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, 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. 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.
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 impediments 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.
Table of Contents
1. Executive Summary
2. Introduction
3. The History of Federal Express (FedEx)
4. Vision and Mission Statement
5. FedEx External Assessment
5.1 FedEx External Factor Evaluation matrix (EFE Matrix)
5.2 Analysis of External Evaluation (EFE) Matrix
5.3 Competition Profile Matrix, (CPM)
5.4 Analysis of Competition Profile Matrix, (CPM)
5.5 Conclusion
6. Internal Assessment/Audit
7. FedEx Internal Strengths
7.1 Internal Evaluation Matrix of FedEx
7.2 Financial Ratio
8. Analysis of Result
8.1 Our Conclusion
9. FedEx’s SWOT Matrix
9.1 Analysis of Result
9.2 Conclusion
10. FedEx BCG Matrix
10.1 BCG Matrix
10.2 Internal Evaluation Matrix
10.3 FedEx BCG and IE Matrix Analysis of result
10.4 Conclusion
11. SPACE Matrix
11.1 Analysis of Space Matrix Result
11.2 Conclusion
12. Alternative Strategy
Research Objectives and Themes
The primary goal of this strategic analysis is to evaluate the current positioning of FedEx within the logistics industry, particularly in response to the rapid surge in online shopping and parcel delivery demand. The analysis aims to formulate strategic recommendations that will enable the company to improve its competitive advantage, optimize its ground delivery operations, and maximize long-term shareholder returns through analytical framework applications.
- Application of External Factor Evaluation (EFE) and Internal Factor Evaluation (IFE) matrices.
- Competitive benchmarking via the Competition Profile Matrix (CPM) against rivals like UPS and Amazon.
- Assessment of organizational strengths and weaknesses through SWOT and SPACE matrix methodologies.
- Evaluation of business segments using the BCG Matrix to drive resource allocation.
- Strategic planning for operational growth and service enhancement in the ground delivery sector.
Excerpt from the Book
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 (about.van.fedex.com, 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).
Summary of Chapters
Executive Summary: Provides an overview of the logistics market surge driven by online shopping and outlines the proposed strategic plan to reposition FedEx ground delivery services.
Introduction: Defines the scope of the study, which utilizes analytical tools like EFE and IFE matrices to evaluate FedEx’s current strategy.
The History of Federal Express (FedEx): Details the founding of the company by Frederick W. Smith and its evolution from an innovative thesis idea to a global logistics leader.
Vision and Mission Statement: Analyzes the company's "leading the way" vision and its mission statement to understand the firm’s commitment to profit, quality, and service.
FedEx External Assessment: Examines external forces such as market competition, regulatory changes, and economic factors impacting the firm.
Internal Assessment/Audit: Discusses the systematic evaluation of internal operations, business structure, and information systems to identify core competencies.
FedEx Internal Strengths: Highlights organizational assets such as brand equity, technological infrastructure, and human capital.
Analysis of Result: Synthesizes findings from financial ratios and strategic matrices to assess the company's health and competitive positioning.
FedEx’s SWOT Matrix: Categorizes internal strengths/weaknesses and external opportunities/threats to develop actionable competitive strategies.
FedEx BCG Matrix: Segments the firm’s divisions to determine investment priorities and growth potential.
SPACE Matrix: Evaluates the firm's strategic position based on financial, competitive, industrial, and stability dimensions.
Alternative Strategy: Proposes operational improvements, such as opening new hubs and increasing driver capacity, to capture the growing B2C ground delivery market.
Keywords
FedEx, Strategic Analysis, Logistics, Ground Delivery, EFE Matrix, IFE Matrix, SWOT Matrix, BCG Matrix, SPACE Matrix, Online Shopping, Competitive Advantage, Supply Chain, Revenue Growth, Market Positioning, Parcel Delivery
Frequently Asked Questions
What is the primary focus of this strategic analysis?
The work primarily focuses on analyzing FedEx's current strategic position within the logistics industry, specifically exploring how it can leverage its strengths to address the increasing demand for ground delivery caused by the boom in online shopping.
What are the central themes of the document?
The central themes include competitive rivalry with firms like UPS and Amazon, the necessity of infrastructure investment, the importance of operational efficiency in parcel delivery, and the application of various strategic management frameworks.
What is the main objective of the proposed plan?
The primary goal is to reposition FedEx's ground delivery services to capture a larger share of the "shop-and-ship" market, with an objective to increase ground delivery service revenue by 20 percent.
Which scientific methods are employed?
The paper employs several quantitative and qualitative analytical tools, including the EFE (External Factor Evaluation) matrix, IFE (Internal Factor Evaluation) matrix, CPM (Competition Profile Matrix), SWOT analysis, BCG matrix, SPACE matrix, and financial ratio analysis.
What topics are covered in the main section of the paper?
The main sections cover the history and mission of FedEx, an assessment of the external and internal environment, financial performance analysis, and strategic recommendations based on matrix outputs.
Which keywords best characterize this work?
Key terms include strategic analysis, logistics, ground delivery, SWOT, BCG matrix, competitive advantage, market positioning, and supply chain management.
How does FedEx currently compare to Amazon in the logistics space?
While FedEx maintains a strong infrastructure and brand, the document notes that Amazon is a significant emerging threat due to its massive financial position and investments in its own delivery technologies like drones.
What is the primary recommendation regarding the company's internal operations?
The author recommends that FedEx should increase its number of hubs, rent more delivery vans for peak periods, and improve incentives for contract employees to boost morale and operational efficiency.
- Citar trabajo
- Oluwagbenga Afolabi (Autor), 2018, Strategic Management Analysis of FedEx, Múnich, GRIN Verlag, https://www.grin.com/document/426889
