DHL Express_ Strategic Planning Document

7/27/2019 DHL Express_ Strategic Planning Document

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DHL express: Strategic planning document

EXECUTIVE SUMMARYThe aim of this strategic planning document is to thoroughly analyze a company and based on the

analysis find the right strategy that fits the company's business purpose and mission. The right strategy,

depending at what is directed, should help the company strengthen its position on the market; increase

profits; help with further development. If a company implements a wrong strategy, it can cause bad

damage or it can have huge financial impact on the company which could even end up in bankruptcy,

which wipes the company off the market.

The company chosen for this paper is DHL Express with focus on European region. DHL is part of the

Deutsche Post DHL (further "DP DHL) brand/group. The reason why I have chosen DHL for the

Strategic Planning Document is that I have been working for DP DHL group for four years. I work

specifically for IT Services which is the service line that internally supports the whole IT technology of

the whole DP DHL group.

ABOUT THE COMPANYDHL was founded in San Francisco exactly 40 years ago by 3 budding entrepreneurs - Adrian

Dalsey, Larry Hillblom and Robert Lynn. It went from small company shipping papers by airplane from

San Francisco to Honolulu1 to global company shipping EVERYTHING around the world.

DHL delivers time-critical shipments as well as goods and merchandise by road, rail, air or sea. DHL

transports courier and express shipments via one of the world's most extensive networks to over 220

countries and territories. The company employs more than 300,000 employees all around the world.

DHL Express provides wide range of easily accessible services and solutions for their customers;

from transport of letters, information to transport of parcels and goods. It operates in more than 220

countries around the world and employs more than 100,000 employees. DHL Express is number one in

Europe with 25% of market share.

Brief history 2

1969 DHL founded by Adrian Dalsey, Larry Hillblom and Robert Lynn in San Francisco;

1974 The first UK office opened in London. Globally, DHL had more than 3,000 customers;

1979 DHL extends its services to delivering packages. Only document services had been

available until now.

1983 DHL is the first air express forwarder to serve Eastern European countries. An

international distribution centre was opened in Cincinnati, USA;

1985 A state of the art hub was opened in Brussels. More than 165,000 shipments are

handled per night

1998 Deutsche Post became a shareholder in DHL;

2002 Deutsche Post World Net became the major shareholder in DHL and 100% shareholding

was completed by the end of the year.

DHL: Our Company Portrait [online]. Available at ww w:

1.

DHL: Steps to success [online]. Available at w ww:

2.

2005 DP DHL acquires Exel, the British logistics corporation. Exel primarily offers transport

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and logistics solutions for key customers;

2008 DHL opens new state of art European air hub at Leipzig/Halle Airport in Germany.

DHL legally operates under Group's title defined as Deutsche Post AG and uses its brand name DHL. As

previously mentioned DHL is part of DP DHL group and is formed by 3 divisions: Express, Global

Forwarding, Freight and Supply Chain supported by internal services Global Business Services. Mail is a

standalone division that is part of Deutsche Post brand. All four divisions together create Deutsche Post

DHL as the picture below describes.

DP DHL: Corporate Presentation, October 2009, p. 3 [online] Available at www .

3.

DHL has a divisional form of structure. The DP DHL group is organized into four operating divisions,

each of which operates under the control of its own divisional headquarters. The Group management

functions are performed by the Corporate Center.

Management responsibilities are structured in accordance with decision-making,responsibility and reporting lines:

Board departments

Corporate departments

Business departments

Service departments

Regions

Departments

DHL Express provides standardized products and services - courier, express and parcel (CEP) - both

locally and globally depending on the country. Whether it is document or parcel, road or air, DHL Express

provides several different types of services that are divided to four basic groups:

1. Same Day

An immediate pick-up of a shipment by a dedicated courier, with an emergency delivery within the same

day via a dedicated network.

2. Time Definite

Express door-to-door delivery by a certain time on an overnight or next possible business day basis.

3. Day Definite

Reliable door-to-door delivery within a certain number of days

4. Optional Services

Shipping convenience with a range of optional services to support your express transportation

DP DHL: Annual Report 2008, p. 22 [online] Available at www.

4.

DHL: Express Services Good afternoon [online]. Available at w ww :

5.

External Analysis

Courier Express and Parcel (CEP) services exist in every single country around the world. It is neither

country specific nor region specific industry. There are thousands of logistics companies operating

locally or internationally around the world and Europe is not an exception.

PESTLE

PESTLE analysis is a view on external environment companies operates in. There are five external

factors that influence life of organizations: Political environment, Economical environment, Socio-cultural

environment, Legal environment and Environmental factor.

The below PESTLE analysis focuses on CEP companies in European market.

Political Environment

European region is stable environment that is not affected by any significant political crisis in

countries and no major changes in political structure are expected in near future. More than half of

European states are integrated into European community, European Union and create one of the biggest

single markets for trade and investment in the world. EU enlargement has removed border lines and hasmade trade and business more accessible for its members. It has brought greater opportunities for

businesses, wider range of companies and benefits for their customers.

EU has created closer links with immediate neighbors and enables bigger exports, free movement

of services, payments and capital for trade and investment. Prior liberalization in 90's there were many

national postal operators acting as monopolies. EU decided to start postal reform that firstly completely


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liberalized CEP market. Liberalization has enabled both national postal operators (Post Offices) and

private postal companies to enlarge their business portfolio into parcel and express market.

This happens through acquisitions of well-established companies and smaller national companies.

Exactly, as it happened to DHL through acquisition by Deutsche Post in 2002. Full liberalization in Europe

will be completed by 2012 which gives current companies time to strengthen their positions, build new

networks and gain wider portfolio of customers.

EU has also built up confidence in European political and economical future of each member which

enables companies to make longer term decisions, strategies and investment plans. Currently the CEP

market is highly competitive and companies have to have capital to establish strong and powerful

position in such an environment and have to have built up networks supported by the modernist

technologies.

Summary:

Europe is stable environment where no major political changes are expected. Full liberalization of

European postal market that will be finished by 2012 will bring more competition especially on domestic

level. However, there is a potential to merge or acquire those companies operating in the local markets

and increase market share. Big companies operating on international level have an advantage of built

global networks and modern technology behind them.

Economical Environment

CEP is highly potential market and its growth is directly related to the level of GDP. Global trade is on the

rising level and together with industrialization has made CEP services more important for majority of

industries. Additionally, product life cycles have been reduced, quality awareness among customer isgrowing and in order to succeed companies are forced to maintain high quality standards.

The global economic crises caused decline in economy and it has affected the entire logistics sector.

Volume of shipments decreased and the recession slowed down the whole market. Even the big

corporations have to fight with decreased revenues and change their investment plans and business

strategies.

Governments around Europe support investment plans by structural reforms and programs that

encourage investors to invest. During the big economic crisis in 30's this did not happen and

governments tended to act individually without multinational or even global cooperation. Today's

economies learnt from those mistakes which help to lower the implications, increase customer demand

and support start of growth. Due to the crisis companies changed their investment plans but did not stop

them. Merges with smaller companies, agreements and strategic acquisitions represent one way of

increasing the competitive advantage.

