Since 1973, FedEx believes that speed and reliability of deliveries are effective way to win customers and increase competitiveness in global market. Due to globalization competition, FedEx has invested in company’s information technology in order to cater to market’s needs. FedEx started to launch a series of technological system which provide additional services to customers. To compete globally, FedEx has started its logistics operation to generate positive effect on cash flow. Although FedEx is an extremely successful company, problems occur when five separate subsidiary companies following the acquisition of Caliber System was formed and managed independently. Besides, there is fierce competition among competitors and another external problem is fuel price increase.
FedEx should come out with solutions to solve the problems in order to increase revenue and to reduce costs in company. My recommendations consist of reorganization in FedEx Group’s operation. Five subsidiary companies should function under one operation. Besides, FedEx has to sell the entire organization under one collective and global brand. FedEx should take concern of customer satisfaction to build customers’ brand loyalty. By having a good management in supply chain, business linkages among FedEx, customers and suppliers can be established. Other recommended solutions include forming alliance relationship with competitors and employment of MIS company. To wider customer segment, a business of home delivery service should be established by FedEx. By implement the solutions that I suggested, I believe that FedEx can solve the problems, increase profit and continue compete with other competitors successfully.
Federal Express was founded by Fred Smith in 1971. Federal Express was original overnight courier services; FedEx Express provides delivery of goods, from envelopes to freight. Speed became of significance to achieve competitiveness to improve cash flow and to create customer satisfaction. When the competition was tough, FedEx expanded the business into logistics management.
2. Statement of problem:
Since inception in 1973, FedEx realized the importance of remaining competitive by improve customer service and reduce costs. One vital strategy in achieving this goal is to strive on transformed from express delivery company to global logistics and supply-chain management company. The acquisition of Caliber System shows undesirable outcomes in which the cost of FedEx remains high. Besides, there is a sharp drop of FedEx net income of 6% in November, 1999. Several problem areas, including external and internal have been identified. Firstly, the increasing fuel price had severely impact FedEx and resulting in lost of operating income. Secondly, the high competitiveness that FedEx face from competitors has resulted in company’s low profit. Thirdly, five separate subsidiary companies (Federal Express, RPS, Roberts Express, Viking Freight and FDX Logistics) following the acquisition of Caliber System were formed and managed independently. This type of management has cause overlapping in operation and function.
3. Problem analysis:
One of the problems that FedEx face is the high competition among competitors. Although FedEx is the first mover who does business with IT-based service, however this is only a temporary advantage for FedEx. The advantage that FedEx offer to customers is letting customers access tracking information about packages through internet connection, web browser and its PowerShip programme. However, this technology has become a norm in the industry. All major transportation and delivery companies put a lot of effort in enhancing its companies’ technologies to facilitate online package tracking. Therefore, the advantage that FedEx offer to customer is no longer a competitive advantage to customers when there is a rivalry among existing competitors. This is one of the treats in...
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