Contractors handle 60-65% volume leading 10% less expenses - More pickups per trip leading to 20% and 10% savings in pickup and delivery cost respectively Operations: air &...
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