Emerging markets represent big opportunity in long-term perspective. There is potential for investmentand development in emerging markets and it is expected that industrialization will bring opportunities, the

economy will growth and market for services will accelerate. The crisis negatively affects profits of every

company on one hand but on the other hand big corporations with strong brand and position in the

market have to exploit this opportunity. Smaller companies do not have potential to expand because they

are in bigger risk of losing money or even bankruptcy if they fail. Big corporations are able to absorb that

risk much easier.

Companies have started to reduce cost and people have started losing their jobs. Restructuring of

company structure is one of the way how to move forward. IT is core element of every company that

operates in logistics industry. Companies have to invest huge amount of money to development and

maintenance of their IT infrastructure. Recent trend leaves development in Europe and transfers hosting

and maintenance of the infrastructure to Asia.

Summary:

Conclusion from the Economical environment analysis is that companies should not stop their

investment plans because of economic crisis. It is important in current situation to strengthen position in

the market and expand if possible. Emerging markets represent a potential of rapid economy growth.

The risk of loss is the same for all companies but for big corporations is more acceptable. Reduction of

cost is evitable for every company and restructuring or outsourcing are the ways of dealing with it.

Socio-Cultural Environment

The third aspect of PESTLE analysis focuses on forces within society. Social and cultural forces affect

customers' attitudes, interests and opinions. Companies must be able to offer products and services that

aim to complement and benefit customers' needs and wants. If they do not quickly respond to changes

in society they will lose market share and demand for their product or service will decrease.

Removing of border lines makes trade and business in Europe more accessible. Emerging markets are

place that is constantly developing and rapidly growing. Although the infrastructure is not as developedas in Western countries, there will be improvement with economic growth. It is important for the

company to establish its brand and achieve good and reliable image and service quality among its

customers. The portfolio of services that is offered in developing countries is not usually complete and

focuses on the biggest needs and wants of the business.

Companies do not have the only affect and responsibility to their customers. There are different parts of


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society they are in contact with. There are needs of employees, investors and the society as a whole.

Research & Development department play an important role in this area. Customer satisfaction surveys,

employee satisfaction surveys, market surveys help the company to build its brand and image, increase

employees commitment and shape public awareness.

CEP market and logistics industry play one of the key roles in the economic growth globally not only

within European market. Increases in volumes of goods transport has lead to higher CO2 emissions

which according to climate scientists have direct affect on global warming. It is social cost for the society

and governments discourage those social costs with fines, taxes and legislation. Companies'

responsibility is to decrease these cost and work with more efficient and environmentally friendly means

of transport. Social cost have negative affect on customers' spending but could be balanced by larger

offer of environmental friendly oriented products.

Summary:

Social forces affect customers' needs and wants and it is important for the company to know it and

benefit from it. Therefore the role of Research & Development is very important. Company has to

respond to changes in society quickly not to loose market share and demand for services. Customer

satisfaction surveys, market surveys, employee surveys play important role in building company's brand

and image in the market.

Border lines have been removed within EU and services are more accessible in the whole Europe.

Emerging markets represent an opportunity for companies to enter and establish their brand and image.

Additionally, there are also social costs for the society that companies have responsibility for. The affect

on environment is significant and companies' role is to decrease those costs by working with more

efficient and environmentally friendly technology which is then balanced by larger portfolio of

environmental friendly oriented customers.

Technological Environment

Technology environment is vital part of every business that rapidly moves it forward. Technological

innovations have changed the world and manner in which every business operates. Technology has

created society expecting immediate results. Information exchange between customers, companies,

people or any stakeholders is faster. That gives benefit to businesses as they can react quickly to any

changes in the operating environment. However, the ability to quickly react also brings extra pressure on

companies because they are expected to deliver on time and without any delays.

Customers in service industry have to continuously face new challenges in planning, managing and

monitoring their business processes. Companies in CEP market (and not only there) started offering

customized logistics solutions to meet challenges: for example safety transport of sensitive products

such as pharmaceuticals and vaccines to the healthcare industry done within a temperature-controlled

environment. Operations in logistics industry is not only about cars, vans and aircraft there are other

parts of infrastructure that needs technological development and improvement: posting, collection,

sorting, transport, warehousing, delivery and last but not least Information Technologies. IT is core.

Speed and reliability are key success factors to be able to meet standards and quality and gain

advantage among competition.

It is important to pay special attention to IT area because service industry is fully dependent on it.

Companies invest huge amount of money to development and maintenance of their IT infrastructure. As

mentioned above IT is one of the key elements for logistics and operations processes. Systems must be

accessible and available at all times; security is evitable - unauthorized access to data and data

manipulation must be prevented, to ensure that software is not delivered with defects or too late.

Companies have to fight with decreased revenue and reduce their cost in times of economic crisis but

importance of IT technology is so significant that they cannot stop investing in it. Otherwise there is a

threat that they will fall behind and loose their market share.

Outsourcing or in other words subcontracting is a way of reducing cost in IT area. Development ofnew technologies, software or applications goes to another organization. Usually, the company is

specialized in software development. Or hosting and maintenance of applications or services are

transferred to another company. The decision whether to do in-house or outsource is often based on

achieving lower production cost and usage of available resources in better way and focus energy on the

core competencies of the business.

Summary:

Modern technology and environment is key to success of the company that helps to maintain or gain

competitive advantage. IT is the most important technology factor for logistics business because speed

and reliability are equal to success. However, there is an indisputable constant threat of falling

behind.Investments to the modernist technologies are evitable and in times of economic crisis are much

more important then anytime before. Company has to decide if it runs internal IT organization or if it

outsources most of the services and reduce cost.

Legal Environment

Legal rules play a role in nearly every aspect of company's operation from state regulations through

contracts to treatment of employees. Legal factor is very important because companies work within

legislative framework where legislation can either place numerous obligations or can create market


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conditions beneficial for business.

CEP market is regulated by Postal directive applicable in all EU states. Full liberalization process will be

completed by 2012 which gives current companies time to strengthen their position, build new networks

and get more customers before new competition arrive. CEP market was fully liberalized during 90's and

no special license or authorization is required in most of the EU countries. Ten states of EU require

companies to receive explicit decision of National regulatory authority that is called "general

authorization that enables them to start operating in those countries but it does not represent a barrier.

General authorization document contains several conditions that are related to e.g. confidentiality of

correspondence, restrictions on transport of dangerous goods, data protection standards, etc.

As I said previously there are social cost for the society that must be balanced by companies' obligations

in terms of fines, taxes and additional legislations related to regulation of aircraft noise, regulations

concerning emission standards, obligations to reduce greenhouse gas that forces companies to invest

into more environmentally friendly means of transport.

Summary:

Legal factor is important for operations of every company. Companies have obligations like directives,

taxes and rules that they must be aligned with to be able to operate in the market. Legal factor can either

place numerous obligations on the company or can create market conditions beneficial for business.

Liberalization is an example of the benefit. Removal of border lines together with liberalization enabled

building and strengthening of positions in the logistics market. There are no special and expensive

authorizations necessary in CEP industry which is another benefit for companies. On the other hand

there are obligations that balance the above benefits in terms of fines, taxes and directives that are

mainly related to environment. Companies are forced to invest into environmentally friendly operations.

