FedEx Corporation
Student’s name
Institutional affiliation
Table of contents
Introduction ……………………………………………………………………..3
Measurements of success ……………………………………………………….3
Reasons underpinning the success of FedEx Corporation ………………………7
Innovative culture: Employees satisfaction …………………………….7
Marketing and brand reputation ………………………………………..9
Intended strategy of acquisition ………………………………………..9
Adoption of Effective Strategic Management………………………… 10
Use of the ‘360-feedback’ system ………………………………………10
FedEx Corporation’s reliability and integrity …………………………..10
Justification of FedEx Corporation’s success ……………………………………11
The VRIN framework …………………………………………………..11
Value ………………………………………………………..11
Rarity ………………………………………………………..12
Inimitability …………………………………………………13
Non-substitutability ………………………………………….13
Summary of VRIN framework ………………………………14
Value chain framework ………………………………………………….14
Leadership of FedEx Corporation ……………………………………………….15
Fielder Contingency Model ………………………………………………16
Hersey and Blanchard’s Situational Theory ……………………………..17
Continuation of FedEx Corporation’s success …………………………………..18
FedEx Corporation
Introduction
FedEx Corporation, also known as Federal Express Company LTD, is a holding company that offers services like e-commerce, provision of portfolio of transportation and other business related services within the FedEx brand. Additionally, this company is a fast delivery corporation that provides timely deliveries in a span of one to three working days within the markets it operated. Plunket (2008) described FedEx as “one of the fastest growing corporations in America”. It is worth noting that this company has smaller branches called the FedEx Ground Package Systems and the FedEx Corporate Services. The FedEx Ground Package System, also known as the FedEx Ground, provides limited-package ground deliveries within its markets while the FedEx Corporate Services (FedEx Services) assist FedEx Corporation affiliates with marketing, communication, IT and back office support (Plunkett, 2008).
Measurements of success
There are quite a number of indicators that the success of a company. Different managers and organizations use different indicators to measure their levels of success and identify areas of failure. In the FedEx Corporation, for instance, there are a number of indicators that show the company’s success over the past ten years. FedEx Corporation can be examined by its net profit margins as a mode of determining its level of success over the years. Accumulation of assets is also an important indicator for determining the level of success of a company (Sapru, 2008; Daft, 2010; Knecht, 2014; Day, 2004). This section of the paper will use FedEx Corporation’s financial records for the past ten years in determining its level of success.
Graph 1
Assets
(Findlay, Chia, & Singh, 1997)
The volume of FedEx Corporation’s assets has been increasing considerably from 2004 to 2013. The company’s assets like cash and cash equivalents, receivables, deferred income taxes and prepaid expenses have increased steadily over the past ten years. This is a direct indicator that the company registers a healthy growth. Even though the total current assets of the company reduced slightly in 2012, there was a swift recoup in 2013 as shown in the Graph 1 above. The reduction in overall current assets might have been as a result of unavoidable business environments, but the quick recuperation in 2013 is an indicator that the company has measures of curbing business uncertainties.
Graph 2
Common stockholders’ investments
The investment of stockholders is an important aspect of a company. An increase in these investments is an indication that stockholders have trust in the company and that they see no risk of investing further in the company. As a result, increased stockholders’ investments show that a company is doing well.
(Findlay, Chia, & Singh, 1997)
The Graph 2 above indicates that FedEx Corporation has been improving since 2004 to date. This is because the accumulated investments of its stockholders have increased steadily since 2004 to 2013. There was, however, as slight reduction in 2012 but the increase realized in the following year indicated a positive growth.
Graph 3
Annual consolidated statement income
Another good indicator for a company’s success is accumulated revenue realized every financial year. A decrease in revenue accumulated during each financial year indicates that a company is on the verge of collapse while increased revenue in consecutive financial years is an indication of success.
(McKinsey, 2000)
A close examination of FedEx Corporation’s revenue gives promising results. FedEx Express, FedEx Ground, FedEx Freight and FedEx Services have also registered an increase in their total revenues over the last ten years. As indicated in the Graph 3 above, there has been a steady growth in revenue for this company over the last ten years and this is an indication of success.
Graph 4
Revenue per package
Just like every other company, the success of FedEx Corporation has been highly dependent on the success of its products. This is an implication that if the individual packages of this company yielded enough revenue to compete with the related production cost then the company’s performance would be perceived as quite impressive (Bohlander, & Snell, 2007).
