Strategic Management Analysis of FedEx

Term Paper, 2018

38 Pages, Grade: 100.00


Table of Contents:

Executive Summary


The History of Federal Express (FedEx)

Vision and Mission Statement

FedEx External Assessment
FedEx External Factor Evaluation matrix (EFE Matrix)
Analysis of External Evaluation (EFE) Matrix
Competition Profile Matrix, (CPM)
Analysis of Competition Profile Matrix, (CPM)

Internal Assessment/Audit

FedEx Internal Strengths
Internal Evaluation Matrix of FedEx
Financial Ratio

Analysis of Result

Our Conclusion

FedEx’s SWOT Matrix

Analysis of Result

FedEx BCG Matrix
BCG Matrix
Internal Evaluation Matrix
FedEx BCG and IE Matrix Analysis of result

SPACE Matrix
Analysis of Space Matrix Result

Alternative Strategy


Executive Summary

The need for the services of logistic companies has experienced a geometric increase in recent times, fueled by the spike in online shopping. Our company focus on this strategic analysis is the Federal Express (FedEx), established on April 17, 1973, by W. Smith a Yale graduate. However, the explosion of online shopping with its associated shipment of packaged goods (Business to customers) has created a vacuum (a niche) due to the overtasked of exiting ground delivery services. In 2017, there was a "14.7 percent jump in shop-and-ship commerce, online spending since the start of November has topped $1 billion every day and exceeded $65 billion by Dec. 5" (, 2017).

However, logistic companies have not been able to meet up with the demand for their services because they lack the capacity to fulfill these deliveries. This is largely due to the firm’s limited resources and unpreparedness for such geometric increase for parcel delivery. The United Parcel Service (UPS) according to Reuter "posted a $1.1 billion profit $1.27 per share, in the quarter compared with a year-ago loss of $239 million, or 27 cents" (Blake M., 2017). Even though the company was not able to meet all its scheduled parcel deliveries, the firm still recorded a substantial gain in 2017, the majority of which came from ground delivery.

Therefore, our strategic plan includes repositioning the FedEx ground delivery service to capture this externality and increase ground delivery services revenue by 20 percent. Using the EFE and IFE matrices, we determined that Amazon accounts for about half or 53 percent of the United States online sales. Although the company is entering the logistics business, we believe the rate of shop-and-ship commerce will double that of last year. "According to the survey of 1,000 U.S. consumers from online grocery technology firm Unata and order fulfillment platform ShopperKit, 36% plan to shop online for groceries this year, up from 22% in 2017 and 19% in 2016" (Melton, J., 2018). However, the existing system is not capable of meeting the demand for on-time delivery, especially during the peak period.

To address the above problem, we recommended a strategic alternative for FedEx based on the results of various strategical analysis tools used that converged to the same conclusion i.e., the need for FedEx to expand its ground delivery service. Further, this strategic alternative consists of opening new Hubs, increasing ground delivery vehicles and delivery drivers. However, adopting these alternative strategies has its associated advantages and threats.

Some of the advantages of expanding its ground delivery system are for the firm to effectively capture the benefits of the spike in online purchases. Furthermore, opening more Pickup/Delivery Stations and (Hubs) can ensure speed of shipment and delivery. However, one of the major impediment to this strategy is the cost associated with increasing its delivery fleets and drivers. Therefore, channeling a portion of the Tax cut windfall to purchasing these vehicles and hiring new delivery drivers will yield a return on investment in the long-run based on the result of the strategic analysis.


This paper aims to analyze FedEx’s current strategy using some strategical analytical tools like the External Factor Evaluation(EFE) matrix, and the Internal Factor Evaluation (IFE) matrix. Further, tools like the SWOT analysis and other matrix methods will be utilized to strategically analyze the strengths, weaknesses, opportunities, and threats to FedEx as an entity. At the end of this paper, we hope to recommend the best strategy or alternatives for FedEx to ensure the firm can maximize its return on investment.

The History of Federal Express (FedEx)

Federal Express (FedEx) is the brainchild of Yale graduate Frederick W. Smith. As an undergraduate, Smith wrote a term paper on logistical challenges facing pioneering firms in the IT industry. The paper proposed an industry that changed current operations by pioneering firms. Per Smith’s analysis, a large percentage of "airfreight shippers relied on passenger route systems, but those did not make economic sense for urgent shipments, Smith wrote" (FedEx, n. d). However, Smith suggested a system designed solely to cater for time-sensitive shipments such as "medicine, computer parts, and electronics. Smith’s professor apparently didn’t see the revolutionary implications of his thesis, and the paper received just an average grade"(FedEx, n. d).

After a career in the Military, Smith bought the controlling interest in Arkansas Aviation Sales in Little Rock, Arkansas in 1971 (, n. d). It was during business operations that he discovered how difficult it was shipping a consignment from one location to the other within one to two days. He sought to find a developed a better way, the result was the birth of Federal Express as we know it. The name "Federal Express" was chosen to be "patriotic meaning associated with the word “federal” suggested an interest in the nationwide economic activity. He also hoped the name would resonate with the Federal Reserve Bank, a potential customer"(FedEx, n. d).

The organization started operation on April 17, 1973, with three hundred and eighty-nine employees. Today, the firm serves two hundred and twenty countries with a total revenue of 50.4 billion in 2016 generated by three hundred and forty thousand employees. Presently, the firm has eight-line extensions which include: FedEx Services, FedEx office, FedEx Express, FedEx trade networks, FedEx ground, FedEx Supply chain, FedEx Freight, and FedEx Custom critical. (, n. d). Further, the firm has diversified from freight delivery to including services like sales, marketing, information technology, communications, customer services, and so forth. Per FedEx’s website, "FedEx Services integrates the technology and services customers need. It includes solutions for global supply chains, e-commerce, or any of today’s business challenges"( n. d).