Environmental Analysis

Transportation industry causes major impact on the green house gases in the atmosphere. Mobility has

increased and brought many indisputable advantages that must be weighed against the social, economic

and environment costs it causes. Countries issue legislation that forces companies to reduce emissions.

Companies have started implementing projects that help them to find out ways how to reduce pollutions

and to be compliant with issued legislation. Transportation companies are dependent on fossil fuels and

to reduce their dependency they have to look for commercial vehicles and aircraft powered differently or

non-conventionally. Change of vehicle is not the only option that would reduce air pollution there are

other ways that companies could take: to make their business more efficient and effective, to reduce

shipping time, to take uniform approach, to offer climate-neutral products or train employees.

Research & Development department plays important role in those projects because it helps to come up

with new ideas, technologies, procedures and processes.

Summary:

Transportation industry has great effect on air pollution globally. It is undisputable fact and companies

are forced to fulfill the requirements of governments to reduce their contribution on pollution of the global

environment. Companies have started implementing projects that help them fulfill those requirements.

Research & Development department is key to the success of it.

PESTLE Summary

Based on the PESTLE analysis I have identified opportunities and threats that will be taken into account

during the SWOT analysis.

Opportunity: Full liberalization of European postal market that will be finished by 2012 brings

new opportunities to increase market share by acquisitions or merges with other logisticscompanies or newly liberalized companies. Established companies wit big market share, global

network and technology have competitive advantage.

Opportunity: Border lines have been removed within EU and services are more accessible in

the whole Europe. Emerging markets represent a potential of rapid economy growth therefore it

is an opportunity for companies to enter and establish their brand and image and gain bigger

market share.

Threat: Role of Research & Development department in the company is very important.

Company has to respond to changes in society quickly not to loose market share and demand

for services. Customer satisfaction surveys, market surveys, employee surveys play important

role in building company's brand and image in the market.

Threat: In times of economic crisis economy slowed down and revenue decreased. Reduction

of cost is evitable for every company and restructuring or outsourcing are the ways of dealing

with it.

Threat: Social costs represent a responsibility of companies towards society. The affect of

transportation and logistics companies on environment is significant and companies' role is to

decrease those costs by working with more efficient and environmentally friendly technology

which is then balanced by larger portfolio of environmental friendly oriented customers.

Companies are forced to invest into environmentally friendly operations by fines, taxes and


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directives placed by governments. Therefore, companies have started implementing projects

that help them fulfill those requirements.

Threat: Modern technology and environment is key to success of the company that helps to

maintain or gain competitive advantage. IT is the most important technology factor for logistics

business because speed and reliability are equal to success. However, there is an indisputable

constant threat of falling behind. Investments to the modernist technologies are evitable and in

times of economic crisis are much more important then anytime before. The role of Research &

Development is evitable here.

Porter's Five Forces

Courier Express Market is highly competitive market and its growth is directly related to growth of

GDP. Customers of logistics companies are demanding. Technology improvements reduce product life

cycles, quality awareness among customer is growing and in order to succeed companies are forced to

maintain high quality standards.

DHL Express has three biggest competitors in CEP market. They are UPS, TNT and FedEx. As you can

see in the Picture 2 below DHL Express has the highest market share of 25% as a single company in

Europe. All four major competitors operate internationally and have global network with good and

modern technology behind them. The picture below also shows us that third of the European market is

dismantled among small and medium sized companies that operates independently.

European market portrait

Customers of logistics companies vary from individuals to big industrial or manufacturing companies. All

of them expect that the delivery service will be simple and convenient and that the delivery will be ontime without any delay and in a good quality. Customers are more and more demanding because range of

suppliers is broadening and they are looking for customized and innovative solutions for delivery of their

goods.

DP DHL: Annual Report 2008, p. 58 [online] Available at www.

6.

The range of offered products is wide but could be introduced in three basic categories:

Courier services are fast, door-to-door pick up and delivery services of high-value goods or

urgently required documents.

Express services are time-sensitive, usually guaranteed services and have delivery time a

specific day (in general the next day) and/or specific time.

Parcel services are the transport of largely standardized packages with usually non-guaranteeddelivery time of 2-3 days (Time-definite and Day-definite)

Porter's Five Forces mode will help me to analyze five forces that influence the logistics industry and

better understand the environment in which DHL Express operates in and competitive advantage the

company has or could gain.

Threat of New Entrants HIGH

CEP market is large and very attractive to business. Everyone needs to deliver package or parcel.

Everyone needs to use courier. Logistics industry is important and dominates to the service sector. It is

very easy to entry. There are no special legal barriers, patents or licenses necessary to run the business.

There are exceptions as described in PESTLE analysis but those exceptions do not represent

"impossible to achieve requirements. The market is still growing and there is an assumption that will

grow further.

There are no border lines among members of EU which would threaten new companies to enter

the CEP market. Company that wants to succeed in such a competitive environment has to have a good

network that enables it to operate on local and international level. Good network requires time and

financial investment. High technology standard is must.

Companies have to protect themselves from the threats of new entrants therefore it is important for them

to find ways to turn disadvantages in their favor. They have to capitalize from their historical experience

and try to find better ways to provide their service. Current big players in CEP market are well

established leaders that have significant cost advantage that is unavailable for the new entrants. Large

companies have buying power that allows them to offer discounts to their customers. Simply, bigger the

business is lower average unit cost they are able to produce.

Customers' loyalty is another important factor that increases barriers to entry for other competitors. Loyaland satisfied customer will be unlikely tempted to go to competitors or new entrants. Establishedcompanies usually do business set on long-term partnerships and contracts. The basic rule says thatcustomers get everything they need or want. There are many advantages that economies of scale

gives to big corporations but there are also limitations that must be taken into account. Those limitationsgive competitive advantage to smaller and medium sized companies. Large companies are very complexand with higher complexity the product range is widening. This makes it difficult to succeed and be thebest. Specialization and innovative ideas are crucial. Large companies are also known for their high levelof bureaucracy which gives smaller companies big advantage because they can satisfy customer fasterand it is what matters in logistics industry. Also large companies have thousands of employees withdifferent labor relations in every country which causes additional legal cost. In case of powerful workersunion it can decrease power of the company and make their operation more difficult especially in time of


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restructuring.

As I have mentioned modern technology is an important factor that significantly helps to increase

market share and creates more barriers for new entrants. Outsourcing or off shoring are possibilities for

companies to take advantage of other economies of scale and use their buying power and specialization

in favor of further development.

Summary:

In summary, logistics market is large and is attractive to business because when GDP grows the

demand for services grows. There is no special barrier to entry. In fact, it is very easy to entry. The

market is still growing and there is an assumption that will grow further. Successful companies havebuilt networks that enable them to operate on local and international level. Good network requires time

and financial investment. High technology standard is must. Historical experience and appearance in the

market is an advantage for companies like DHL.

Big companies and corporations use economies of scale in their favor. Bigger company can provide

higher discount and has lower profit. Customers' loyalty is another important factor that increases

barriers to entry for other competitors because of long-term partnerships and contracts.

On the other hand there are also disadvantages for big companies that must be taken into account.

Large companies are very complex and with higher complexity the product range is widening.

Specialization is an answer to it. Large companies are also known for their high level of bureaucracy

which gives smaller companies big advantage. Bureaucracy slows down the whole process. Strong

workers unions decrease power of the company and make its operation more difficult especially in time

of restructuring.

