Fedex Case Study

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Fed Ex Case

Federal Express is a strong recognizable brand with growth potential, but the company faces a multitude of challenges with rising fuel prices, increased value of living, as well as a decline in the economy. FedEx also encounters issues with competition and even negative publicity due to various lawsuits involving violations against EEOC laws and regulations.

SWOT Analysis:

• Best leader in express shipping
o 99% of deliveries are on time
• Expansion of operations into international markets
o Purchase of Tiger International
• Strong brand image associated with products, quality, and reliability

• Expensive compared to other services
• Increased amount of debt
• Decreased expansion in Europe

• Expansion of online consumer services
• Offer larger variety of shipping services
• Global business growth

• Technological advancements
o E-Commerce
• Competition
o Overnight delivery market matured rapidly
• Rising fuel prices
• Decline in worldwide economy
• Rising costs associated with employee salaries and benefits • Negative publicity due to lawsuits

Critical SWOT Factors:

Federal Express needs to focus on their strengths in the company, as well as pursuing their opportunities. FedEx built its foundation on being the fastest and most reliable postal service in the United States, and has taken these principles overseas in foreign markets. The FedEx brand name and image is critical toward the company’s on-going success and future growth opportunities. Being globally known, as well as having a strong foothold in almost every country will allow FedEx customers to more willingly accept new services offered by the company. Such factors for expansion and competitive advantage will include offering online services. The world is becoming more technologically advanced day by day, with the use of Internet services; FedEx will be able to adhere to the world’s online progression. Currently, FedEx is aggressively moving into e-commerce in order to fulfill business-to-business and business-to-consumer merchants. Moreover, the company needs to focus more on reducing their labor costs, as well as finding a way to decrease fuel costs. With the price of oil rising continually each year, FedEx’s fuel costs have risen up to 30% within the past three years. Despite the fuel costs, the company’s labor costs have risen even higher; the largest expense FedEx endures. This is immensely critical since the company has suffered a multitude of lawsuits regarding unfair pay. According to EEOC laws, FedEx is still under investigation whether the company is violating terms and policies under Title VII of the Civil Rights Act. The distinction between independent contractors and employees for the company is imperative, because under the federal law, if the company treats the contractor as an employee, the company has certain legal obligations, such as overtime pay and withholding taxes. If FedEx is in violation of these laws and more lawsuits continue to sprout, the company may be in jeopardy of losing their strong and loyal brand image that has been built upon for decades. .

Alternative Solutions:

Federal Express should move toward integration of expansion within e-commerce to an online subsidiary for consumer retailers. By collaborating with a large and well-known retailer such as WalMart or Target, FedEx would strengthen not only its name, but also its revenue within the marketplace. FedEx could integrate with a retailing company by partnering with each other. Therefore, they would be able to share benefits with and increase each company’s revenue. For example, if FedEx integrated with WalMart, WalMart would be able to have discounts on shipping products and goods. Likewise, FedEx would be able to always have a buyer that would...
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