Attachment 1: Cover Page (Project and Dissertation)

Executive SummaryFedEx is a multinational CEP firm that provides the service to customers around the world in the mode of transportation from one point to another point by cargo, flights, and ground vehicles. The entire coursework is about how the FedEx implemented different kind of strategies to gain the competitive advantage in the market as compare to other familiar freights like UPS, DHL, TNT and AWS. The worldwide operations of FedEx firm and strategic view of FedEx market that consist internal as well as external environment conditions, the organization that faces the difficulty between the customers and competitors. The view explains the capabilities of FedEx PESTLE analysis and the organization structure of the firm that elaborates the threats and rivalries facing by the organization. The differentiation strategy followed by the FedEx that shows a strong customer base by offering value added solutions that competitors dont have. FedEx achieved differentiation through high customer service, quality, rapid product innovation and usage of high technologies. FedEx acquired Supaswift to gain the South African market. FedEx may continue organic development in its existing infrastructure to capture further market. FedEx may focus on alliances with giant retail and online sectors for ensuring the business in future.

Word Count

Number of Pages: 24Number of Words:3181Word count is exclusive of the followings:

Cover Page

Declaration of Originality

Executive Summary

Conclusion

Citation and Referencing

Gantt Chart

Content Page

Table of Contents

41: INTRODUCTION

42: EXTERNAL ENVIRONMENTAL ANALYSIS

42.1: Macro-Environment

62.2: Porters Five Forces Model

82.3: Market Segmentation

93: INTERNAL ENVIRONMENT

93.1: Resources and Competencies

93.1.1: Physical- IT Infrastructure

103.1.2: Financial- Revenues

113.1.3: Human Capital- FedEx Diversity Workforce

114: BUSINESS & CORPORATE LEVEL STRATEGY

114.1: Differentiation Strategy

134.2: Vertical Integration

134.2.1: Backward Integration

144.3: Merger and Acquisition

145: RECOMMENDATION OF STRATEGIC OPTIONS

166: Conclusion

177: References

List of Figures & Tables5Figure 2.1: FedExs fuel efficiency improvement year by year (NPR news 2012)

7Figure 2.2 Porters five forces model for FedEx (Harvard Business Review 2008)

10Figure 3.1: Resources and Competencies (FedEx 2013)

10Table 3.1: Percentage increase in Revenue (FedEx Annual Report 2012)

11Figure 3.2: FedEx Revenue FY 2011 v/s 2012 (FedEx Annual Report 2012)

13Figure 4.1 Vertical and Horizontal Integration (FedEx 2013)

15Figure 5.1: CEP Industry Growth Rate in Europe (A. T. Kearney Analysis 2013)

16Figure 5.2: UPS v/s FedEx Sales Revenue (Diffen 2013)

1: INTRODUCTIONFedEx Corporation is a logistics service corporation and operated since 1973 (FedEx 2013). Under the company FedEx, there are different Business Units according to the market demand; FedEx Express, FedEx Ground, FedEx Freight, FedEx services and so on. All of these services are operating under the brand name of FedEx, but they are not very much related with one product line and another (Vector Strategy Group 2010).

FedEx was mentioned in the best 100 of Fortune 500 Companies and 10 most admired companies (CNN Money 2013). This factor proves that FedEx is performing the best in logistic industry, therefore, can also be assumed as the market leader of the whole logistic market and there would be analysis on the performance of FedEx in marketing management and how the company is strategically operating in the industry. In this assignment, there will be 4 parts of analysis on the company FedExs strategic management. Part 1 is about the critical analysis on external environment which is including macro environment, industry, and market segment, part 2 is about the internal environmental conditions, part 3 is the discussion of FedExs vertical integration, backward integration and merger & acquisitions and part 4 is recommendations for the company FedExs current performances based on the organisations strategic capability.2: EXTERNAL ENVIRONMENTAL ANALYSIS2.1: Macro-EnvironmentAccording to PESTEL environmental influences can be summarized within six categories (Johnson, Wittington & Scholes 2011). For the CEP industry, list of influences under six PESTEL analysis categories might include the following: POLITICAL analysis: means factors like governmental policies, laws, rules and regulations, taxation changes and government intervention in some situations effect the organisation (Johnson, Wittington & Scholes 2011). In United States, because of the terrorist attack at 11 September 2001, the government is highly concerned like that similar events may happen again (Knee n.d.). Therefore, the government enacted the Aviation and Transportation Security Act signed by previous President Bush in November 19, 2001 (Knee n.d.) As subsequence, local noise regulations of United States controlled in FedEx aircraft operations in some domestic areas. This might be affected on the revenue of the FedEx.ECONOMICAL analysis: means the impacts of the countrys inflation, GDP, GNP, unemployment rate, exchange rate, economic crisis, interest rates and banking systems (Johnson, Wittington & Scholes 2011). FedExs CEO, Fred Smith, trying to get oil efficiency while oil prices are continuously rising (NPR news 2012). FedEx is operating with about 700 planes and so many numbers of trucks and vans and ships delivering around the world, so oil is kind of essential in processing. Because of the high oil price, FedEx needs to use other alternatives to operate machines instead of using petroleum-based fuels which cause expensive for organizations and non-eco-green (NPR news 2012). FedEx is also considering of using electric vehicles to get fuel efficiency improvement. This is how economically effect upon FedEx and how the organisation managed the problem to survive. Heres the diagram that shows improvement.