Modern technology helps to gain competitive advantage and be ahead of new entrants. Companiesshould take advantage of outsourcing or off shoring companies and use their buying power in favor of

specialization and development.

Threat of Substitute Products or Services HIGH

Every customer has a choice when and what to buy. Substitute products or services create a

ceiling on the price. Any need or want of the customer could be satisfied in different ways and it is up to

the customer which company to choose. Threat of substitute products is very high in CEP market

because range and price of offered products is similar. Customer can quite easily turn and goes to the

competitor.

Research & Development department plays outstanding role for this aspect. It is important to know what

customer wants and needs therefore customer satisfaction surveys must be held. Surveys help to

identify the problem of substitute products and help to answer what substitute products customer

considers. They help companies to better position themselves in the market and among customers,uncover customers perceptions, improve customers loyalty, or help to make technology and product

improvements.

For a company to be able to succeed in such a competitive environment it is important to know who the

competitors are and what service they provide that could substitute the service they offer. It is also

important to consider their benefits, price, weaknesses, constraints, limitations, reason for switching

between products and barriers to switch. Based on that information, company can defend the threat

easier and attract customer from another substitute service by innovation for example. It is important to

communicate and educate customers about services the offer. Customers must be tempted to purchase

and if they are loyal it would stop them from switching to another company. Marketing and Advertising is

therefore highly important for this factor. Companies have to invest in building their brand and image to

gain competitive advantage.

Summary:

The range of offered products and prices in logistics industry is similar. Therefore threat of substitute

products is very high. Role of Research & Development department is important and helps to identify

what customer wants and needs, the problem of substitute products or answers what substitute

product customer considers. Its role is also to get knowledge about competition and their offer. Based on

that information, company can defend the threat easier and attract customer by the added value

(innovation for example). Investment in Marketing and Advertising cannot be forgotten. These

departments communicate and educate customers about brand and image of the company, about

products that are in the offer. They help to gain competitive advantage.

Bargaining Power of CustomersHIGH

Logistics industry is highly competitive and there are many companies that offer similar products.

Customer has the power to decide if to pay high or low price, to decide between cheaper or more

expensive company. And also customer has the power to walk away and make a deal with competitor.

Loyalty increases when customers get better value or benefits for the same price. Therefore it isimportant to build customer satisfaction, build partnerships or provide discounts. Basically, any reduction

of the price that customer "negotiatesmeans lower profit for the company.

Customers are very sensitive to price and are willing to switch to the competitor very easily if the

service, company offers, does not differentiate from any other service that can be purchased in the

market. Price is the magic word that matters. Therefore it is important for the company to differentiate


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and offer something more. If it cannot be price then for example it can be company's attitude towards

environment and using climate-neutral transportation or products.

There always must be value added for the customer.

Suppliers always outnumber customers. This is a market rule. Therefore, customer has the

advantage and is allowed to choose from a range of companies who offer the logistics service. The

logistics industry offers similar products and customer is able to compare prices and types of services

from different companies.

Company has to be differentiable for the customer and unique in some way. As I indicated above

price is not the only factor that influences the customer, although it is a strong influencer. It is importantto create a tight and loyal relationship with the customer and offer range of services for good price and

quality. There are many tools company can use to fasten the customer: special offer, favorable financial

arrangements, long-term contracts, etc. Customer's switching costs are dependent on the strength of

the cooperation and linked tasks. Therefore companies in service delivery have to invest in modern

technologies. Internet could serve as an example. It has completely changed the world of logistics and

e-commerce has brought new financial opportunities not only for customers but for suppliers as well.

Summary:

Logistics industry is highly competitive and the range of products and prices is similar. Logistics

companies always outnumber customers and customers very easily switch to competition. Therefore it

is important to gain customers loyalty and provide benefits that would tight them to the company. It is

also important to differentiate from competition and to provide offer with added value for example

climate-neutral products. There are many tools company can use to fasten the customer: special offer,favorable financial arrangements, long-term contracts, etc. Customer's switching costs are dependent

on the strength of the cooperation and linked tasks. Modern technologies are able to tight customer to

the company and increase switching costs.

Bargaining Power of SuppliersHIGH

In this section I would only focus on bargaining power of suppliers in Information technology area

which is the most important factor for the logistics industry. Every company has to invest huge amount

of money into IT to be able to stay on top.

There are two types of technology used in CEP market "front-office and back-office. Front-

office technology represents computers, telephones, scanners, handhelds etc. and back-office

technology is the more important one. It is primarily used for operational purposes of the service, it

creates the network. For example: systems that help companies to improve their operational efficiency

like GPS or track & trace system that help to locate the parcel for the customer at any time.Investments to modern IT technologies are big and every company has to decide if it runs internal IT

organization or if it outsources most of the services. In the latter case, decision of using expensive but

highly skilled company or cheaper and badly skilled company is essential because it could potentially lead

to higher cost in future. IT knowledge and skills are the core for success of the company in logistics

industry. What is modern yesterday is out of date today. The threat of falling behind is present.

Usually, company contracts with few companies for longer period of time. Global companies tend to

supply from already existing suppliers. It is beneficial for both sides. Both supplier and the company can

use buying power in favor of specialization and development in their sectors.

Summary:

Suppliers in IT have an advantage of skills and importance. Every company in logistics industry is

dependent on its network and IT systems. Therefore companies and specifically the large companies

spent big amount of money for development of Information Technologies to be able to stay on top.Company can either use internal IT organization or outsources the services. IT knowledge and skills is

the core for success of the company in logistics industry. There is a constant threat of falling behind.

Rivalry Among Current Competitors HIGH

Rivalry among the big players is high and is very intensive especially on international level. There are

many middle or small companies that represent danger and increase rivalry on local or international level.

As mentioned several times it is very important for the company in order to succeed to differentiate from

its competitors. One of the ways, they can do, to come up with innovative ideas. The role of Research &

Development department is then inevitable. Therefore it is important to employ skilled and committed

people with new ideas that help the company to increase its competitive advantage.

Porter's Five Forces summary:

Based on the Porter's Five Forces analysis I have identified opportunities and threats that will be taken

into account during the SWOT analysis.

Threat of new entrants is very high in CEP market but existing big players have built national and

international networks that provide competitive advantage against new entrants. Historical experience

and appearance in the market is an advantage for companies like DHL and customers' loyalty increases


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barriers to entry for other competitors because of long-term partnerships and contracts. Big companies

and corporations use economies of scale in their favor. Bigger company can provide higher discount and

have lower profit. However, bureaucracy that exists in large companies gives smaller organizations

competitive advantage. Bureaucracy slows down the whole operating process. Outsourcing or off

shoring are used to reduce cost and suppliers' buying power is used in favor of specialization and

development.

Threat of substitute products is very high because the range of offered products and prices in logistics

industry is similar. Role of Research & Development department is crucial and helps to identify what

customer wants and needs and solve the problem of substitute products. Investment in Marketing and

Advertising is important because these departments communicate and educate customers about brand

and image.

Bargaining power of customers is high because range of products and prices is similar and customers

very easily switch to competition. Therefore it is important to gain customer loyalty and provide benefits

and differentiate from competition. Customer has to experience the added value. Customer will not

switch to competition if there is a linked relationship and dependency that would increase the switching

cost.

