FedEx Corporation Operating Segments and Companies Basically, FedEx is divided into four segments and 11 operating companies. The segments consist of FedEx Express Segment, FedEx Ground Segment, FedEx Freight Segment, and FedEx Freight Segment. The 4 segments and 11 operating companies are as shown chart below: FedEx Services Segment FedEx Freight Segment FedEx Ground Segment FedEx Express Segment FedEx Services FedEx Freight FedEx Ground FedEx Express FedEx Global Supply Chain Services
FedEx Customer Information Services FedEx Office Caribbean Transportation Services FedEx Trade Network FedEx SmartPost FedEx Custom Critical SWOT Analysis SWOT analysis is the most renowned tool for audit and analysis of the overall strategic position of the business and its environment. Its key purpose is to identify the strategies that will create a firm specific business model that will best align an organization’s resources and capabilities to the requirements of the environment in which the firm operates.
The major SWOT considerations in FedEx’s attempt to continue its growth and dominance are the following: Strengths * Strong brand name * Superior service performance * Advanced technology innovations * Impressive infrastructure of equipments * Focus on customers satisfaction * Clear leader in domestic express delivery market * Unmatched reputation or on-time delivery * Lots of planes, well-located hubs, great routes/landing rights * Ranked as one of the best companies to work for many years in a row * Great R;amp;D, quite innovative * Extensive capital expenditures * FedEx SWOT Clear leader in domestic express delivery market * Large scale operations| Weaknesses * High prices relative to competitors * Not as strong internationally * Costly innovation technology * Less capable in ground service * Weak and slow returns * Drivers and other workers are trying to unionize * Lag UPS in the ground delivery market * Very exposed to economic conditions and fuel prices| Opportunities * Untapped market * Economy is beginning to recover, especially in Asia (China specifically) * Increase in demand of logistics * Alliance with USPS * The cost of infrastructure of express delivery companies are a barrier of entry to new comers * FedEx leadership in global express delivery – As long as the nature of our socioeconomic environment exists, there will always be a need for express delivery * E-commerce is creating an increased need for express delivery * Globalization offers opportunities for expansion * Currently offer services to 220+ countries and barring government intervention, can expand in them as it sees fit * Continued globalization of the world marketplace means more contract are available and at higher volumes as well * Expansion of online retailing creates an increased need for on-time, hassle-free shipping * Focus on taking away international market share from DHL and domestic ground delivery from UPS| Threats * Increasing in transportation costs (fuel charge) * Economic down in US * Substitution (UPS,PosLaju,GDex,DHL) * Online competitive advantage of rivals * Maintaining the infrastructure of an express delivery company is an exit barrier because of high fixed costs * Capitol is acquired through the volume of sales, so the high fixed costs can hurt when times are slow * Due to the nature of the industry, it is nearly impossible to become the clear industry leader * The nature of the industry shows very low returns on invested capitol * The E-tailing industry demands lower shipping rates and charges to pull customers from the retailing industries * Economic downturn has cut down on volume overall * Many consumers and businesses are switching to slower delivery options to save money * UPS is attempting to take away market share in the express delivery arena * E-mail may take away from overnight document delivery market| We have found 20 lists of SWOT under each component; however, there are only important issues that influenced FedEx growth are picked after analysis the case. 1. Strengths FedEx has a strong brand image which gives it significant strengths among the competitors and the company was named the Fortune’s sixth best admired company all over the world.
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They offer superior overnight delivery performances which are divided into four segments and 11 operating companies, and the segments that offers are FedEx Express, FedEx Ground, FedEx Freight and FedEx Service. From performance view, FedEx confirms that roughly 99 percent of its deliveries are delivered to doorstep on time. This gives a significant competitive advantage with differentiating their services with other competitors who do not offer their customers of these services. FedEx has a strong and impressive infrastructure of equipment and processes. Through the first and second agreement with U. S. Postal Service, FedEx able delivery services through air transportation and have option to drop box in every U. S. post office.
These agreements have created the Postal Service’s Global Express Guaranteed service which offers date certain international delivery to over 190 countries. Besides that, FedEx also well knows with its great R&D and innovative of delivery service. For instance, FedEx provides the innovation of new residential delivery service which is FedEx® Home Delivery in key U. S. cities and a pioneer in applying advanced information technology to meet customer needs. In additional, advanced technology has hit their aims to focus on customer satisfactions. FedEx has a huge advantage with regards to reaching untapped places and the acquisitions of major companies have created a more organized and a more able delivery system. 2. Weaknesses
There are few weaknesses in FedEx that hindering it from growing stronger in domestically and internationally. FedEx services are priced using a zone system which means that the distance of package must travel to reach its final destination determines the price is higher relative to competitors. This significant weakness exists as FedEx is still recovering from the debt of purchasing Flying Tiger Line airfreight service. Besides that, they are less capable in ground service compared to UPS. Other than that, FedEx has involved costly technology innovations. For instance, in order to determine the status of their packages at all possible locations along the delivery route in real time.
Customers can track packages in three ways by accessing the FedEx Web site on the Internet and click on the features of FedEx Ship Manager at fedex. com, or FedEx WorldTM Shipping Software. Other than that, Drivers and other workers are trying to unionize under a four year agreement ratified in 2007. This caused FedEx to deal with the bill which they opposed fiercely and bring the bill into law. Indirectly, this incident leads to increase service costs by 30 percent that need to bear by the customers and inconsistency of operating throughout the organization. 3. Opportunities FedEx have a lot of potential in expansion due to the company’s fame around the world. The untapped market has given FedEx a great opportunity to penetrate into large global market.
Untapped market happened when political changes in foreign market. Next, the cost of infrastructure of express delivery of FedEx is a barrier of entry to new comers. New comers need to bear with a large amount of cost to build their infrastructure such as airfreight for delivery service. Nowadays, E-commerce and online shopping expansion is creating an increased need for express delivery. The expansion leads to the demand of hassle-free and on time delivery to volume up. Economic is recovering especially in Asia is also one of the opportunity for FedEx. Despite the problems in Europe, the Asian economy was growing rapidly and manufactured product exports were accelerating at the same time.
This has increased the demand on express delivery and FedEx introduced AsiaOne network which gave effectiveness and efficiency in delivery. 4. Threats One of the threats that faced by FedEx was increasing transportation cost which involves high fuel charge. The increasing fuel prices are likely to have a direct impact on the company’s profit margins by causing a raise in the operating expenses of FedEx. This is an unavoidable threat as FedEx has a high reliance on fuel compared to UPS in express deliveries. There are few competitors in express delivery services domestically and internationally such as UPS, DHL, PosLaju and GDex. This has given customers a substitution choice to substitute FedEx express delivery services. Hence,
FedEx has to make a differentiation between the competitors in order to win the market to avoid customers from switching to other delivery option. In year 1992, economic turnover in United State gave affect in the amount of package delivers per day. By end of 1992, FedEx experienced total loss of $133 billion and negative earnings per share of $2. 11. Many customers were switching to slow delivery options to save money. Advanced technology of email may take away from overnight document delivery market which also a threat that is beyond FedEx control. The ways that FedEx uses their SWOT analysis in helping them to create a competitive advantage will be explained in the part of Strategies to Put FedEx Ahead of The Game.