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.
For decades, FedEx has maintained profits through good strategic decision making and timely acquisitions. The express package delivery industry, which includes global logistics and air cargo, is highly fragmented. In this type of market, specialization is often a better choice than competing solely with low-cost and differentiation strategies. New entrants create excess capacity and companies are forced to cut prices. The result is a price war, depressed industry profits, or both (Hill & Jones, 2011). FedEx has experienced this in the past when competing head to head against UPS.
A company’s value chain can be created through a number of avenues. Tangible and intangible resources including knowledge, capabilities, skilled human resources, information systems, and company infrastructure can each be a distinctive competency. However, the multi-faceted business environment and industry dynamics can effectively erase a company’s advantage over time. This is particularly true with tangible resources. It’s easy for competitors to imitate one another. For example, all players in the package courier industry have invested heavily in tracking technology, shipping labels, and scanners. When UPS decided to move into the retail industry and acquired Mail Box Etc. in 2001, FedEx followed suit and acquired Kinko’s in 2004 (Hill & Jones, 2011). Marketing strategies related to pricing and promotions are also highly coveted.
FedEx needs to focus on superior efficiency and superior customer resp...
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...iness strategy that you recommend in Question 3. Next, suggest one significant way that Federal Express may confront its global competition.
FedEx currently operates in over 220 countries, offering international economy and priority delivery services (FedEx, 2013). FedEx has the infrastructure, capital, information technology, and networks for greater expansions. With the suggested focused differentiator business model, FedEx can effectively target large international businesses, institutions, and governments. To reduce global competition with popular regional carriers, FedEx should market strategic acquisitions of small to medium delivery companies with large networks in areas where they want to target. Then, advertise aggressively, upgrade and integrate systems, and rebrand quickly. This will give them an immediate national presence and a solid work force.
In August of 1971, Smith started his venture by buying controlling interest in Arkansas Aviation Sales. While operating his new firm, Smith recognized the tremendous difficulty in getting packages delivered within one- to- two days. This dilemma motivated him to do the necessary research for resolving the current inefficient distribution system. Thus, the idea for Federal Express was born: a company that revolutionized global business practices and now defines speed and reliability1.
Target Corporation pioneered value chain activities like focusing on customer experience through superior marketing, ability to attract global talent, sustain in and outbound supply logistics, develop supplies with a high-quality vendor and partners, a great customer service, extend return by 30 more days if purchased through Target brand store cards, and a skilled workforce supports its generic strategy of "Expect more Pay Less" improves competitive position that its rival cannot match. --
3. What are the key policies, procedures, operating practices, and core values underlying Southwest’s efforts to implement and execute its low-cost/no frills strategy?
Business depends very critically upon Fed Ex. If Fed Ex had a major disruption to their delivery system, flowers would not be delivered on time, resulting in dissatisfied customers. For example, if Fed Ex employees went on strike, there would be no alternative equivalent to Fed Ex to deliver flowers to customers. UPS, although an alternative, did not deliver perishable products in the same timely fashion as Fed Ex.
Blue Ocean Strategy is based on 150 strategic moves spanning more than 100 years that have been studied in over 30 industries. The authors’ objective was to compare successful companies to their less successful competitors to analyse for a trend and common strategy. The result was the blue ocean strategy, which emphasises creating uncontested markets. The book is divided into three parts. The first part of the book explains the “cornerstone” of Blue Ocean Strategy which is value innovation. Kim and Mauborgne say “[w]e call it value innovation because instead of focusing on beating the competition, you focus on making the competition irrelevant by creating a leap in value for buyers and your company, thereby opening up new and uncontested market space” (Kim and Mauborgne, 2005, 1...
The United Parcel Service has taken steps to restructure itself from an operations-oriented company into a market driven industry. Recent findings suggested the need to achieve better external customer satisfaction. The steps taken were to improve the overall of all customers that utilize the services at UPS. Other key areas that need improvement are volume logistics and customer logistics. The main priority at UPS is to deliver the package on time. They provide a much-anticipated alternative to the monopoly of the United States Postal Service. This competitor has been unreliable on multiple occasions. The average customer is feed up with the inconsistencies of the United States Postal Service. Unlike this company, the United Parcel Service helped define the word efficiency. Even from the earliest days, when Jim Casey and Claude Ryan, two Seattle teens, gave life to the now world-known UPS delivery company. ”Management is the...
A key part of an organizational strategy is to identify market opportunities by finding a niche or a gap in the marketplace that they can pursue to take their company ahead of all their competitors. An organiz...
I have selected Mc Donald’s as an organization on which I would be making this report. I would be discussing Mc Donald’s competitive advantages over other organizations by applying a Resource based view of strategy. This report would highlight the resources and capabilities Mc Donald’s has and how can it utilize those resources to gain competitive advantage over its rivals.
Private persons, big and small businesses at a point would have to either send or receive parcels, shipment, among other things. This cannot be done without the help of cargo companies, which are highly involved in the process of transportation of goods and services from one point to the other, but in short and long distances. And the demand to have this parcel and shipment delivered in a faster and more secured way , has brought about a high competition among several companies in the world , and they all have adopted both similar and also different measures to tackle the issues they deal with in the delivering order and tracking issues.
Which of the three generic strategies (Cost leadership, Differentiation, and Focus) is JetBlue following? Discuss how information systems is used in JetBlue to support its strategy.
FedEx started offering SCM services to its customers on a very small scale in 1974.With increasing demand for services such as in...
To get started, we first need to understand what Crocs' value chain is and how that process plays a role in the strategic direction of the company. The authors of our text, views the value chain as "the entire series of organizational work activities that add value at each step, from raw materials to finished product. In its entirety, the value chain can encompass supplier's suppliers to the customer's customers"(Robbins & Coulter, 2009, p.430). At Crocs, the entire series of organization work activities may be broken down even further using Porter's value chain model of viewing a manufacturing (or service) primary and secondary activities as a "system made up of subsystems, each with inputs, transformation processes and outputs"(Ifm.eng.cam.ac.uk, 2011). A diagram, compliments of Porter(1985) can be seen below:
The system adopted by 7-eleven maximizes the threat for new entrants. That’s means that threat of new entrants of 7-Eleven is low. It is because 7-Eleven has already reached economies of scale through maintaining a strong customer base and brand loyalty. Over the years, 7-Eleven has increases their customer and brand loyalty. The access to latest technology and capital investments in the same ensures that the barrier for entries for new entr...
All choices made by Seven-Eleven are structured to lower its transportation and receiving costs. For example, its area-dominance strategy of opening at least 50 to 60 stores in an area helps with marketing but also lowers the cost of replenishment. All manufacturing facilities are centralized to get the maximum benefit of capacity aggregation and also lower the inbound transportation cost from the manufacturer to the distribution center (DC). Seven-Eleven also requires all suppliers to deliver to the DC where products are sorted by temperature. This reduces the outbound transportation cost because of aggregation of deliveries across multiple suppliers. It also lowers the receiving cost. The information infrastructure is set up to allow store managers to place orders based on analysis of consumption data. The information infrastructure also facilitates the sorting of an order at the DC and receiving of the order at the store. The key point to emphasize here is that most decisions by Seven-Eleven are structured to aggregate transportation and receiving to make both cheaper.
Explain how the company’s value-chain activities can be better linked to create value for the company.