Bargaining power of Suppliers in IT is high. Logistics companies are dependent on network and IT

systems. IT knowledge and skills is the core for success of the company in logistics industry. There is a

constant threat of falling behind. Therefore it is important to choose right supplier.

Rivalry among current competitors is high because all four biggest competitors are successfully

established on international level and have experience with competition. Local or international

competitors represent third of the European market and must be taken into account as well. Therefore

differentiation and innovation are important for the company. The role of Research & Development

department is indisputable here.

Internal Analysis

Internal Analysis serves as a tool that tells me if company is capable to use opportunities and

defend from threats that were found during the analysis of external environment.

From the analysis of external environment I know that CEP market is highly competitive. Customers

are demanding and request effectiveness, efficiency, speed and quality. Company that wants to succeed

in this environment must have good operational network and modern technology that would support it

on local and international level. Successful companies work on development of their competencies to

become core competencies to get bigger competitive advantage.

Competences

DHL Express has been in logistics business for 40 years now and it has built its brand and business ontradition. It provides wide range of easily accessible services and solutions for their customers; from

transport of letters, information to transport of parcels and goods. It operates in more than 220 countries

around the world and employs more than 100,000 employees. DHL Express is number one in Europe

with 25% of market share. It wants to become a Logistics company of the world.

The advantage of operating globally, using of fixed routes and standardized workflows for delivery is

enormous. DHL Express operates in tight cooperation with other divisions (Mail, Global Forwarding &

Freight and Supply Chain) which helps to better address customers' needs. Modern Information

Technology stands behind the success without any discussion. Customer and service support serves 24

hours a day and 7 days a week.

DHL Express has built its success on committed employees and experts. DP DHL group belongs among

the five most admired companies in the world in logistics industry. It is on fourth place just behind

FedEx, UPS and TNT according to the Fortune magazine. It invests huge amount of money onto

research and development area and has come up with several interesting projects aimed on employees,

shareholders and customers, environment and innovations. DHL pays special attention to Marketing &Sales area and presentation of their brand and image. DHL knows that educated customer and employer

will bring future benefit.

Core Competences

Core competences represent competitive advantage of a company. They help to differentiate, be more

profitable, be more successful and gain more market share. DHL works on its competences very hard to

gain the competitive advantage and be the best in the Express market. They say that size is not enough

and they are not the best just because of the biggest market share but also because they are able to

provide the best service, innovative solutions and achieve customers' satisfaction.

DHL Express' core competency is guaranty of the fastest delivery in a good quality anywhere. As I said in

previous text the trick behind that is the network in which DHL Express operates consisting of more

than 220 countries, standard routes, modern technologies, standardized procedures and processes and

last but not least more than 100,000 committed employees. Further more DHL's aim is to continue inimproving its core competencies and continue in innovation, quality and productivity and provide career

development opportunities for their employees. And in the same time be seen as socially responsible

organization.

DP DHL group and subsequently DHL Express have rolled out strategic programs and initiatives that

they believe drive the company forward to the future and are based on core competencies:


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First Choice program is focused on improvement of business processes based on customers'

needs. The rationale behind is to strengthen customers' loyalty and intensify and broaden

business with current customers. DHL also wants to change the corporate culture of DP DHL

group and improve collaboration among employees across divisions and regions to provide

better value to their customers.

Roadmap to Value program is focused on transparency, profitability, cost reduction,

performance, organic growth, sustained increase in the company value, etc. This program is

aimed to make DHL first choice for customers and employees and also for investors.

As mentioned several times in this paper environment and social costs are closely connected

therefore DHL has rolled out a program focused on climate protection and disaster relief. It is

called Go Green. The company itself set a goal to achieve 30% improvement in CO efficiency by

2020. Therefore it has implemented measures such as fleet optimization (both aircraft and

ground vehicles) and expand range of climate-neutral and climate-friendly products. Additionally,

the company is an official partner of United Nations organization and provides logistical support

during natural disasters.

The main driving force behind the programs and initiatives are people, the human resources, the

organization itself. People are the great benefit that DHL Express has. Educated, skilled and smart

people are the core competence that helps to move the company towards future. DHL rolled out an

initiative called Discover logistics to present logistics as an exciting industry that looks into the future

and introduces DHL as attractive employer. DHL uses an online career portal that is taken as an

adequate and fitting recruiting tool in the age of internet.

Position Audit

Position Audit will tell me if DHL Express is able to take advantage of opportunities and is able to

mitigate threats that were identified previously.

The analysis of External environment revealed an opportunity for DHL to increase market share by

merging with other logistics companies or newly liberalized companies. According to the Picture 2 third

of European market is dismantled among small or medium logistics companies. Through mergers and

acquisitions DHL could enlarge its network and result of having better and efficient facilities with loyal

customers. DHL has assets that allow the company to go that way.

Another opportunity that appeared was entrance into Emerging markets. There is potential of rapid

economy growth and profit. DHL has already entered in these countries and through Marketing is

working on establishing of its brand and image there.

Modern age has brought changes and constant development of technology and demand. This

represents a threat for the company that will not be able to quickly react to those changes and the

company may loose market share. As indicated in PESTLE analysis role of Research & Marketing is

evitable and represents must for the company. DHL invests into this area and mitigate this threat quitesuccessfully.

Economy crisis has brought slow down of economy and decrease of revenue. Every company has

to deal with that threat and mitigate it. DHL is aware of that threat and is convinced that strong brand

makes them safe and well-equipped for difficult times. Therefore, they plan less investments and have

started working on lowering of indirect costs by cost-cutting. Therefore, they have started with

restructuring and initiatives that improves cross-divisional cooperation.

Social cost and responsibility of companies represents another threat for companies in terms of

fines, taxes and customers' perceptions. Logistics industry has significant negative effect on

environment and companies' responsibility is decrease the social cost by working with more efficient

and environmentally friendly technology to balance it. DHL has come up with their goal Living

responsibility and initiated several innovations and programs to deal with this threat (e.g. Go Green

program). Research & Development has played an important role in it.

21st century is the age of modern technologies and namely Information Technologies. Logistics isbased on technology because speed and reliability are basics for success and to fall behind is relatively

easy. DHL Express mitigates this threat by strong internal IT organization that supports the whole DHL

network. Additionally, DHL uses knowledge of IT companies like Hewlett Packard and IBM to use the

modernist IT tools and technology. Additionally, DHL also outsources highly skilled specialists to

cooperate on innovations and innovative ideas. Roadmap to Value program helps to mitigate that risk.

Threat of new entrants is very high in CEP market and DHL has to mitigate the risk and does it very

well. It has built strong national and international network that provide high competitive advantage.

Experience and strong brand increase loyalty and create barriers for new companies to entry. DHL has

25% of European market share which brings an advantage of economies of scale. Possibility of more

favorable prices offer, higher discounts bring new customers and help to build long-term partnerships

and contracts. DHL knows about the advantage and work on it with help of Sales and Marketing and

Research & Development department programs First choice and Roadmap to value help to mitigate

that threat.

