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A team's strategic management analysis of FedEx and UPS in 2011 - who's got the sustainable competitive advantage?
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Presented May 9, 2011
Jon Michaud Wendy Rowley Kim Waldbillig
Joe Wyson
Recommendations & Chosen “Winner”
Sustainability of Competitive Advantages
Industry Dynamics Affecting Profitability
Firm Performance
Corporate Strategy Canvas
Business-Level Strategies
Resources and Capabilities
Porter’s Five Forces Analysis
Key Issues Faced By FedEx & UPS
Introduction
• Are UPS and FedEx colluding and violating antitrust law? • Do UPS and FedEx meet the market definition of duopoly? • Is it ethical that rising fuel costs are passed on to the consumer?
• What are the pros and cons of unionized versus non-unionized employees? • How to capitalize on trends in trade globalization and make it cost-efficient?
Power of Suppliers Power of Buyers
Threat of Substitutes Threat of New Entrants
Intensity of Competitive
Rivalry
LOW
MODERATE
MODERATE
LOW
LOW
• Fuel vs. Alternatives • Power of Laborers • Maintenance & TCO
• Long Term Contracts • Small Subsidize Large • Few Global Integrators
• Capital Intensity • International Regulation • Brand Name Credibility
• Global Network • Supply Chain Solutions • Reliability & Experience
Porter’s Five Forces Analysis
} Four business segments ◦ Ground, Express, Freight,
Services
} Boeing 777 Aircraft ◦ Fastest international
} Partnership with USPS ◦ High domestic market share
} Few unionized employees
} Integrated Express & Ground Delivery assets
} IT Infrastructure ◦ COMPASS & UPSNet
} Inventory Express ◦ Just-in-time
} Mostly unionized employees
Type of Competitive Advantage
Com
petit
ive
Scop
e
COST UNIQUENESS
BR
OA
D T
AR
GE
T
NA
RR
OW
TA
RG
ET
Broad Cost Leadership
Broad Differentiation
Narrow Cost Leadership
Narrow Differentiation
Integrated Cost Leadership/
Differentiation
High
Low
COMPETING FACTORS
Price Speed Reliability Int’l Air Corporate
Responsibility
Perceived Value of Add-on Services
Reliability Int’l Ground “Green”
Technology
1. Industry 2. S&P 3. FedEx
1. UPS 2. S&P 3. Industry
High Pressures for cost savings
Low Pressures for local adaptation High
Global Transnational
Multi-domestic
Matching Capacity to Demand More Types of Shipping in More Markets
Ability to Implement Green Technology
} Find new ways to match capacity to demand
} Reduce costs to improve against industry P/E ratios
} Growth by acquisition and alliance; not all organic
} Blue Ocean Strategy: ◦ Increase customer’s access to capital in emerging markets
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