The question in this exercise are based on FedEx Corporation from their 10-K for the fiscal year ended May 31, 2005 at http://www.sec.gov/edgar/searchedgar/companysearch.html. Input CIK code 1048911 and hit enter. Input 10K, and then select the 10K with a filing date of July 14, 2005.
1) What is FedEx strategy for success in the marketplace? Doe the company rely primarily on a customer intimacy, operational excellence, or product leadership customer value proposition? What evidence supports your conclusion?
2) What are FedEx's four main business segments? Provide 2 examples of traceable fixed costs for each of FedEx's 4 business segments. Provide 2 examples of common costs that are not traceable of the 4 business segments.
3) Identify one example of a cost center, a profit center and an investment center for FedEx.
4) Provide 3 examples of fixed costs that can be traceable or common depending on how FedEx defines its business segments.
5) Compute the margin, turnover, ad return on investment (ROI) in 2005 for each of the FedEx's four business segments.
6) Assume that FedEx established a minimum required rate of return of 15% for each of its business segments. Compute the residual income earned in 2005 in each of FedEx's 4 segments.
7) Assume that the senior managers of FedEx Express and FedEx Ground each have an investment opportunity that would require $20 million of additional operating assets and that would increase operating income by 4 million. If FedEx evaluates all of its senior managers using ROI, would the managers of both segments pursue the investment opportunity? If FedEx evaluates all of its senior managers using residual income, would the managers of both segments pursue the investment opportunity?
FedEx strategy for success in the marketplace is customer value proposition through operational excellence. This is supported the services portfolio it provides to its... [continues]
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