Figure 2.1: FedExs fuel efficiency improvement year by year (NPR news 2012)

SOCIO-CULTURAL analysis: the living standard of people, perceptions, traditional issues, intellectual rights, populations, lifestyle changes, cultural changes and attitude changes effect on FedEx (Johnson, Wittington & Scholes 2011). For example, lifestyle changes such as the emergence of new e-commerce is a threat to logistic companies like FedEx and UPS (Reuters 2013). Because of that reason, logistic companies build some acquisitions, like FedEx purchased Kinkos (Reuters 2013). On the bright side, FedEx moved to backward integration which is good for the organization.

TECHNOLOGICAL analysis: the effects of the revolution of the advanced information technology because of globalization, innovations and spending more money in research and development (Johnson, Wittington & Scholes 2011). Since information technology is improving, the living standard of people is also improving. In United States, there are 85% of adults are using internet (Fox 2013). Therefore, internet is the main effective thing for FedEx due to the online shopping, shipping, tracking and customer services. FedEx even has the FedEx Institute of Technology at the University of Memphis, where researchers and business persons work together for research and development and innovations (FedEx 2013).

ENVIRONMENTAL analysis: means go-green for the environmental profit such as environmental protection laws, using alternative energy instead of consumption fuel, systematic waste disposing and so on (Johnson, Wittington & Scholes 2011). For instance, FedEx collaborate with Esty environmental partner and build EarthSmart to set FedExs objectives with lesser impact on environment (Staff 2010). EarthSmart has three-point green plan which is in business solutions, workplace culture and community outreach (Staff 2010). This is how FedEx is trying to give some profit to environment.

LEGAL analysis: the legal factors ruled by governments that effect to the company FedEx such as health and safety laws, competition laws, licensing laws and employment laws (Johnson, Wittington & Scholes 2011). In United States FedEx, its online website specifically has the trade group membership because of the NAFTA, the North America Free Trade Agreement (FedEx 2013).2.2: Porters Five Forces ModelPorters five forces are the methods to analyse the industry of the company FedEx. Porters five forces are: The threat to entry, the threat of substitute, the bargaining power of buyers, the bargaining power of suppliers and the extent of rivalry between competitors (Johnson, Whittington and Scholes 2011).

Figure 2.2 Porters five forces model for FedEx (Harvard Business Review 2008)The threat of entry is very low because the barriers to entry are high in logistic industry (Vector Strategy Group 2010). The amount of financials need in the industry is very high and the access of the distributed channel is hard to build (Vector Strategy 2010). And for the new entrants, there are also costs for the experience curve because new entrants dont have enough experience in the industry (Johnson, Whittington & Scholes 2011). So there will be unnecessary costs for the new companies due to the lack of experience and they cannot apply the economies of scale.

The threat of substitutes of the industry is in the moderate level (Vector Strategy Group 2010). Means there are not many chances of the alternatives of the product for the customers. Because of the emergence of fax machine, e-mail systems and new e-commerce strategies, they are threatening the logistic companies (Reuters 2013). Even though, there are substitutes, some important documents still need to use FedExs service from one place to another (Vector Strategy Group 2010). There are not only threats but also opportunities exist in the industry, so, the level is moderate.