On the other hand the advantage of DHL as a big corporation has also brought more bureaucracyand slow down of processes. This is a fact and I can only confirm it as a DHL employee. Program like

Roadmap to value helps to mitigate it and brings more transparency and performance. DHL has started

with restructuring of the company organization that also brings cost reduction. First choice program

brings more collaboration between employees and consequently brings innovations.

The range of offered products in logistics industry is similar. Therefore the threat of substitute


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products is very high. DHL works on mitigating it through Research & Development and through First

Choice program. The result of the initiatives has brought identification of customers' wants and needs

and help to solve the problem of substitute products. DHL continues on improvement of the products

and services that are in the offer. High quality together with speed and reliability are key success factors.

Standardized systems, processes and workflows enable the DHL sales force to increase productivity.

Again the programs Roadmap to value and First Choice is an answer to the threat of substitute products.

Bargaining power of customers is very high in logistics and threat of losing customers is significant. DHL

knows that therefore invest in Marketing & Sales and in constant communication and education of

customers. It has built well-established and well-managed brand that is one of the most valuable assets

of any company on national or international level. First Choice program helps to align processes with

customer needs and subsequently bring cost efficiency.

Suppliers play an important role in logistics business, their power is high especially in IT. Information

technology is a key success factor. All systems must be accessible and available at all times;

unauthorized access to data or data manipulation must be prevented, and it is important to ensure that

software is not developed with defects. The success of IT depends critically on employees and

suppliers. DHL uses its internal IT organization and as mentioned above DHL also uses knowledge of IT

companies like Hewlett Packard and IBM and outsources highly skilled specialists to cooperate on

innovations and innovative ideas. Investment in that area is high but it is worth it. DHL uses knowledge

and core competencies of other companies in its favor.

Rivalry in CEP market is high and DHL is aware of it. DHL Express has started working on tighter

cooperation with other divisions; uses cross-divisional synergies and works on improvement of

products and services through differentiation and innovation and invests in research and development.

Additionally, DHL has competed to gain highly qualified specialists and managers and through First

Choice program "fight successfully with competition. Surveys, improvements, innovations,

transparency, cooperation and restructuring is a way for DHL to mitigate the risk of high rivalry andsustainable work on maintaining and extension of its market share.

SWOT Matrix

OPPORTUNITIES

Mergers and acquisitions

Investment in Emerging markets to strengthen market position and gain new market share

Investment into strategic programs

Active Sales and Marketing department

Improvement of products and services through innovation

Specialization of products

Improvement of collaboration cross-divisionally

Deepen relationship with suppliers to be able to use their buying power

Differentiation from competition (e.g. expand offer of climate-neutral and climate-friendly

products)

Intensify and broaden business with current customers to increase their dependency

Customized solutions for every customer

Increase productivity by strengthening of standardized systems, processes and workflows

key factors quality, reliability and speed

Education of customers

Communication to customers

Build more transparent organization by restructuring and cost-cutting initiatives

Outsourcing or off shoring

Be seen as socially responsible organization

Become First Choice for employees

Become First Choice for customers

THREATS

Slow down of economy due to economic crisis and lower profit

Social cost and impact on environment

Threat of falling behind in IT due to technology development and rapid changes

High dependency on network and IT

High threat of new entrants (doing business in highly demanding and attractive environment)

High threat of substitute products


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High bargaining power of customers

High rivalry among existing competitors

STRENGHTS

History and experience

Strong brand and image

Strong financial position

High market shareCost advantage

Global network and standardized w orkflows

Cross-divisional experience and cooperation

Standardized product portfolio

Portfolio of loyal customers

Broad portfolio of quality IT suppliers

Very good customer support

Established and strong Research & Development department

Strong Marketing & Sales

High level of technology

Skilled and committed employees

Very potential employer

Committed employees and highly skilled specialists

Official partner of United Nations

WEAKNESSES

Third of European market is dismantled among small and medium companies which weakens

the power of DHL Express

Bureaucratic environment (danger of slower processes and potential loss of customers)

Wide range of customers' portfolio (from individuals to big companies)

Wide range of product portfolio (worse identification of targeted customer)

Customers easily switch to competition

No major differentiation among the major competitors (network, history, experience, customer

portfolio, product portfolio)

SWOT Analysis

SWOT analysis is process of minimizing or mitigating threats by turning them into opportunities, turning

weaknesses into strengths, and matching of strengths with opportunities.

Threats

Economic crisis has brought slow down of economy, lower number of shipments and consequently

lower revenue and profit to the organization. DHL Express is strong organization with strong brand and

good financial situation that make it safe for the time-being. It is an opportunity for DHL Express to work

on making the organization more transparent, less bureaucratic and restructure its organization. These

initiatives would bring cost-cutting and help to financial health of the company for the future. It is also an

opportunity to outsource or off shore some of IT services from suppliers and use their buying power in

terms of competitive advantage.

There is a big threat of falling behind due to speed of technology development and high dependency on

IT and network for DHL Express. It is not possible to avoid that threat but it is important for the company

to minimize it. DHL Express uses broad portfolio of quality suppliers like HP and IBM that help to

minimize the risk of falling behind. Thankfully, the dependency is two-sided. It is not only for DHL

Express but also for the suppliers. It is important to deepen the cooperation and create stronger

dependencies. This could be done through innovative projects held through Research & Development

department.

As previously indicated the threat of new entrants is very high in CEP market, however, DHL Express

mitigates this risk very well. It has built strong global network. It has experience, history, strong brand

and very good image in the market. As a big company it has financial advantage and can offer more

favorable prices and discounts to the customers. Sales & Marketing and Research & Development

departments help to minimize that threat. Strategic programs that work on improvement, innovation,

education and communication cross-divisionally, among employees and customers are the success


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factors.

The threat of substitute products is very high in logistics and it is important to fight with this threat and

differentiate for the customer. Customer is interested in quality, reliability and speed; therefore it is

important for DHL Express to work on specialization and provide customized solutions for customers.

Good and recognizable brand brings image of quality and this is strengthen through Marketing & Sales

activities - communication channels, advertisements, commercials and further initiatives.

Customers have strong bargaining position in logistics industry because all logistics companies provide

similar portfolio of products. There are many competitors on domestic and international level that are not

easily recognizable for customers and therefore it is relatively easy for them to switch to competition.

Customers very often rely on image of the company and its historical experience which is a big

advantage for DHL Express. Therefore the investment into Marketing & Sales is important and work on

further development in that area is a big task. It is important to know what customer needs and surveys

play an important role in it. DHL Express takes initiatives based on it and came up with strategic

programs that work on improvement of company's assets in customers' eyes.

There is high rivalry among competitors in logistics industry as indicated before. DHL Express has to

fight with it but it has the advantage of international company with history and experience, with strong

and recognizable brand and good image. Cross-divisional cooperation, highly skilled specialists,

committed and educated employees, strategic programs focused on improvement of company's

strengths and weaknesses are ways of dealing with rivals and competition. The existence of smaller

rivals gives to DHL Express the possibility to merge with those companies and use their resources,

assets and networks to gain more market share. Cooperation and collaboration on innovations and

programs with them creates opportunity to further minimize this threat.

