Chapter 11 Questions
1. What is FedEx’s strategy for success in the marketplace? To gain success in the marketplace, FedEx relies primarily on the customer value proposition of operational excellence. They are dedicated to delivering their products at a faster, more convenient and lower price than their competitors. They win over their customers not by focusing on having the closest relationship with them or the best product in the market, but by being the most efficient at the best price and focusing on providing hassle free services. The evidence that supports my conclusion is found under the strategy section of FedEx’s 10-K report. It states that their strategy is to continue “To provide our customers with convenient, seamless access to our entire portfolio of integrated business solutions” (FedEx 10-K, 4). This enhances the point that FedEx is always working to pursue the best and most convenient experience for their customers. 2. What are FedEx’s four main business segments? Provide two examples of traceable fixed costs for each of the four segments and provide two examples of common costs that are not traceable to the segments.
FedEx’s four main business segments include Express, Freight, Ground and Kinko’s. A traceable fixed cost is a cost that was incurred only because of the existence of the segment. Therefore if the segment were to be eliminated the cost would disappear. A common cost is a fixed cost that is not traceable back to any one particular segment. These costs support the operation of one or more segment at a time. Traceable costs for FedEx Express would include the maintenance or fuel costs accumulated on the aircrafts and the costs of purchasing the ten Airbus A380 aircrafts. Costs that are traceable back to FedEx Freight include the salaries of the people operating the modes of transportation and the depreciation on their 39,500 vehicles and trailers. Traceable costs for FedEx Ground would include advertising expenses...
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