At the global level, FedEx major competitors are DHL that is Deutsche Post, FCML Courier, LDH Express, and Royal Mail.
The current position of the FedEx is topmost in the courier and e-commerce industry operation at domestic level. By providing the reliable and satisfying services on time to the customer.
Relevant general environment and their implications for successful implementation of strategic goals.
Economic environment or factors- Economic factors also contribute the growth of the industry. The economic segment of the general environment address changes and the conditions in the economy which includes many factors such as interest, inflation, and unemployment, GDP, and exchange rate (Boersen et al., 2015). So in case of the transportation and shipping industry, it has been found that the GDP has been increased over the time all over the world. Which is contributing to the courier and shipping industry to operate in a good manner and earn more profit.
With the change in the price of Dollar, FedEx is affected and it has impacted the economy.
Social factors- Countries which have more population are more likely to have a major customer. So same is the case with the transportation industry. Social factors include such as literacy rate, lifestyle and so on. If more literate people are there then they demand more transportation and shipping services so the transportation and shipping industry will be benefited due to more literate people. So FedEx is serving its major services in the region which are more educated and developed so it has good opportunity to serve the maximum customer.
Technological factors- In any industry technology play a vital a role. Due to globalization and technological advancement, transportation and shipping, as well as courier industry and company, gained a lot of importance. The increasing trend of online shopping has resulted to increase the economy of the FedEx Company as it is also dealing in the same transportation and courier services sector (Gleghorn et al., 2015). In regards to technology, FedEx is very much sound and its adopted fine technology in its supply chain management.
Legal factors- FedEx has sincerely following the legal formalities for its operation. FedEx follows the ISO 14001 certification regarding the environment as well as it also follows the regulation and rule. FedEx provides the information security online and stands answerable in any case of legal matter.
Environmental factors- it has a major impact on any industry. In case of transportation and shipping industry in which FedEx also operate is getting affected by the environmental factor. Change in the climate may affect the air transportation and led to delay in the delivery of the goods. Apart from this FedEx ensure to make the environment healthy and clean.
External environment analysis of the logistics, transportation or courier industry.
Five Force Model
|1. Internal rivalry||High|
|2. Supplier power||Low to moderate|
|3. Buyer power||Moderate|
|4. The threat of new entrants||Very low|
|5. Substitutes and complements||Moderate|
Internal rivalry- in the transportation, courier or shipping industry the existing rivals is high such as the FedEx, UPS, USPS, and DHL. Regardless of the few competitors, still the transportation and logistics industry remain so competitive and main reason is a large number of the consumer, low cost of changing providers and poor demarcation among the competitors. FedEx competes with other firms across of its service lines.
Supplier power- a major product of the transportation services are available easily. So the power of the supplier is low in regards to service and transportation industry. There a huge number of supplier available in the market who are ready to supply raw materials and other required product to the transportation and service industry.
Buyer power- moderate or low due to medium shipping choice. In the same manner of bargaining power of the supplier, the bargaining power of the buyer is also moderate. But at the time it fluctuates also as a customer have full right to choose their service provider according to the demand and time, need. But though they lack the right to negotiate on the price.
The threat of new entrant- transportation, logistic or courier industry is been credited or have the advantage of minimum threat from the new entrant. Due to making the entry in this sector or industry require a high cost. And require a high cost of operation and capital equipment also.
Substitutes and complements- it is moderate and sometimes said to be low due to limited services for the large air freight and freight. Due to a low number of the substitutes or alternative this logistic industry has low that from the substitute.
So in a way to gain the competitive advantage, FedEx adopted the strategy of focusing on the customer need and provide the prompt and reliable service to the customer. Finally, the FedEx became a success in implementing this strategy that is to provide the same day delivery and reliable services to the customer globally. Which lead FedEx gain the strategic advantage over the competitors.
FedEx can use it supply chain management in an effective manner and try to focus on the customer need in a way to gain the strategic advantage in the logistics industry.
VMO Strategy of the FedEx
FedEx focused to build a sound relationship with all the vendor and stakeholder. So for this, it appointed the person to look into the matter of relationship with every vendor. It adopted steward’s relationship tactic which led him in deploying the resources in much effective manner. A purchasing and sourcing group. To ensure FedEx Corp. and its operating companies get the best deals from their vendors, the corporate IT department created a purchasing and sourcing group within its vendor management office. The group is responsible for staying on top of the company’s top 100 contracts and the competitive landscape associated with each of those vendors (Thomas et al., 2016). It also provides the IT leaders of the operating companies with a dossier on their top vendors containing information they can use to negotiate the best deals. All these VMO strategies enable FedEx to be competitive and build a strong image.
FedEx focuses on the below major five strategies to grow.
• It's focus to grow internationally
• Developing core packaging business
• Focus to grow or develop the supply chain capabilities
• Focus and concentrate to grow with technology and e-commerce (Thomas et al., 2016)
• Focusing to grow new services and alliances
Strategic Group Mapping
Through the adoption of the effective supply chain management, FedEx has gained the strategic advantage in the industry.
Its current position in the market is at the top that is FedEx is the leader in the logistics industry.
It has a sound brand image
Good reputation for on-time delivery
Well located hubs, great routes
Fine Research and development
More focus on customer needs and making satisfied
A leader in the domestic express delivery market
Relative high price
Lacks quality in regards to UPS
Not fully differentiable from UPS
Growth chances more in Asia China Specifically due to economy beginning to recover (Burner et al., 2017).
Growth chance due to continued globalization
Expansion of online retailing creates a great opportunity
High fixed cost
Worker and drivers are trying to form the union
UPS is trying to take market share in the express delivery arena
Threats- the price of the fuel has increased tremendously. Back in the 90s, fuel cost about a 50percent gallon. Presently it is near about 3.60 per gallon. The major market is been cover by the UPS and it is trying to tap the major market at the global level so to compete with this it is somewhat threatening. E-substitute from the ever-growing popularity of the internet it is creating the major challenges to the FedEx (Grant et al., 2016). It is relating with the VMO strategy as VMO strategy of FedEx is to ensure the sound relation with all the sourcing group to ensure effectiveness in the operation it strategy is also that it appointed an authorized person to look after the relationship of each vendor to maintain the relationship strong and competitive.
Need to concentrate on the quality of the services also as it lacks the UPS services proved in regards to quality.
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