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<p>FEDEX COMPANY</p> <p>PREPARED FOR: PhD Pham Quoc Khanh (lecturer)</p> <p>PREPARED BY Do Viet Dung Casper ITP F04 037</p> <p>SUBMISSION DATE: 8th January, 2013</p> <p>1</p> <p>TABLE OF CONTENTS</p> <p>INTRODUCTION .......................................................................................................................... 3 LO3. UNDERSTAND APPROACHES TO STRATEGY EVALUATION AND SELECTION . 4 1. Analyze possible alternative strategies relating to substantive growth, limited, growth or retrenchment ................................................................................................................................ 4 a. b. c. 2. a. b. c. d. e. f. Five years objectives ........................................................................................................ 4 The stages for five years................................................................................................... 4 Alternatives for FedExs strategies .................................................................................. 5 An appropriate future strategy for FedEx ............................................................................ 8 Analysis of suitability....................................................................................................... 8 Analysis of feasibility....................................................................................................... 9 Analysis of stakeholders Acceptability........................................................................... 9 Analysis of risk............................................................................................................... 10 Score and ranking ........................................................................................................... 11 Selection and improvement ............................................................................................ 11</p> <p>LO4. UNDERSTAND HOW TO IMPLEMENT A CHOSEN STRATEGY .............................. 12 3. a. b. 4. 5. a. b. Compare the roles and responsibilities for strategy implementation ................................. 12 Sub-objectives or targets ................................................................................................ 12 Activities to archive each target and department to carry out each activity .................. 12 Evaluate resources requirement to implement a new strategy for FedEx .......................... 15 Target and timescales for achievement in FedEx to monitor a given strategy .................. 18 Action plan for each department in line with objectives of different stages .................. 18 Measurement .................................................................................................................. 22</p> <p>CONCLUSION ............................................................................................................................. 23 REFERENCES ............................................................................................................................. 23</p> <p>2</p> <p>INTRODUCTION This report is about the various approaches to strategy evaluation and selection which are applicable to FedEx Company. Firstly, the report will provide to FedEx possible alternatives for FedExs strategies which can be used to archive five year objectives of FedEx which are limited growth, substantive growth, and retrenchment growth strategy. After that, the report will evaluate these alternative strategies base on the analysis of suitability, feasibility, stakeholders acceptability, and risk. Thus, the report shows how to implement a chosen strategy through the roles and responsibilities for strategy, resources requirements and targets and timescales for achievement.</p> <p>3</p> <p>LO3.</p> <p>UNDERSTAND</p> <p>APPROACHES</p> <p>TO</p> <p>STRATEGY</p> <p>EVALUATION</p> <p>AND</p> <p>SELECTION 1. Analyze possible alternative strategies relating to substantive growth, limited, growth or retrenchment a. Five years objectives The vision of FedEx Company is make it possible for people and business to connect and collaborate with each other, no matter where they in the world and FedExs mission is producing superior financial return for its shareowners through provide high value-added logistic, transportation and related business services by focused operating companies. In addition, FedEx also has to meet customer requirement based in the highest quality manner appropriate to each market segment served and FedEx will strive to develop mutually rewarding relationships with its employees, partners and suppliers. Based on that, FedEx actually set up the objectives for the next 5 year which is expanding the business to the new markets and bring to customers perfect services to make FedExs express and transportation service is the first choice of customers based on that increase profit 18% at the end of 2017. The objectives of FedEx will be evaluated based on SMART technique Evaluation Specific YES Measurable YES Achievable YES Relevant YES Timetable YES</p> <p>b. The stages for five years To make the effective of objectives is highest, FedEx actually divide the completed time objectives to three stages. The first stage is three years (2013 to 2015), in this time FedEx will increase its revenue by 10 percent annually based on the increase of sales and customers and the second stage (2016) will be for completing the growth of the market share in all the market by 8 percent. The last stages (2017) will be the time FedEx creates new alliances and services for new markets leads to the expansion of the business of FedEx.</p> <p>4</p> <p>c. Alternatives for FedExs strategies Limited growth Market penetration: The growth which based on the market penetration is not related to the business activities of the company in new market or creating new products/ services. It is a strategy in which the company can increase market share using current products or services (Clark, n.d.). For example with the case of FedEx Company, FedEx may provide lower price of services, good quality of service and also using the promotion in order to advertise the existing services. Thus, FedEx can improve the competitive ability to compete with competitors to attract new customers and also increase the use of current customers. Product development: By creating new products/ services to serve the same market the company can provide these new products/ services to existing customers and grow the business of the company without tapping new markets. With the case of FedEx, continuing the FedEx commitment to the pursuit and development of technologies, FedEx will strive to provide innovative solutions and services for customers (FedEx Coporation, n.d.). Based on that, FedEx will have the advantages in the competition with its competitor but it also make the competition is harder because it leads to the innovation of competitors. Market development: It involves introducing the company products/ services to new markets. For example, FedEx can enter a new country, a new city, and even targeting a market segment. Thus, FedEx could attract more new customers and make a good image in customers mind. But market development strategy will take higher cost and more time from FedEx. Substantive growth Substantive growth strategy includes four main types which are horizontal integration, vertical integration, related and unrelated diversification. Furthermore, substantive growth strategy is frequently implemented through acquisition, merger or