The company started with fourteen Dassault Falcon jets and delivered packages to twenty-five cities in their first year. In 1983, the firm attains $1 billion in revenue making the firm the first company to realize such returns without merger and acquisition. The company began regular operations in European cities in 1985 and established direct operations in Dubai, UAE in 1989 (FedEx, n. d).

Vision and Mission Statement

It is no surprise that the firm's vision statement is, "leading the way" (, n. d) which correlates with the firm's history of innovation. The company mission statement sheds more light into the firm's strategy, its mission statement reads

FedEx Corporation will produce superior financial returns for its shareowners by providing high value-added logistics, transportation, and related business services through focused operating companies. Customer requirements will be met in the highest quality manner appropriate to each market segment served. FedEx will strive to develop mutually rewarding relationships with its team members, partners, and suppliers. Safety will be the first consideration in all operations. Corporate activities will be conducted to the highest ethical and professional standards (FedEx, n. d)

David and David, (2017), beliefs that a firm's mission statement should be customer oriented and covers core areas of the firm’s business. A closer look at the entity's mission statement shows that the firm is profit driven since one of its goals is to produce returns on investment for shareholders by "providing high-value-added logistics, transportation, and related business services through focused operating companies"(, n. d). Further, the focus of the firm is also on its customer as highlighted in its mission statement. FedEx also placed a higher priority on its employees, promote its public image by emphasizing safety and ethical behavior.

The deregulation of the airline industries in 1977, meant that start-up firms like FedEx could acquire large planes to boost service delivery, especially in the overnight package delivery. FedEx currently operates a fleet of over 700 aircraft. It is also owns, the "world’s largest fleet of aircraft "(Murray M., 2018). FedEx is the largest operator of the Airbus A300, Airbus A310, ATR 42, Boeing 727, Cessna 208, McDonnell Douglas MD-10, and the McDonnell Douglas MD-11 aircraft. Furthermore, the firm became public in 1978, and "made a profit of $258.5 million of $21.4 million on sales of $258.5 million with 65,000 packages a day to 89 cities across the United States"(Murray M., 2018).

However, in 1984, the firm made its first acquisition by buying the controlling shares of Gelco Express (, n. d). Gelco, a packaging company based in Minneapolis serving about eight-four around the world, the acquisition helped FedEx develop its international package route. As of 1987, the firm was servicing ninety countries around the world with landing rights in five major airports outside of the United States. The countries include; London, Montreal, Brussels, Toronto, and a limited right in Tokyo, it also acquired Tiger International, a heavy cargo airline for $883 Million to expand international dominance in package delivery (Adelson, A., 1988).

FedEx External Assessment

The external environment of FedEx consists of all external factors affecting its business operations that are beyond its immediate control. Such external environment forces could affect the firm directly or indirectly. The direct external environmental can have an immediate firsthand impact on the firm. Conversely, the indirect external environmental forces may have a minimum impact on the operation of a firm. However, such indirect external environmental forces can sometimes affect the organization's operations directly. For instance, a state or federal law can affect the interest of the firm directly. Further, government regulations, weather, the economy, competition strategies, and a new entrance are some of these external opportunities or threats facing FedEx.

Therefore, to understand the FedEx external environment forces affecting the firm positively or negatively, we will employ the External Factor Evaluation matrix (EFE matrix) and Competition Profile Matrix (CPM) to strategically analyze these threats and weigh them in order of importance. “An External Factor Evaluation (EFE) Matrix allows strategist to summarize and evaluate the economic, social, cultural, demographic, environmental, political, governmental, legal, technological, and competitive information” (David &David, 2017).

FedEx External Factor Evaluation matrix (EFE Matrix)

Analysis of External Evaluation (EFE) Matrix

The analysis of the result for FedEx using the EFE matrix will be broken down into two spectrums; FedEx external opportunities and its threats.

External Opportunities: Our EFE matrix results shows a higher weighted score of 0.4 for the customer's willingness to pay a higher price for on-time delivery. Further, a higher weighted score mark for Amazon’s increased dominance in online sales. Amazon accounted for 53% of total online sales in the United states hence, although the firm has it’s a delivery service, it still relies on firms like Logistic firms like FedEx to guarantee customer’s satisfaction through on-time delivery. Another opportunity that was exploited by FedEx was the acquisition of TNT due to the failure of UPS to steal a deal with the firm due to anti-trust laws in Europe per report on the company’s website (Logisticsmanagement, n. d). The Acquisition of TNT further expand the rich of FedEx in its European market. “FedEx is one of the smallest logistics integrators in Europe with a market share of 5%. DHL leads with 19%, followed by UPS at 16% and TNT at 12% “(FedEx, n. d).

External threats: The recent move by Amazon Inc. to introduce the Amazon delivery service as a direct competition to FedEx shows a weighted score of 0.33, making it the highest threats facing the firm, this is mostly due to the financial position of the firm.


Excerpt out of 38 pages


Strategic Management Analysis of FedEx
Saint Leo University
Catalog Number
ISBN (eBook)
ISBN (Book)
strategic, management, analysis, fedex
Quote paper
Oluwagbenga Afolabi (Author), 2018, Strategic Management Analysis of FedEx, Munich, GRIN Verlag,


  • No comments yet.
Read the ebook
Title: Strategic Management Analysis of FedEx

Upload papers

Your term paper / thesis:

- Publication as eBook and book
- High royalties for the sales
- Completely free - with ISBN
- It only takes five minutes
- Every paper finds readers

Publish now - it's free