(Findlay, Chia, & Singh, 1997)
As shown in the Graph 4 above, all the packages of FedEx Corporation registered as steady growth in the yield of revenue from 2004 to 2013. This is a direct implication that the company was growing during each financial year and that the company was doing well (Findlay, Chia, & Singh, 1997; Henderson, 2000; Punzel, 2011; Shaw, 2007; Young, 2009; Bentzel, 2006; Carroll, 2013; Davis, & Zutz, 2013).
Reasons underpinning the success of FedEx Corporation
Innovative culture: Employees satisfaction
(Bruce, 2014)
The culture of FedEx Corporation is identifiably innovative where there is an enormous trust of employees by the management. Owing to the dynamism of transportation and shipping markets, this company has inculcated a culture based on constant focus on customer and market behavior (Bruce, 2014). This is done in a bid to identify the shifts in the markets. Additionally, FedEx Corporation promotes innovation from both the lower and upper level employees. Perhaps this is the reason why the company constantly changes its modes of operation with the aim of assuring utter customer and employee satisfaction. It is true that employee satisfaction at FedEx Corporation is one of the major factors of the company’s success (Bohlander, & Snell, 2007). This is exemplified by the less that 1% employee turnover exhibited by this company. The figure above is a clear indication that the employees of FedEx Corporation rate their company very highly as opposed to how other employees rate their companies. This is all as a result of employee satisfaction realized at FedEx Corporation.
Marketing and brand reputation
Since FedEx Corporation has invested largely in innovation and integrity, the firm enjoys a highly esteemed brand reputation. It is important to note that the company markets itself in its local and international markets as a law-abiding company that is committed to maintain its high business standards and personal ethics of its employees. This promotion plan has since played a significant role in promoting the success of the company in not only its local markets but international markets as well. As a result, its corporate reputation has been pivotal in its success (Prince, & Simon, 2009).
Intended strategy of acquisition
The success of FedEx Corporation can be majorly attributed to its previous and intended acquisitions with the aim of facilitating growth. This company has grown enormously in the previous decade, mostly as a result of acquisition of transportation and logistics companies with the most recent being Flying Cargo Hungary Kft in 2007 and Servicios Nacionales Mupa, S.A. de C.V (MultiPack) in 2012. As if this is not enough, the company intends to acquire TATEX which is one of the most outstanding business to business transportation corporation based in France. It is projected that this acquisition would give the business unit of FedEx Corporation direct way into a nationwide domestic network that clears over 19 million consignments annually. This translates to about 150 million Euros in revenue per annum (Fleenor, & Prince, 1997; Eckes, 2002; Shaver, & American Society for Training and Development, 1998).
Adoption of Effective Strategic Management
Key to the success of FedEx is the well laid out strategic plans both in the short and long runs. Based on the objectives and misiion of the company that stipulates the need to grow and serve its purpose in the most effective way, the organization has managed to stand out as a success story, in the industry within which it operates. Arguably, the management that oversees the implementation of the set goals continue to pay a vital role in ensuring adherence to the culture, and expectation of the company. What is more, by insisting on a culture of continous improvement, FedEx’s management particularly, and all the stakeholders as a whole are attuned to the concept of focus, technological adoption and service improvement. Hitt, Ireland and Hoskisson (1999) indicate that an organizations management are vested with the role of ensuring there is cohesion between the long term strategic goals and the day to day activities. Ultimately, these aspects have gone a longway in creating the successful organization FedEx has become.
Use of forward integration
This system was intended to track feedback in a circle and gave rise to the term 360 degree feedback system. It was meant to encourage the managing director of FedEx Corporation to have a direct contact with his employees and his employees with him. As a result of this system, critical insights concerning the leadership of the company were identified, thereby revealing the areas that needed improvement. In addition to that, the system was instrumental in improving the leadership abilities of not only the managing director but also other senior managers. As a result of this, FedEx Corporation enjoyed a smooth chain of command, hence making it more likely to perform better in delivery of services (Bohlander, & Snell, 2007).
FedEx Corporation’s organizational culture
It is important to note that the name FedEx is synonymous with reliability and integrity all over the world. This has been the principle reason why the company enjoys a strong corporate reputation it the markets amidst stiff competition from related corporations. FedEx Corporation has a convincing commitment to abiding by the laws that govern its operations and this gives it an edge over its competitors (Fleenor, & Prince, 1997). That notwithstanding, the company’s employees are guided by personal and business ethics all over the planet and this obviously makes FedEx Corporation the number one choice for transportation and logistics customers (Gold, & Shuman, 2009; Forssell, 2004; Robbins, 2011; Jones, & Bearley, 1996; Fleenor, & Prince, 1997; Eckes, 2002; Shaver, & American Society for Training and Development, 1998; Rao, Mahapatra, Rao, & Chawla, 2002; DiTullio, 2010; Bohlander, & Snell, 2007).