joint venture rather than organic growth. (Thompson, 2001) Horizontal integration: it is a strategy in which the company can increase its market share by taking over a similar company in the market. Furthermore, this merger can be made in the same geography or probably in other countries to increase the number of customers (Anon., n.d.). For the case of FedEx, horizontal integration can help FedEx holds more5</p> <p>market share and make more profit in the new markets even old markets. On the other hand, horizontal integration will be a good way for FedEx completes the objective of increasing 10% revenue annually from 2013 to 2015 and also increase the market share of all the markets (2016) while FedEx has more market share. Vertical integration: It is the process based on that the company can control some steps of the production or distribution of the product or service in order to increase the companys or entitys power in the market place (Anon., n.d.). For example, by using vertical integration FedEx can reduce the transportation cost by building a hub in the airport where the packages are sorted based on their destinations and after that the packages will stay at the hub until they are delivered by plane, improve supply chain coordination, or increase entry barriers to potential competitors. Related diversification: the company can develop the old product or service to new ones and there is a relationship between existing product/ service and new product/ service. Unrelated diversification: There is no discernible relationship between existing and new products, services and markets. The main advantage of unrelated diversification is make high financial benefits and profits from the new investment and for the case of FedEx; unrelated diversification can is the way for FedEx can get the third stage of objective (2017) which is creates new alliances and services for new markets leads to the expansion of the business of FedEx. Conclusion: Substantive growth strategy is a perfect strategy for FedEx because depend on it FedEx can complete all stages of five years objectives and the only work for FedEx is considering how to use unrelated diversification, horizontal integration and vertical integration in the highest effective way. Retrenchment strategies While corporate strategies prefer finding ways to expand business, they often face tough economic times and need a more conservative approach. The retrenchment strategy provides corporation a chance to regroup, preserving resources for the greater good and it includes divestment, bankruptcy, and liquidation. Honestly, the retrenchment strategy is not matched for FedEx Company in order to complete the five year objectives.</p> <p>6</p> <p>Alternative strategies for FedExs stages Alternative strategies Limited growth Stage 1 By using market penetration, FedEx can attract new customers and make the use of current customers increase so make the revenue of FedEx increase. By using market development, FedEx also could attract more new customers and make a good image in customers mind by introducing new services to new markets By using horizontal integration FedEx holds more market share and make more profit in the new markets even old market and vertical integration help FedEx reduces the cost Stage 2 Based on market penetration, the market share of FedEx will increase. Stage 3 Based on the product development, FedEx can create new alliances and services for new markets leads to the expansion of the business of FedEx.</p> <p>Substantive growth strategy</p> <p>FedEx should use horizontal integration because when FedEx merges with a local similar company of the foreign market; FedEx can take advantage of the reputation of this local company to increase the market share.</p> <p>By using unrelated diversification FedEx will can make new product/ service or develop existing product/ service for new markets in order to expand its business</p> <p>Figure 1: Alternative strategies for FedExs stages</p> <p>7</p> <p>2. An appropriate future strategy for FedEx a. Analysis of suitability Alternative strategies Limited growth Suitability To complete the first stage of five year objective from 2013 to 2015 and the second ones, FedEx can introduce the services to the new customers in new markets such as Vietnam, Lao, and other countries in South East Asia through market development in order to attract more potential customers. Furthermore, introducing its services should goes with the promotion FedEx will send a small gift for potential customers who usually purchase its services. On the other hand, FedEx will use competitive price in existing services to increase the use of current customers. But besides that, FedEx also should consider about the cost of strategy because market penetration will take lower cost and shorter time than market development. About the third stage (2017), product development is objectives of the third stage FedEx provide new services to customers but it is quite of expensive and take a long time to develop the services. Substantive growth In the first stage and second stage of FedEx, by merging similar local companies in the foreign markets FedEx can get the trust of customers of foreign countries and reduce the risk of loss from the different about traditional, culture, and even customers think from that there is more market share and more profit for FedEx. About the third stage of FedEx, there is more risk for FedEx when it joins in new fields through new service and new markets. Because of new service and new markets so there are not many customers know and trust the service of FedEx.</p> <p>Figure 2: Analysis of suitability</p> <p>8</p> <p>b. Analysis of feasibility Alternative strategies Limited growth Feasibility Financial Management: it is easy for FedEx management to balance existing operations as well as managing expansion into new markets when FedEx uses limited growth because the financial and logistic challenges of rapid growth are usually too complicated for even skilled managers to handle in the effective way. (Richards, n.d.) Human resources: FedEx does its business through more than 200,000 staffs that have good skills and professional behavior so it leads to FedEx can make a good image in customers mind. Furthermore, it is easy for FedEx completes promotion works and develop services based on its staffs. Substantive growth External relation and partnerships: based on the good external relationship and the correlation relationship with partners, it is easier for FedEx merges other companies. Technologies: By improving the technologies innovation, FedEx also can create new services for new markets. Figure 3: Analysis of feasibility c. Analysis of stakeholders Acceptability Alternative strategies Limited growth Stakeholders Acceptability If FedEx Company uses limited growth strategy, FedEx can avoid the massive debt that often accompany rapid growth strategy furthermore, this debt will be very costly especially when FedExs sales are not high as expected. Thus, banks are interested with the financial situation of FedEx so FedEx can get the support from banks. When FedEx introduces the services to the new customers in new markets and gives them the competitive prices so FedEx could get the trust of customers and they will accept the brand of FedEx.</p> <p>9</p> <p>Substantive growth</p> <p>By improving the technologies innovation, FedEx can create new services in better way so FedEx will create good image in customers mind. Furthermore, the greatest advantage of s...</p>

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