Airborne Express Harvard Business case
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Executive Summary:
Airborne Express the current underdog in the express mail business has been able to compete with market leaders due to innovation and optimization strategy. The company built on cutting cost and emphasizing reliability now faces pressure from the leaders UPS and FedEx to change their pricing strategy. This change from standard rate pricing to distance-based pricing puts Airborne in a dilemma in which they must choose to match the competition which will make them lose what sets them apart in the market or stay with the current strategy. Changing will increase their flexibility and could open them up to new consumers while staying the same might push them further into a niche market of long distance big business customers. Airborne should change to the distance-based pricing strategy and find a new way to differentiate itself so that it can continue to grow in the market. We recommend that they consider sticking to large business customers who deliver in bulks in order to cut the cost related to constant transportation. They may want to expand into the single item delivery business which delivers items in metropolitan areas by means of bicycles in 30 minutes. This will set Airborne apart and allow them to compete with the rest of the market.
Part one: Big picture of the case: Seattle-based Company Airborne Express was descended from two specialist airfreight carriers, and they are the Airborne Flower Traffic Association of California and Pacific Air Freight. Those two companies merged in 1968 to form the Airborne Freight Corporation. Unlike UPS and Federal Express which always made headlines, Airborne hardly attracted any notice. However, Airborne had grown far faster than either of the two big companies in express mail business, and it held 16% of the domestic express mail market by 1997. Looking over the Airborne Express case, Airborne face a
Executive Summary:
Airborne Express the current underdog in the express mail business has been able to compete with market leaders due to innovation and optimization strategy. The company built on cutting cost and emphasizing reliability now faces pressure from the leaders UPS and FedEx to change their pricing strategy. This change from standard rate pricing to distance-based pricing puts Airborne in a dilemma in which they must choose to match the competition which will make them lose what sets them apart in the market or stay with the current strategy. Changing will increase their flexibility and could open them up to new consumers while staying the same might push them further into a niche market of long distance big business customers. Airborne should change to the distance-based pricing strategy and find a new way to differentiate itself so that it can continue to grow in the market. We recommend that they consider sticking to large business customers who deliver in bulks in order to cut the cost related to constant transportation. They may want to expand into the single item delivery business which delivers items in metropolitan areas by means of bicycles in 30 minutes. This will set Airborne apart and allow them to compete with the rest of the market.
Part one: Big picture of the case: Seattle-based Company Airborne Express was descended from two specialist airfreight carriers, and they are the Airborne Flower Traffic Association of California and Pacific Air Freight. Those two companies merged in 1968 to form the Airborne Freight Corporation. Unlike UPS and Federal Express which always made headlines, Airborne hardly attracted any notice. However, Airborne had grown far faster than either of the two big companies in express mail business, and it held 16% of the domestic express mail market by 1997. Looking over the Airborne Express case, Airborne face a