Strategy Management/Case study/FedEx

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To assess FedEx case with Strategy Management, the first question should be asked is

"What is strategy?" Johnson and Scholes said: "Strategy is the direction and scope of an organization over the long-term: which achieves advantage for the organization through its configuration of resources within a challenging environment, to meet the needs of markets and to fulfil stakeholder expectations".

How Strategy is Managed is why we study Strategic Management. In its broadest sense, strategic management is about taking "strategic decisions" In practice, a thorough strategic management process has three main components, shown in the figure below:

To assess FedEx case we use Strategic Analysis

This is all about the analyzing the strength of businesses' position and understanding the important external factors that may influence that position. The process of Strategic Analysis can be assisted by a number of tools, including:

PESTEL Analysis - a technique for understanding the "environment" in which a business operates

Five Forces Analysis - a technique for identifying the forces which affect the level of competition in an industry

Value Chain Analysis - describes the activities that take place in a business and relates them to an analysis of the competitive strength of the business.

PESTEL analysis is concerned with the environmental influences on a business. The acronym stands for the Political, Economic, Social and Technological issues that could affect the strategic development of a business.

Identifying PESTEL influences is a useful way of summarizing the external environment in which a business operates. However, it must be followed up by consideration of how a business should respond to these influences.

Apply to the case of FedEx, PETEL factors can be defined as the following:

Political/Legal factors

Government deregulation of the airline industry which permitted the landing of larger freight planes, thus reducing operating costs for FedEx.

Deregulation of the trucking industry, which allowed FedEx establish a regional trucking system to lower costs further on short-haul trips.

Trade deregulation in Asia Pacific, which opened new markets for FedEx. Expanding globally became a priority for FedEx.

Economy factors

"The growth of the express transportation and logistics industry was brought about by three main trends: the globalisaiton of business, advances in information technology (IT) and the application of new technology to generate process efficiencies, and the changing market demand for more value-added service"

Socioculture factors

"FedEx's business expanded beyond national boundaries and extended their global reach to take advantage of new markets and cheaper resources, so the movement of goods created new demands for transportation and logistics industry. With this the competitiveness of transporation companies depended upon their global network of distribution centres and their ability to deliver to wherever their customers conducted business. Speed became of significance to achieve competitiveness , not only for the transportation companies but also for their customers. The ability to deliver goods quickly shortened the order-to-payment cycle, improved cash flow, and created customer satisfication."

Technology factors

Technological breakthroughs and applications innovations promoted significant advances for customer ordering, package tracking and process monitoring. FedEx's greatest strengths is its relentless pursuit of technological advancement. Well before it became a competitive imperative for companies to strive for technological improvements, FedEx redefined the shipping industry with its breakthrough innovations. From its introduction of the COSMOS system to the launch of its website, FedEx has sought to constantly stay ahead of its competitors by technological improvements that would create value for customers. In addition, its enviable record of...
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