Airborne Express Case Analysis

Only available on StudyMode
  • Download(s) : 261
  • Published : March 6, 2011
Open Document
Text Preview
In the freight forwarding industry there are three major corporations which make up 85% of the total market; United Parcel Service (UPS), Federal Express, and Airborne Express. Combined, these “Big Three” ship more than 5 million packages a day with over 98% of which arriving on time. The impact that the express mail industry has made on the U.S. economy in terms of technology, logistics support for small business, and the overall movement of goods has far exceeded the expectations of many since its origination in the 1970’s. The case at hand dives truly dives into, not necessarily the phenomenon of express mail, but who were these competitors and how they competed with each other. Each one of these major players in the express mail industry maintained a specific strategy geared towards gaining a competitive edge over the other two competitors. Federal Express (Fed Ex), which held around 45% of the marketplace and was the first mover of the industry, used a differentiation strategy to gain its advantages over UPS and Airborne Express. This strategy, which is generically focused on producing a differentiated product and charging sufficiently higher prices to more than off-set the added costs of differentiation, clearly worked for Fed Ex for many years. They developed highly technological operational systems so that customers could easily place, and track orders, as well as develop quality programs to insure each customer was 100% satisfied. The result of such major capital expenditures and high-quality service (along with massive marketing campaigns) was a price increase to reflect the added value the organization had on the express mail industry. On the opposite end of the spectrum, United Parcel Service and Airborne Express produced a relatively equivalent service that Fed Ex produced, but at a lower cost. This strategy, known as low-cost leadership, focuses on decreasing costs in what Chapter 5 of our book outlines into 5 distinct economic drivers of strategic...
tracking img