The bargaining power of buyers means the price may probably be controlled by customers if they are powerful (Johnson, Whittington & Scholes 2011). In case of FedEx, bargaining power of buyers is relatively high accordingly when they are large in number and corporate customers, concentrated and purchase products/service in volume quantity (Henry Fund Research 2012). According to Henry Fund Research, FedEx is expecting to increase 9% in all retailers in 2016 (Henry Fund Research 2012). Online shops like Amazon.com, Buy.com, ebay.com and etc are main customers of delivery industry, so, since their industry is growing then logistic industry might also be growing in next 5 year as an annual growth rate of 10% (Henry Fund Research 2012). So in this case bargaining power may be higher as there is a growth in retail & e-retail sectors.The bargaining power of suppliers relates to the influence of Suppliers upon industry (Johnson, Whittington & Scholes 2011). Even though the suppliers for packaging equipments and small vehicles are low in bargaining power of suppliers, the unstable price of oil is effecting in the level of moderate to logistic industry (El-Khamy and Golubov 2005). Now, FedEx is trying to reduce the power of suppliers to their company by using alternative energy and electric vehicles for transportation (Reuters 2013). Therefore the suppliers bargain power may vary from low to moderate for FedEx. The extent of rivalry between competitors means another business groups in the same industry and same customers of FedEx (Johnson, Whittington & Scholes 2011). For example, TNT and UPS are the main competitors for FedEx and there are also some other players like DHL, OHL, AWS and DB Schenker (Hoovers Inc. n.d.). Even though, there are only 3 main competitors including FedEx, they are competing considerably concentrated (Vector Strategy Group 2010). Even in acquisitions, when FedEx has Kinkos, UPS also has Mailboxes Etc. (Vector Strategy Group 2010). 2.3: Market SegmentationMarket segmentation is the differentiation of customers into small groups with similar demands so that the company can provide services and products more specifically (Johnson, Whittington & Scholes 2011). In that case, FedEx has mainly 4 market segmentations; FedEx Express, FedEx Ground, FedEx Freight, and FedEx Express Freight (FedEx 2013).

FedEx Express provides delivery with speedy time and definite date for paper works packages and services are also available on weekends (FedEx 2013). FedEx Ground services budgeted delivery and on-time and also offers cost-effective function for the normal package returns (FedEx 2013). There are heavy package about over 150 pounds deliveries in FedEx Express Freight and there are four different types in FedEx Express which all services are all reliable and time-definite deliveries (FedEx 2013). 3: INTERNAL ENVIRONMENTFedEx operates its business units, enabling them to compete collectively. FedEx corporate environment has the characteristics of organic organization; constantly changing environment and the uncertainties generally emits a much higher level of fluidity and flexibility. Preparation and decision-making are as close as possible to the point concerned possible. Employees can respond to changes characterized by a decentralized power structure.3.1: Resources and Competencies

3.1.1: Physical- IT InfrastructureIT Infrastructure is one of the major resources that helped FedEx to grow rapidly as compared to its competitors (Knudson n.d.). IT is essential to FedEx operation. In 1978, founder and CEO Frederick Smith stated that the information about the package was as important as the package itself (ComputerWeekly 2012). Based on this, FedEx started developing its package management systems. FedEx ship manager software is an advance shipping solution for huge shipping.FedEx Ship Manager allows employees of the company to store and share customers information, other shipping related history at one place.FedEx Resources: What FedEx haveTypeFedEx Competences: What FedEx do well

IT Infrastructure(FedEx Ship Manager SoftwarePhysical(Easy accounting and record keeping

(Fast and effective delivery tracking

Financial Highlights

(Revenue generated $42.6B in FY 2012

(Net Income $2.0B in FY 2012Financial(Exceptional performance of FedEx ground segment

FedEx Workforce Diversity( FedEx is made up of more than 290,000 team membersHuman(Diverse workforce, supplier base and supporting culture enable FedEx to do better service

Figure 3.1: Resources and Competencies (FedEx 2013)

FedEx Ship Manager is proprietary software of FedEx hence it is RARE and Inimitable by competitors (FedEx 2007), it makes shipping easy because it tacks the status instantly and confirm delivery quickly. It also manages the return easily (FedEx 2013). 3.1.2: Financial- RevenuesRevenues, Operating Income raised in 2012 due to the better performance of FedEx Ground segment and FedEx Freight (FedEx Annual report 2012). FedEx may continue to investment in aircraft, vehicles, IT infrastructure and any small scale acquisition for service excellence.Year20112012% Increase

Revenue39,30442,6808.58

Table 3.1: Percentage increase in Revenue (FedEx Annual Report 2012)

Figure 3.2: FedEx Revenue FY 2011 v/s 2012 (FedEx Annual Report 2012)

From the above graph it clearly indicates that the revenue increased by 8.58% from the year 2011 to 2012. 3.1.3: Human Capital- FedEx Diversity WorkforceDue to diverse work environment, supplier base and good corporate culture assures FedEx to do better service for their customers and compete efficiently in the global market. More than 27% of FedEx management team belongs to minorities (FedEx 2013). Mostly FedEx helps small suppliers, women owned suppliers and Suppliers belongs to minorities by making contract with them for accessing the FedEx supply chain and ensures quality service (FedEx 2013).4: BUSINESS & CORPORATE LEVEL STRATEGY

