Bus 599 Assignment 2

Topics: FedEx, Express mail, United Parcel Service Pages: 6 (1518 words) Published: December 3, 2014
1.     Analyze Federal Express’s value creation frontier, and determine which of the four building   blocks of competitive advantage the company needs in order to continue to maintain    above-average profitability. Provide a rationale to support the response. According to study of Hill and Jones (2013), value creation frontier refers to the maximum amount of value that the products of different companies within an industry can provide to customers at any one time using the different business models. To reach the value creation frontier, the company must pursue one or more of the four building blocks of competitive advantage, which are innovation, quality, customer responsiveness and efficiency. The concept provide four basic ways to lower cost and achieve differentiation. Federal Express or FedEx Company provides customers and businesses worldwide with a broad portfolio of transportation, e-commerce and business services. Fedex has its headquartered in Memphis, Tennessee, FedEx Corporation is the parent company that provides strategic and logistical support for a variety of operating divisions, currently known as FedEx Express, FedEx Ground, FedEx Freight, and FedEx Services. These various entities compete collectively and are managed cooperatively under the FedEx brand name but operate relatively independently from one another. The company is currently the global leader in the express delivery market and offers delivery to and from individuals and businesses in over 220 countries. (Amsler, Cullen, & Erdmenger, 2010) The organization’s core businesses have focused on quality, and customer responsiveness. FedEx’s great attribution is reliable services, which shows its high quality of services. In early years of business, FedEx created a system that could achieve next-day delivery of small-package airfreight (less than 70 lbs.). This system guaranteed that a package, which picked up from a customer in New York at 5 p.m. would reach its final destination in Los Angeles (or any other major city) by noon on the following day. This system was a great achievement and created more value to the organization. After 1973, FedEx quickly built up its volume. By 1976, it had an average daily volume of 19,000 packages, a fleet of 32 aircraft, 500 delivery vans and 2,000 employees, and it had initiated service in 75 cities. After 3 years of posing losses, the company turned in a profit of $3.7 million on revenues of $75 million (Charles W. L. & Gareth R., 2013). In term of customer responsiveness, FedEx have devoted more attention to compete on the basis of information technology. The ability to track a package as it moves through an operator’s delivery network has always been an important aspect of competition in an industry where reliability is highly valued. The internet-based technology allows FedEx to provide its customers service online though its website. Therefore, customers can ask for pick-up request, service and price information inquiring, package status and proof of delivery inquiring, and general inquires and advice. In additional, the company also provide toll free customer service hotline and 24 hours customer service from Monday to Saturday. This is the strategy that the organization tries to influence its customers and also create long-term relationships and customers’ loyalty. By keep developing its quality and customer responsiveness, which are two of four building block of competitive advantage, FedEx reaches to the value creation frontier as quality as excellence. Customers can rely on its on-time delivery service, which create competitive advantage to the company. 2. Determine the main aspect of product differentiation and capacity control that Federal Express could use in order to maintain an edge over its rivals. According to study of Hill and Jones (2013), a differentiation business model allows a company to create a unique product- one that customers perceive as different or distinct in some important...
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