Fedex Case Summary

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What this case is about
FedEx vs. UPS
China & US agreement for the establishment of air-cargo hubs in China and landing rights for commercial airlines at any available airport China is battleground for the two package delivery giants

Assumption: success in China was widely seen as the litmus test for corporate survival in the new millennium No guarantee for how new cargo routes would be allocated between UPS and Fed Ex Which company was better positioned to attract the capital necessary to win this competitive battle? Current facts

FedEx
had largest foreign presence in China
invented customer logistical management
innovative, entrepreneurial, operational leader
2003
assets: $15.4 B
Net Income: $830 M
Revenue: $22.5 B
Performance assessment: superior financial returns
No unions – flexible with costs
Model asset attentive
UPS
world’s largest package-delivery company
historically bureaucratic and industry follower
overhaul of image
repositioning as leading provider of logistics and supply-chain management services small-package market - $60 B vs. worldwide supply-chain market is $3.2 T everything from the moment something gets made until it gets delivered for final delivery, and then after market, it’s parts replacement 2003

assets: $28.9 B
Net Income: $2.9 B
Revenue: $33.4 B
Performance assessment: long-term competitive return

History of FedEx
1971
Fred Smith Yale
Purchase planes instead of using cargo space on passenger airlines like competitors Largest venture-capital start-up at the time ($91 M)
No unions!
1970’s
severe losses
1980’s
generated more revenue than any other U.S. air delivery company acquired more trucks/aircraft/capital
competition emerges
companies started imitating the hub system and acquiring airplanes UPS positioned overnight letter at half the price
Ad about quality quelled this
Owned market for express delivery
1990’s
Operational leader
Award from president
1st company to win in service category...
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