4.1: Differentiation StrategyThe reason of differentiation is to develop a strong customer base by offering something value added solution that competitors wont have (Harvard Business Review 1997). Differentiation can be attained through high customer service, best quality, product innovation, usage of information technology etc.Depending upon the customers requirement FedEx divided into different Business Units: FedEx Express, FedEx Custom Critical, FedEx Ground, FedEx Freight, FedEx Supply Chain Services and FedEx Trade Networks (FedEx 2013). Each Business Unit intended to towards a specific segment according to customers requirement. Customers might have different requirements at the same time i.e. document express need to deliver overnight, and then freight in the next day. FedEx understand the customers need and have segmented the business to gain the competitive advantage.

FedEx is much more distinguished from its competitors on global supply chain solutions i.e. distribution and order handling services for critical, time-sensitive and medical instrument devices through FedEx Critical Logistics (FedEx 2013). FedEx offers the money back guarantee and pick up facility from the customers door step (FedEx 2013).Worldwide, FedEx is much more visibly differentiated from its competitors due to infrastructure. FedEx serving more than 220 countries and territories, 90000 ground vehicles, 660 aircraft in operation, in service and more than 10 million daily average package shipment (Proctor 2013). It is very difficult for other companies to establish such a huge infrastructure because no one else has the infrastructure that FedEx has and people think of FedEx for global delivery. FedEx make promises but its rivals cannot because of their limited infrastructure and resources. With the expected globalization of large scale business in the future, it is likely that competitors may work to overcome this differentiation by establishing their own infrastructure and resources. But for now, FedEx is market leader as far as global express delivery is concerned (FedEx 2013). The infrastructure ensures the quality of the FedEx service.FedEx was built upon innovation, and it continues to be an m part of the FedEx culture and business strategy (FedEx 2013). One of the FedEx innovation solution is SenseAware provided by FedEx a ground breaking sensor-based logistics service that combines a multiple sensor devices with a web base shipment monitoring application. It enables customers to monitor their consignments in real time basis with information like temperature, location and exposure to light and share this important information continuously with their supply chain partners (FedEx 2013). FedEx Institute of Technology at the University of Memphis is there for hi-tech research, think tank sessions, corporate training programs and conferences (FedEx 2013).4.2: Vertical IntegrationFedEx comprises of six business units FedEx Ground, FedEx Trade Networks, FedEx Freight, FedEx Custom Critical and FedEx Services (FedEx 2013).

Figure 4.1 Vertical and Horizontal Integration (FedEx 2013)

Vertical Integration describes entering activities where the company is its own supplier or customer (Johnson, Whittington, and Scholes 2011: 240). Vertical integration states that firm has integrated all the prospects of the supply chain management including supplying raw materials, manufacturing, managing warehouse, distribution and retailing or forwards to the customers (Environmental Leader 2010).Generally there are two types of vertical integration i.e. forward and backward integration. (Hubbard and Beamish 2010: 254)

4.2.1: Backward Integration

Backward integration is that when a firm itself handles the same business what its suppliers were doing (Hubbard and Beamish 2010: 254). Recently FedEx implemented the backward strategy by acquiring Kinkos. FedEx Office (formerly FedEx Kinkos) is a chain of outlets that provide a retail solution for other related business i.e. FedEx Express and FedEx Ground (including home delivery) shipping, as well as photocopying, printing, binding, lamination services (BloombergBusinessweek 2008). Apart from the above service FedEx Office provides self services to its customers. The computers are available on rental basis where each computer is connected to the printer for printing the documents (FedEx 2013). The FedEx Office retail solution also offers a selection of office supplies and business books for retail purchase. 4.3: Merger and Acquisition FedEx has many potential merger and acquisitions. FedEx recently completed the first part of acquisition by acquiring Supaswift. Recently after acquisition FedEx operates five countries of Africa i.e. South Africa, Malawi, Mozambique, Swaziland and Zambia, and is also in a process to acquire Supaswifts businesses in Botswana and Namibia (FedEx 2013). Initially these operations may work under the FedEx Express Business Unit. By this acquisition FedEx express will enter across the 7 markets to 39 facilities and will accept approximately 1,000 of Supaswift team members (FedEx 2013). Once the final stage of acquisition over, this will make FedEx stronger to meet the growing and customize needs of customers. Supaswift started operations in South Africa in 1990. In 2005, Supaswift merged with MyExpress which was providing FedEx Express international services in Southern part of Africa since 1991 (FedEx 2013).5: RECOMMENDATION OF STRATEGIC OPTIONSOrganic Development: It has been forecasted that global Supply Chain Management market will increase from $5.90 billion to $8.55 billion (Environmental & Energy Management News 2010). It says the annual growth rate of 7.7% during this time period (Environmental & Energy Management News 2010).

