5/23/2018 Fedex Strategy and Obstacles
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What strategy did it follow, and what obstacles did it have to
overcome?
StrategyFederal Express (Fedex), express transportation company,
relies upon several suppliers
such as fuel suppliers, airports, shipping materials, and
manufacturers for business
operations. In order to grow its core packages business, supply
chain capabilities introducingnew services and alliances, they used
IT as a corporate strategy to take advantage of
international markets. Fedex used international compatibility of
wireless applications like
Fedex Super Tracker (Provides shipping information and status)
and Fedex e-business
website.
As part of their global strategy, Fedex standardize its products
and services and adopts
uniform marketing to achieve homogeneity of customers response
to the marketing mix.
Fedex also focused on cost reduction strategies, established
centralized control where top
management taking all decisions and extending its geographical
coverage through
acquisition. Fedex capitalized on its first mover advantage in
international expansion to
achieve cost reduction through learning effect. By having tight
control in differentgeographical locations resulted in facilitating
coordination, consistency of decision, avoid
duplication and easier to incorporate changes.
In general, Fedex adopted a strategy of acquisition in entering
the global market. Acquisition
of different companies worldwide enabled Fedex to grow its
portfolio of services along with
strengthening its delivery services around the globe. In 1984
FedEx made its first
acquisition, Gelco Express, a Minneapolis-based package courier
that served 84 countries.
Hoping to recreate its U.S. market dominance overseas, the
company made further
acquisitions in Britain, the Netherlands, and the United Arab
Emirates. (FundingUniverse,
1997). Other subsidiaries of Fedex includes: Tiger International
Inc. (Facilitated in
international airfreights), Caliber system Inc. (facilitated in
growing portfolio of services in
ground small package carrier), Tower Group International Inc.
WorldTariff Ltd. (provided end-
to-end transportation and customs clearance solutions around the
world), American
Freightways Corp, Kinko's Inc., Parcel Direct, ANC Holdings
Limited, Watkins Motor Lines,
Flying Cargo Hungary Kft, Tianjin Datian W. Group Co., Ltd,
Prakash Air Freight Pvt. Ltd.,
AFL Pvt. Ltd./Unifreight India Pvt. Ltd., Servicios Nacionales
Mupa, S.A. de C.V. (MultiPack),
Opek Sp.z o.o., TATEX, and Rapido Cometa.(Fedex.com, Acquisition
History)
http://www.fundinguniverse.com/company-histories/fedex-corporation-history/
(FundingUniverse, 1997)
http://investors.fedex.com/phoenix.zhtml?c=73289&p=irol-overviewPortfolioHistory
(Fedex.com, Acquisition History)
Obstacles/ Challenges
http://www.fundinguniverse.com/company-histories/fedex-corporation-history/http://www.fundinguniverse.com/company-histories/fedex-corporation-history/http://investors.fedex.com/phoenix.zhtml?c=73289&p=irol-overviewPortfolioHistoryhttp://investors.fedex.com/phoenix.zhtml?c=73289&p=irol-overviewPortfolioHistoryhttp://investors.fedex.com/phoenix.zhtml?c=73289&p=irol-overviewPortfolioHistoryhttp://www.fundinguniverse.com/company-histories/fedex-corporation-history/
5/23/2018 Fedex Strategy and Obstacles
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With all the advantages of going global, Fedex also came across
some cross-cultural
problems with global strategy in management effectiveness.
Global strategy increases Fedex
reliance on national regulations (especially towards air
regulations). For example in Asia,
management of airlines is very strict for government. Also,
after having mergers its quite
difficult for reduce pressure from labor unions and maintain its
performance.
With the step of going Global Fedex came across a challenge of
understanding the nature of
operations and infrastructure facilities of a leading global
third party supply chain
management solutions provider . Also, they had to get an insight
into the various supplychain management services offered by FedEx.
(ICMR, 2004)
http://www.icmrindia.org/casestudies/catalogue/Operations/OPER029.htm(ICMR,
2004)
http://www.icmrindia.org/casestudies/catalogue/Operations/OPER029.htmhttp://www.icmrindia.org/casestudies/catalogue/Operations/OPER029.htmhttp://www.icmrindia.org/casestudies/catalogue/Operations/OPER029.htm