Justification of FedEx Corporation’s success
The VRIN framework
FedEx Corporation has widened its scope over the last decade to virtually all the continents of the world. This positions the company at a strategic spot to tackle its barriers and achieve a sustainable competitive advantage in the overly competitive market. As a result of its length of stay in the markets, the company has a capacity to adapt to the changing markets while directing its focus towards meeting customer specific needs (Bohlander, & Snell, 2007).
It is important to note that the company’s constant innovation in service delivery makes it capable of amalgamating its competencies with the aim of adjusting to the dynamic transportation, logistics and e-commerce markets. Therefore, the VRIN framework is instrumental in identifying whether the innovation capacity of a company makes it able to attain a competitive advantage depending on whether the company is generally valuable, inimitable, rare and non-substitutable (Eckes, 2002).
Value
The innovative manner in which FedEx Corporation offers reliable and timely transportation and e-commerce services give its customers a sense of value for their money. Additionally, the company’s focus on integrity and conformation with the law differentiates it from the many competitors in the market. This, therefore, gives FedEx Corporation an edge over its competitors, thereby making it possible for the company to explore new niche markets and create value to its clients (Fleenor, & Prince, 1997). The creation of value to the customer eventually leads to competitive advantage. Having created value to its customers, it is worth noting that FedEx Corporation can use this as an advantage to implement premium pricing methods with the aim of increasing its profit margins.
Value in the eyes of the customer is also created by FedEx Corporation in its efforts to acquire more transportation, logistics and e-commerce companies across the globe. The expansion that comes as a result of these acquisitions leads to increased profit margins and savings (Fleenor, & Prince, 1997). Additionally, it lowers operational costs, thereby opening the company to opportunities for its competitive growth. Subsequently, this increases the number of loyal customers to the company; an indication that the company increases its competitive advantage (Fleenor, & Prince, 1997; Eckes, 2002)
Rarity
The aspect of rarity simply means the ability of FedEx Corporation to possess uncommon traits. Despite the fact that there are a number of players in the market where FedEx Corporation operates, it is worth noting that the company displays some rare characteristics that make it unique from the rest of the players (Bruce, 2014). For instance, the company’s determination to uphold the rule of law in all its operations inconsiderate of the territories within which it operates. This is a unique combination with service delivery that is not exhibited by many companies in scrambling for the same market (Schermerhorn, 2011).
That aside, the company’s determination to carry out its operations with utter integrity makes it rare. This is because the transportation business is marred with corruption (Catherine, Michael, and Natalia, 2008). As already mentioned before, FedEx Corporation endeavors to uphold a high standard of personal and business ethics (Lunenburg, & Ornstein, 2012). For this reason, the company’s move to promote business ethics in a market marred by unjust business transactions makes it exceptionally rare thereby making it achieve a sustainable competitive advantage (Eckes, 2002).
Inimitability
FedEx Corporation’s innovative culture from its management methods to operational methods makes it practically difficult for competitors to imitate. For instance, the application of the 360-feedback system is a strategy that many competitors cannot apply as their own management system (DiTullio, 2010). The manner in which FedEx Corporation engages its employees in all the levels of management also makes it difficult of its competitors to imitate. As a result of this, the company achieves a sustainable competitive advantage from its inimitable characteristics (Schermerhorn, 2011).
Another important aspect of FedEx Corporation’s inimitability is its acquisition procedures. Owing to its many years of existence since 1971, the company has acquired numerous companies hence has stretched its influences to all the markets of the word. It is difficult for new players to match this level of success hence giving it an upper hand in competitive advantage (Lunenburg, & Ornstein, 2012; Scott, & United States, 1975; Schermerhorn, 2011).
Non-substitutability
The combination of value, rarity and inimitability makes FedEx Corporation irreplaceable in the market share. As a result of this, the three distinctive traits give the company a raised level of competitive advantage. This, therefore, makes it difficult for competitors to substitute FedEx Corporation. However, it is important to note that the firm has almost zero control over the same services being offered at lower prices by rival companies. Even though the substitute services may not be as good as those offered by FedEx Corporation, the counterfeit services provides customers with services that can meet their needs thereby damaging the sustainable advantage already established by FedEx Corporation (Scott, & United States, 1975).
