Executing Strategies in a Global Environment Essay

AbstractThis reputation al moo for analyze national let looses value existence frontier, and determine which of the four building blocks of free-enterprise(a) returns the friend commit necessarily in order to continue their above average profitability. It pass on too explore the main aspect of return distinctiations and capacity control of the keep conjunction to maintain an edge on their matchs. Further much, for this assignment I leave plan of attack examine the efficiency of FedExs current business role model and exhort a recent business level strategy that will go federal s focusing a competitory advantage over it rivals. In addition, this paper will as head examine the manner in which over each(prenominal), world-wide competition whitethorn influence my recommended business strategy and I will suggest a signifi toleratet way that federal Express discharge confront its world(a) competition.IntroductionFederal Express began operating in 1973, at a s ubalterner place the leadership of Fred Smith Jr. Before Federal Express, a major portion for small packaging airfreight flew on commercial rider flights. Fred Smith believed that these two work should be treated differently, because the commercial rider and cargo shipper had different inevitably. The commercial passenger they wanted the convenience of sidereal daylight flights. As for the cargo shippers, they preferred night serve, which would afford them late afternoon pickups and next day economy (Hill,2013). Since small- packet airfreight solitary(prenominal) went out ground on the commercial flight scheduling, it was hard for cargo shippers to achieve next day manner of speaking. To remedy the transferral issue cargo shippers had Smith aimed to build a system that could achieve next day delivery of small softwargon system airfreight (Hill,2013).Today Federal Express has deformn from a express delivery company to a worldwide logistic and supply chain heed company (Crane, et al., 2003). over the years Federal Express was fit to grow through acquistions and large investmenst in information technoloy. The company was in like manner able to accept out from the rest best on their business model operate independently, compete collectively. Smith segmented his compnay into 6 different dower FedEx Express, FedEx Ground, FedEx Freight, and FedEx Services, which allowed from each one fragment to cogitate on their own enlightent segment. By segmenting of each component it provided Federal express the oppurtunity to focus more on node. crimson though Federal Express 6 different components operated seperatley the competed together under FedEx Corporation. Federal Expresss Value Creation Frontier and Their quadruple Building Blocks of Competitive Advantage Federal Express profitability depends on three factors The value a node places on their attend tos, the constitute Federal Express charges for their work, and the cost Federal Express has to incur to produce the services they provide (Hll & Jones, 2013).The more favorable these factors are the more value is bestowed on Federal Expresss crossway. To accurately value, a companys convergence allotment must(prenominal) distinguish the difference between service and price (Hill & Jones, 2013). Utility is the customers satisfaction or satisfaction with using or owning a companys product or services. Federal Express has stepped up to the plate by making transfer easier and convenient for their customer. Today we bottomland find drop eat up boxes in front of office buildings and small neighborhood transportation stores. Having drop off boxes continues the customer anytime drop offs and no waiting time. Federal Express has also invested severely in innovation to add to the customers obtain (Crane, et al., 2003). The choice of wireless technology and the ability to track deliveries and schedule picks on the companys website provides the customer tape drive r ight at their fingertips.For their global customer Federal Express roll in the hay offer shipping preference to more than two hundred companies. The prices Federal Express company for their services are high than many of their competitors. Federal Express price is considered a superior, which reflects the high timbre level of service FedEx provides (Crane, et al., 2003). Based on FedEx stance, their premium pricing is worth it, but they fail to realize their very price sensitive customer who may go with a more cheaper option for certain services (UPS). In this nerve it make it uncontrollable for Fedex to standout based on branding and the amenties they offer. They may have to think of a different way to differeinate themselves from the competitior. Since Federal Expresss growth and customer, satisfaction comes with a high price tag. Their return on invested capital (ROIC) is very low compared to its biggest competitor UPS. In 2011, FedEx ROIC was 7.41% and UPS was 19.39%(Hi ll, 2013).Some say in time the bullion FedEx spent to build up their company, technology substructure, and customer satisfaction may soon pay off. The different positive side is that FedEx spend and scholarship expenses have made it hard for new companies to enter and compete in the packaging industry Along with value creation, a company must excel in the four building block of warring advantage efficiency, quality, innovation, and customer responsiveness. How well a company performs in these four areas will determine their profitability and competitive advantage over the competitor. These four generic wine building blocks are a product of a companys distinctive competencies, which will allow a company to differentiate its product and lower its cost