Logistics industry has highly negative impact on environment and creates additional social cost for the

company. It also has negative impact on image of the company; therefore DHL Express mitigates thisthreat by initiatives like Go Green program and close cooperation with United Nations organization by

help during natural disasters. Big companies have to use their power and authority to educate their

customers, suppliers and employees and work on decrease of the negative impact.

Weaknesses

As found out during the PESTLE analysis third of European market is dismantled among small and

medium sized companies which weakens the power of DHL Express. It mainly affects the domestic

markets. The small and medium companies do not generally operate internationally because they do not

have such a network and financial assets to build their international position and gain market share.

However, these small and medium companies represent an opportunity for DHL Express for merge or

acquisition and additionally for gain of more market share. DHL Express is in the position of strong and

financially healthy company and this is an opportunity that is quite easy to use.

DHL Express has more than 100,000 employees globally and large international network which createsfriendly conditions for bureaucracy. Bureaucracy creates formal and informal networks that connect

organization levels to one another through flows of information and cooperation and there is a danger

that these flows and organizational levels become to complicated and in some cases double the work

needed or it can happen that two organizational levels do the same task. Bureaucratic environment

slows down processes and procedures in the company and causes loss of customers. In order for DHL

Express to turn this into strength it is important to use and support work of Research & Development

department, support further cross-divisional cooperation, work on standardized process workflows and

create smooth cooperation channels among people in different levels of organizational structure.

DHL Express has wide range of customers' portfolio from individuals to big companies. It is given by

company size and environment it operates in. There is another weakness connected with this one and it

is wide portfolio of product offer. It is again given by size of DHL Express and the nature of logistics

environment. All four biggest competitors cannot be easily differentiated; they all have strong brand,

history, experience and similar product offer. Therefore it is not difficult for customer to switch to

competition. I believe that the above weaknesses cannot disappear, however DHL Express can work on

minimizing the impact. It is important for DHL Express to broaden and intensify business with current

customers and increase their dependency by providing customized solutions for every customer. If

customer uses tools of DHL Express and is dependent on its network it is costly to switch to

competition. DHL Express has to work on improvement of products and services and through

innovation and specialization increase productivity, reliability and speed of their services. This will tight

the customer closer and there will not be any desire to switch to competition. Investment programs are

the way to move those initiatives forward. The role of Sales and Marketing is important at this stage

because it supports the company and educates and communicates with customers. If company is seen

as a strong, financially healthy organization, with good image and recognizable brand, it attracts

customers.

Matching Opportunities and Strengths

Mergers and acquisition were identified as a big potential for DHL Express to increase their market share

and strengthen position in European market. DHL Express would use power of those smallercompetitors, their networks and customer portfolio to gain bigger competitive advantage. European

market will be fully liberalized by the year 2012 and it is clear that there will be more small and medium

sized competitors in near future. DHL Express has experience with merge and acquisition around the

world. I do not have to go far and say example of PPL, Czech logistics company that operates as a

partner of DHL. From my perspective as a customer it has given to PPL better image and competitive

advantage because anytime I have need to deliver a package I called PPL. However, in times of


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economic crisis when companies change their investment plans, every investment like this must be fully

analyzed and evaluated. This is not time for quick decisions and actions. DHL Express has the biggest

market share at the moment and any merges or investments to purchase new companies could be

postponed to near future.

Size of European market is limited but there are still gaps and opportunities for logistics companies in

Emerging markets. Emerging markets have the potential of high economy growth and despite the

influence of economic crisis the growth has slowed down but has not stopped. Therefore it is important

for DHL Express to be present in those countries and invest in active Sales & Marketing. The aim is to

continue and expand DHL Express presence and continuously work on brand and image recognition.

The offer of product portfolio cannot be full because DHL Express would not be profitable if it offers the

full range.

As DHL Express is big company it is important to work effectively, efficiently, be reliable, be quality and

be speedy. It is not easy in all situations, therefore it is evitable to run strategic programs that work on

company's strengths and weaknesses and provide new opportunities. As discovered during the internal

analysis DHL Express has started several strategic programs that help the organization to stay on top.

First Choice program is focused on improvement of standard business processes and workflows based

on customers' needs. The program intensifies cross-divisional collaboration. It educates employees to

actively cooperate and by their attitude interest more customers and work on good relationship with

current customers. Closer cooperation with customers and employees brings new innovative ideas and

identifies gaps. If the company exactly knows what the customer wants, it helps to work on

customization of products and workflows to satisfy their need. Specialization and customization is

definitely an important and strong opportunity for DHL Express and it is one of the most important

opportunities I have identified. It also increases dependency that forces customers to stay with DHL

Express.

Roadmap to Value program is focused on transparency, profitability, cost reduction and performance.

Productivity of DHL Express will be increased by strengthening of standardized systems, processes and

workflows and it will bring the key success factors that customers request: quality, reliability and speed.

Restructuring of the organization will bring more transparency and although there will be redundancies

connected with it I strongly recommend to take this step. Outsourcing is an opportunity for DHL Express

to use skilled specialists and use their buying power to stay modern IT company in logistics world.

Climate protection is high topic in 21st century and DHL Express has to pay attention to it. Go Green

program is focused on climate protection and disaster relief. It helps to decrease social commitment the

company has towards society. And it also provides opportunities for the company to work on expansion

of climate-neutral products offer to the customers which help DHL Express to differentiate. It is important

to start using energy efficient technologies (modern fuel efficient vehicles), train employees to be

environmentally conscious, develop climate-neutral products and use standardized workflows and

systems. Therefore, further investment into Research & Development organization is important.

Employees are the treasure of any company. Skilled, educated and committed employees are the corebenefit for every company. DHL Express has very good image of employer and in order to stay on top it

is important to inform, educate and communicate with its employees. Standardized workflows and

standardized processes make it easier to work reliably, with good quality and be on time. Employees are

the people who communicate with customers and are the first point of contact. Therefore it is important

for DHL Express to hold regular employee surveys, issue bulletins, provide trainings and career

development plans. Marketing & Sales do not only communicate with outside world but also inside the

organization.

Value Chain Analysis

Inbound Logistics

DHL Express operates in more than 220 countries around the world and employs more than 100,000

employees. DHL Express is number one in Europe with 25% of market share. The DHL brand and imageis strongly recognized and their customers know that they will receive quality and fast service. Skilled,

educated and committed employees and specialist are those that help to run the company towards

future. DHL Express is aware of that. Modern technology in terms of vehicles, Electronic Data

Interchange systems (EDI) enabling planning, monitoring, operating and checking, handhelds, GPS,

barcodes and scanners, track and trace systems stand behind the success. Information Technology is

core for every logistics company. It is heart of the whole system that helps to work effectively and

efficiently. DHL Express has an internal IT organization that supports and maintains the applications 24

hours a day, 7 days a week to provide full support to their customers. Information Technology helps to

reduce time and consequently cost of the service which is what customer values. DHL Express has

started several programs to standardized workflows and processes to better satisfy customer and make

more efficient network.

Operations

DHL Express offers wide range of portfolio products and customers can either use service number

or internet to order any logistics service. DHL also maintain service points where any customer can drop

off or pick up shipments and have them packed at no extra charge. This is one of the innovative ideas

that DHL Express provides to offer climate-neutral shipping product within their Go Green program.

Possibility of track and trace their shipment is nothing exceptional nowadays.

