Federal Express Fedex Case

Introduction

Federal Express is an express transportation company, founded in 1973 by Frederick W. Smith. During his college years, he recognized that the United States was becoming a service-oriented economy and needed a reliable, overnight delivery service company. In 1965, as a undergraduate at Yale University, Smith wrote a term paper about the passenger route systems used by most airfreight shippers, which he viewed as economically inadequate. He wrote of the need for shippers to have a system designed specifically for airfreight that could accommodate time-sensitive shipments such as medicines, computer parts and electronics.

Background

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.

The company incorporated in June 1971 and officially began operations on April 17, 1973, with the launch of 14 small aircraft from Memphis International Airport. Apart from his own investment, $4 million, Smith raised over $72 million in loans and equity investment within the first year. Though the company did not show a profit until July 1975, primarily due to the oil crisis, Federal Express soon became the premier carrier of high-priority goods in the marketplace and the standard setter for the industry it established.

The company entered its maturing phase in the first half of the 1980s. Federal Express was well established, and at the time market leader showing a growth rate of about 40 percent annually. In fiscal year 1983 Federal Express reported $1 billion in revenues, making American business history as the first company to reach that financial hallmark inside ten years of start-up without mergers or acquisitions1.

In the following years, Federal Express kept growing and expanding it’s network, now employing over 290,000 workers worldwide, and delivering more than 3 millions express packages to over 200 countries daily.

In 1994, the company changed it image by updating its identity in an effort to distinct itself from its competitors. By formally adopting the name FedEx, the company established itself as Responsive and Global.

Finally in 2000, FedEx completed the transformation of it’s global brand by integrating the companies portfolio of services under one name: FedEx Corporation.