structure (Hill & Jones, 2013). In turn, sustain a competitive advantage and founder profitability outcomes over their competitor.When determining a companys efficiency we weed look at what it takes (inputs) to produce a produc t or services (outputs). According to Hill and Jones, the more in force(p) a company is the fewer inputs it required to produce a point output. The most common way to measure a companys efficiency is through employee productivity the out pout produced per employee (Hill & Jones, 2013). When examining FedEx efficiency they were the frontmost packaging company to invest in technology that enabled their employees to access company information wireless 24 hours a day. This wireless feature also allows the employee to collect packaging data, which allows employees to quickly enter packages into the companys package tracking system, which reduces the possibility of error (Crane, et al., 2003).As for FedEx service, they can be round off by its features, performance, durability, reliability, style, and design (Hill & Jones, 2013). These features are used by customers to determine the quality level of the services that are offered by FedEx. Based on FedExs history, spending to build its infrastructure, and premium pricing FedEx is committed to providing a service of high quality standings. FedEx has also invested heavily in new technologies, which will improve their services, make it more reliable, and valuable to its customers (Amsler, Cullen, & Erdmenger, 2010). An example that show FedEx is all about quality is their technology efforts such as tracking deliveries on their website, and offer convenient shipping at the customers fingertips. As mentioned before FedEx is all about innovation.They are into creating new servicesand processes to make shipping easy and convenient for their customers. One of their major investments is the joint proceed with University of Memphis. University of Memphis and FedEx have joined and formed the FedEx Institute of Technology. This investment will catch that FedEx will not be let in dark when it comes to new technology (Crane, et al., 2003). When it comes to customer satisfaction FedEx tries to identify their customer needs. FedEx heard the customers studyed for a more convenient way of shipping.FedEx has extended drop off times by three hours, offer drop off boxes, and the ability for customer to schedule pickups on FedExs website. The only dissatisfaction is the premium pricing set on their services. FedEx fail to adhere to the demands of their cost sensitive customers. These are the customers who only care about inexpensive delivery services. This group of people may use FedEx as a last resort for their shipping needs. produce DifferentiationThe idea behind product differentiation is creating a product that satisfies the customers needs (Hill & Jones, 2013). In order for a company to obtain a competitive advantage they must offer a product that better satistfies the customers need than its rival. When a company defecates a stratergy that involves innovation, execellence, quality, and customer responsiveness they are offering custumers differentiation product. When the a companys stratergy is about finding ways to increase efficiency and reliablity to reduce cost they are offering the customer low priced product (Hill & Jones,2013). In the case of Federal Express their stratergy is not about offering a low priced product, but offering a product that is innovative, meets a high measurement of execellence, high quality, and basing the product on the customers need.Federal Express understood the importance of differentiation. Since their strategy is not based on offering a low costing product Federal Express had to focus on information technology. Today customers are interested in supervise their shipments, estimating arrival times, price and cost of shipments. These elements are important to most businesses and consumers as well as the safety of their delivery (Crane, et al., 2003). To satisfy the needs of their customers and to stand out from their competitor FedEx hasinvested heavily in the technology infrastructure, which provides options for customers to track and confir m shipments at their personal computer.Federal Express works hard to create a high quality level of service that is difficult for their rival to match (Crane, et al., 2003). Over the years, FedEx has been known as an innovator in the shipping sector, and providing a high level of quality services. Due to FedExs higher prices the level of service they provide may become unnoticed. To differentiate their metre of quality from their competitor FedEx lets their customers know that if they are willing to pay more it will be worth it (Crane, et al., 2003).Capacity ControlWith technology, forecasting, and planning strategies Federal Express is able to handle the fluctuating demand in shipping. With habitual Information Science (GIS) Federal Express is able to build routes for the driver, fill sorting activities of inbound freight, estimate and record delivery times. This information is stored on a cloud, which is use for future planning and test the durability of a route to accommodate package volume fluctuation (Conger, Dezemplen, Haas, & McLeod, 2010).Efficiency of Federal Expresss Current Business ModelFederal Expresss current business model is to operate independently, compete collectively. presently Federal Express is under the leadership of FedEx Corporation. FedEx Corporations provides strategic direction and financial reporting for the following operating companies that compete collectively, but operate one by one worldwide FedEx Express, FedEx Ground, FedEx Freight, and FedEx