Research & Development department plays an important role in development and success of DHL. There


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are several strategic programs running in DHL to strengthen its position in the market. First choice

program aims for DHL to become the first choice for its customers. Go Green program represents

commitment to environment and social issues. Innovation centre that gather employees with excellent

skills coming with new innovative ideas. Additionally, there are employee programs and surveys that

help to measure and to support their commitment. Skilled and educated employees are core for every

business. They are the people who meet with customers and they help to build customers' loyalty.

Surveys also can show to management how familiar employees are with the key strategies and how

strongly they are identified with them.

Outbound Logistics

DHL has thousands of customers and thousands of orders every day. Although their aim is to deliver

faster and with quality delays and mistakes could happen. However, DHL works every day on

improvement of processes, procedures and networks to satisfy every customer need and provide

appropriate solution. As mentioned several times IT is the element that helps to deliver the shipment on

time and w ith quality.

DHL Express have several warehouses in every country and there is one international hub that serves

for all international deliveries in Europe and globally. It is in Leipzig, Germany.

DHL Express has uniform range of international time-definite and domestic day-definite express services

in European region. It continuously expands its services to developing countries. For example they now

offer overnight delivery from all European major cities and economic centers to those countries.

Furthermore the day-definite road transport was expanded which help to acquire better contracts in

industrial sector especially in automotive industry an in consumer goods delivery.

These services are supported by processes, procedures, standards and strict cost control. Cooperation

across the divisions brings cost savings. Consolidation and restructuring of IT infrastructure and

transferring operating functions brings further savings.

Marketing & Sales

DHL Express has very active sales and marketing organization that help to present DHL's brand and

build image of quality. It also works on expanding company's presence into emerging markets. Asset of a

company lays in well-established and well-managed brand especially in the service sector. Good brand

also gives a competitive advantage in the labor market. It is important to show the company as an

attractive employer to get highly skilled and committed employees. DHL uses modern tools for marketing.

As an example can serve an online career portal used as a recruiting tool.

DHL also reworked its corporate design and every service employee wears uniform clothing. Employees

are educated about their company through Brand manuals. There is multi-lingual internet platform for

DHL employees to get consistent information and be aware of the brand image. Customer retention,

customer loyalty and brand recognition are amongst the benchmarks that DHL values to reach success.

These innovative programs that DHL is running are expensive for the company. They know that the

benefit will not come in short-term. Brand awareness and trust cannot be gained in short-time. However,

if it is gained it could have long-lasting.

After Sales

Customer support and customer service is very important in logistics industry because one of the most

important factors is customer satisfaction. Therefore, DHL Express regularly holds customer satisfaction

surveys because they help to identify problem of substitute products, help to answer what substitute

products customers consider, make better position in the market and among customers, uncover

customers' perceptions, improve customer loyalty and make product improvements. DHL Express

knows that loyalty of the customers increase with satisfaction and if customer gets better value or

benefit for the same price it could mean lower profit for the company but it is worth it in long-run.

Research & Development and Marketing & Sales organizations have their significant role in After sales.

objectives

Using the SWOT analysis and Value Chain Analysis I have identified the main DHL Express objectives

and goals.

Increase profitability and productivity

Work on further growth despite economic crisis and invest into emerging markets

Balance the economic decline by restructuring and cost-cutting initiatives

Remain preferred provider and retain market share

Remain technology leader and improve relationship with suppliers

Specialize and customize products to achieve customer satisfaction

Differentiate by expansion of climate-neutral and climate-friendly products

Provide services in high quality and efficiency

Use Research & Development organization and improve products and services through

innovation


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Good Neutral

Invest into strategic programs

Use power of Sales & Marketing and communicate with customer and educate employees and

become their first choice

Strategy Formulation

DHL Express is well known organization with recognizable brand and good financial situation. Economic

crisis has brought less revenue and profit of the organization decreased. Therefore, the first goal is to

stabilize the company situation and return to the level before economic crisis as soon as possible. It

means increase profitability and productivity of the organization. This is an opportunity for the company

to make the organization more transparent and start with restructuring initiatives like improvement ofcross-divisional cooperation, work on standardized process workflows, create easy cooperation

channels among people in different levels of organizational structure and make redundancies if it is

necessary. All these activities will bring lower cost for the company.

Emerging markets were identified as an opportunity for DHL Express to increase its market share due to

their growth potential. Although economic crisis has brought cost-cutting initiatives I see a big

opportunity for DHL Express to invest in building of networks and activities in those countries and

initiate active Sales & Marketing there. Another investment opportunity represents merge or acquisition

with small or medium sized companies in the EU market. Although, it would bring new customers and

new networks I see it as more risky then investment into Emerging markets due to consequences of

economic crisis in EU region and do not recommend taking this step. It is much feasible to retain the

current market share and remain preferred provider in the region.

DHL Express uses internal IT organization that supports all its IT systems around the world. It represents

high investment and cost for the company to stay on top. DHL Express employs top specialists in this

area and is one of the technology leaders. DHL Express closely cooperates with IT suppliers and skilled

specialists on software developments and innovations. Although investment in this area is important I

also recommend including the IT organization to restructuring and cost-cutting initiatives. And carefully

consider contracting of outsourcing or off shoring providers and use advantage of lower prices.

It is important for DHL Express to broaden and intensify business with current customers and increase

their dependency by providing customized solutions. This will bring differentiation for the customer. DHL

Express has to work on improvement of products and services and through innovation and

specialization increase productivity, reliability, quality and speed of the service. Innovation and

specialization also gives DHL Express space to work on environmentally friendly products and solutions.

DHL Express has already started with programs that are targeted on the above opportunities and are

supported by Sales & Marketing organization. Customer satisfaction surveys must be held at least once

a year and the results must be taken into account during the programs development. The main objective

of the program for DHL Express is to become First Choice for the customer.

As I stated in Value Chain Analyses, employees are the treasure of the company and skilled, educatedand committed employees are the core benefit for every company. DHL Express belongs among the

most admired employers in logistics industry and in order to stay on top employees must be educated,

informed and trained. It is important to create for them standardized workflows, processes and

procedures that will make their life easier. It is important to hold employee surveys at least once a year

and communicate the results of it to employees and make actions based on it and provide personalized

development plans. They are the first who communicate with customers and make them stay or leave.

DHL Express has already initiated a program focused on it. The main objective of the program is to

become First Choice for employees.

Strategic programs represent an area that DHL Express has already initiated, and as proved by the

analysis, they represent important success factors for the organization and it is valuable and worth to

continue them. The most important once are First Choice program, Roadmap to Value program and Go

Green program. The details of these programs could be found on page 40.

Marketing & Sales organization must further work on image of DHL Express and its brand awareness

worldwide. This department communicates with inside and outside world of the company and togetherwith Research & Development must by financially supported by the company to bring advantages. I see

these two organizations as one of the most important ones and as the top layers above all innovations,

specializations, customizations, solutions, education, trainings and programs.

conclusion

Although I thoroughly analyzed all aspects of the company and went through the analysis of external and

internal environment my strategy does not differ from the official strategy of DHL Express. On one hand it

is disappointment but on the other hand I am glad that I am working for a company that has clear

Documents

DHL Express_ Strategic Planning Document