Figure 5.1: CEP Industry Growth Rate in Europe (A. T. Kearney Analysis 2013)

So we recommend FedEx should continue in organic growth i.e. investing in planes, vehicles (need to expand more in ground vehicles) and infrastructure, especially in Asia (India and China and Europe), but also need to focus on penetrating into foreign markets by partnering with local supply chain industries. FedEx has used its four business segments to grow from a 3.7% in 1991 to a forecasted 17.7% industry share by 2015 (FedEx Annual Report 2012). FedEx is dedicated in reinvesting earnings for expanding business operations both globally and locally that keep it aggressive year after year (FedEx Annual Report 2012). With the development of large urban centres around the globe that are able to improve efficiency and reduce delivery time, FedEx should do research and change the routes of supply to meet demand. FedEx has net income of $2 billion out of revenue of $42 billion where as UPS has net income of $3 billion out of revenue of $53 billion (Diffen 2013). Amazon uses FedEx much more frequently (Diffen 2013). So FedEx should focus on alliances with giant retail and online sectors like Walmart, Flipkart, e-bay etc for generating more revenue and ensuring the business for forth coming years.

Figure 5.2: UPS v/s FedEx Sales Revenue (Diffen 2013)This will ensure cash inflow even if there is inflation in the market. So FedEx need to target corporate sectors for their delivery. This will be a win-win strategy where FedEx revenue can be increased nearly to UPS. 6: ConclusionTo finalize datas that mentioned above, in logistics industry, FedEx is performing well from the point of strategic management even though the organization has some weaknesses to fix. Since it is the oldest logistic company in industry and it has been mentioned by fortune 500 companies, the company FedEx maybe assumed as the market leader of logistic industry line. If the organization prepare for the weaknesses, learn from mistakes, pass the experience curve, and also adopt the new trends in the industry, then FedEx probably become the best logistic company around the world.7: ReferencesBloomberg Business week (2008) FedEx Ditches Kinko's [Online] available from

[25 June 2013-08-20]Chen, C., Duong, L., Yang, H., Susanty, M., Vellandi, M., Betro, A. (2004) FedEx

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Foster-European-vice-president-of-IT-FedEx-Express > [01 August 2011]

El-Khamy, M. and Golubov, Y. (2005) FedEx in the Global Market [Online] available from [23 July 2013]

Environmental Leader (2010) Supply Chain Management Market to Hit $8.5 Billion by

2015 [Online] available from

[14 July 2013]FedEx (2013) Charitable Contribution Guidelines [online] available from

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FedEx (2013) FedEx Innovation [Online] available from

< http://about.van.fedex.com/fedex-innovation> [18 August 2013]FedEx (2013) FedEx Ship Manager [Online] available from [17 August 2013]FedEx (2013) FedEx Ship Manager Software [online] available from

[20 July 2013]FedEx (2013) FedEx Unveils Strategic Acquisition Deal in Southern Africa [Online]

available from < http://news.van.fedex.com/fedex-unveils-strategic-acquisition-deal-southern-africa-0> [20 August 2013]FedEx (2013) History [online] available from < http://about.van.fedex.com/history >

[18 July 2013]FedEx (2013) History of FedEx Operating Companies [online] available from < http://about.van.fedex.com/fedex-opco-history > [18 July 2013]

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[Online] available from < http://hbr.org/2008/01/the-five-competitive-forces-that-shape-strategy/> [29 August 2013]Henry Fund Research (2012) FedEx Corporation (FDX) [Online] available from

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[27 August 2013]Hubbard, G., Beamish, P., (2010) Corporate Multi-Business Strategy. Australia: PearsonJohnson, G., Whittington, R. and Scholes, D. (2011) Exploring Strategy. England: Pearson EducationJohnson, G., Whittington, R., Scholes, K. (2011) Vertical Integration. Italy: Pearson

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from [28 July 2013]Bargaining Power of Suppliers

LOW TO MODERATE

Threat of new entrants

VERY LOW

Threat of Substitute Products or Services

MODERATE

LOW

- Shipping - commodity

Bargaining Power of Buyers

HIGH

Rivalry among existing Competitors

HIGH

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