Services (Amsler, Cullen, & Erdmenger, 2010). The idea behind Operate independently, compete collectively is that each company will operate independently, compete collectively and manage collaboratively. By operating independently, each of the organizational components (FedEx Express, FedEx Ground, FedEx Freight, and FedEx Services) can focus only when on their market segment. Also by segmenting off each component by its own market segment has provided FedEx the competitive adva ntage in customer responsiveness and has limited wasted time and resources on trouble that are not associated with each market (Amsler,Cullen, & Erdmenger, 2010).The benefit of all the organizational component competing collectively is carrying and competing under a well know pull in FedEx, which is one of the most recognized names in the industry (Smith, 2005). tear down though operate independently, compete collectively has worked for Federal Express so far, but keep in mind it only provided FedEx with a competitive edge in specific customer focus. To gain a stronger competitive advantage FedEx should add cost leadership to their business level strategy. toll leadership is a business model strategy that works towards weighed down a companys cost structure so they can make and sell their products at a lower price than its competitors (Hill & Jones, 2013). This has been difficult for FedEx, because of their constant expenditures in their infrastructure (Amsler, Cullen, & Erdm enger, 2010).Due to FedEx costly expenditures, they are futile to compete with their biggest rival, UPS in setting prices. world(a) Competition and the Impact on Suggested Business Strategy Based on the world(prenominal) shipping demand among integrated global corporations and manufactures it will be FedExs as well as its competitors best interest to enter into the global shipping industry. Global manufactures are interested in keeping their inventory at a minimum and have just in time delivery option. This way global manufactures can keep cost down, fine-tune their production, and meet delivery deadlines (Hill, 2013) . As for global corporation their shipping need are different. They are in need of fast and a safe way to ship document that are to confidential for internet transmisson or require a real signiture. These global coroporation are seeking for the same shipping services the receive in the U.S for their global operations (Hill, 2013).According to Case 7 The Evolution of the Small Package Express Delivery Industry, 1973 -2010 the trend for global shipping need is forcasted to grow approxiamently 18% annually from 1996 to 2016. This means thither is a big demand for air cargo operators to build global shipping networks that will allow them to provide shipping services crossways the globe with in a 48 hour time frame. through acquistion Federal Express was able to build a global shipping network to meet the demand among intergrated global corporations and manufactures. The acquisition expenses, international originate cost, customs regulation cost , labor issue associated with global shipping, and the barries to attaining arrive right in many markets prevented FedEx toinclude cost leadership in their global busines stratergy.Eventhough FedEx does not have the competitive edge when it come to pricing they are t more visible in the global shipping industry than their competitors. They can offer services and shipping time frames their rivals can not offer. FedEx also has shipping hubs all over the world, which include 600 or so air crafts , which allows them to provide shipping option most of their comepitives can not offer. Based on history this was very difficult for other companies to establish this task. Since very few competitor have the same golobal infrastructure as FedEx global companies relay more FedEx for the international shipping needs (Crane, et al., 2003)ConclusionIn conclusion, Federal Expresss competitive advantage is not based on cost, but on its technology infrastructure. Over the years, Federal Express has spent heavily on technology and in acquisitions in order to offer delivery options and services their competitor cannot. The spending was geared towards satisfying the needs of the customer, innovation, offering a quality product and excellence services. The only negative side on spending heavily is that the cost was passed on to the customer, but Federal express stance is that they offer premium services and products. Federal Express can offer their international customers shorter delivery time, because of the major acquisition transactions Federal Express was refer in over the years. As for their domestic business, it may be a little difficult to stand out from their competitor. Currently the competitor (UPS) can offer similar services and convenient shipping options at a lower cost.ReferencesAmsler, M., Cullen, J., & Erdmenger, J. C. (2010). strategic Report for FedEx Corporation. Vector Strategy Group. Conger, R., Dezemplen, R., Haas, J., & McLeod, J. (2010). Using GIS Strategic Planning and Execution at FedEx Express. Crane, B., Landthorn, B., Miri, B., Relph, J., Sanchez, C., & Vernerova, A. (2003). FedEx Corpration Strategic commission Project. Hill, C. L. (2013). Case 7 The Evolution of the Samll Package Express Delivery Industry, 1973-2010. In C. L. Hill, & G. R. Jones, Strategic Management AnIntegrated climax (pp. C83-C96). Independence Cengage. Hill, C. L., & Jones, G. R. (2013). Strategic Management An Integrated Approach (10th ed.). Independence Cengage. Smith, F. W. (2005). FedEx. Retrieved from FedEx corporation annual report http//www.fedex.com/us/investorrelations/financialinfo/2005annualreport/online/msg_chair.html