Summary of VRIN framework
The VRIN framework discussed above proves that FedEx Corporation’s management and operational culture as well as innovations are valuable, inimitable and rare. These have hence contributed to the company’s success and the sustainable competitive advantage the company has created during all its years of operation (Shaver, & American Society for Training and Development, 1998). However, it is worth nothing that FedEx Corporation faces the problem of substitution where some or all its competitive services are substituted with cheaper and poor quality services by its rival companies. This might pose some serious challenges to the sustained competitive advantage in the near future (Schermerhorn, 2011).
Value chain framework
Aside from the VRIN framework, it is important to note that the success of FedEx Corporation can also be attributed to its international strategy that is meant to make good use of its major competencies through its capacity of creativity on a global scope. Some scholars have since come up with an unequivocal international strategy framework that highlights the major aspects that determine the FedEx Corporation approach to exploring a number of geographical markets. This approach is instrumental in helping the company expand its international markets in a bid to achieve sustainable competitive advantage (Scott, & United States, 1975).
504825279400International drivers
International drivers
38195253810Geographic advantage
Geographic advantage
2247900107950International strategy
International strategy
3867150233680Mode of entry
Mode of entry
552450233680Market selection
Market selection
(Lunenburg, & Ornstein, 2012; Scott, & United States, 1975; Schermerhorn, 2011)
The acquisition of various companies by FedEx Corporation was championed by a number of geographical indicators. This was most evident when the company acquired the ANC Holdings Limited in 206 which was a domestic transportation corporation based in the UK. This was a move to enter the UK market, which was very lucrative at that time. This acquisition, amongst many others made in that decade, was important to FedEx Corporation because they expanded its scope in foreign markets (Schermerhorn, 2011).
Many see the move by FedEx Corporation to capture various markets across the globe as a guarantee of the company’s continuation and success in the coming years. This is because FedEx Corporation continues to explore new markets and continues to advance its innovation and management culture in a bid to meet customers’ needs and achieve employee satisfaction and motivation. FedEx Corporation takes advantage of its brand reputation to stretch its influence in newer markets in order to secure its future amidst increasing competition (Scott, & United States, 1975).
Leadership of FedEx Corporation
An organization is as good as its leadership. This implies that the leadership of a business institution has a direct impact on the direction which the organization takes as far as wealth creation is concerned. FedEx Corporation recent success may be accredited to the application of the 360-feedback system that has eased to transfer of information from manager to employee and from employee to manager (DiTullio, 2010). The success of this company may also be attributed to its integrity and reliability. FedEx Corporation shares a market with unscrupulous companies that do not care about integrity, especially because it’s associated with a slight increase in operating cost (Scott, & United States, 1975; Schermerhorn, 2011). However, the company has maintained its high level of integrity despite the fact that it contributes to a slight increase in its operational costs. Most of all, every success of this company is attributed to its chairman, president and chief executive officer Mr. Fredrick W. Smith. It is important to note that all these come as a result of FedEx Corporation’s management, which can best be described using two leadership models (DiTullio, 2010). They include:
Fiedler Contingency Model
Hersey and Blanchard’s Situational Theory
5.0.1 Fielder Contingency Model
The Fiedler Contingency Model of leadership asserts that the effectiveness of leadership within an organization is highly dependent on the relationship between the leadership style applied and the situational control. This style of model is vivid in FedEx Corporation from the leadership style of the company’s chairman, president and chief executive officer Mr. Fredrick W. Smith. The president of FedEx Corporation has highly structured tasks like managing all the subsidiary branches of the company. As already mentioned in the reasons underpinning FedEx Corporation’s success in this paper, virtually all the subsidiary branches of this company are doing well in terms of growth and profit margins (Lunenburg, & Ornstein, 2012).
In addition to managing the subsidiary branches of FedEx Corporation effectively, Mr. Smith has also been instrumental in establishing the exemplary leader-member relationship that has since encouraged an organizational culture that promotes a ‘family’ type of coexistence (DiTullio, 2010). This culture has since promoted trust, confidence, respect and communication amongst employees and managers of different levels. Consequently, this culture has eased the president’s decision-making task because he easily consults with the rest of the employees in order to brainstorm and come up with the best policies and strategies (Schermerhorn, 2011).
The Fiedler Contingency Model suggests that the company’s chairman, president and chief executive officer Mr. Fredrick W. Smith is a task-oriented manager who carries out his duties as the key influencer of decisions to the rest of the managers. He does this by coming up with individual brand goals that are instrumental in driving the company further in its success. That notwithstanding, the president is portrayed by the model as the key contributing factor to not only the company’s success, but also the high level of employee engagement and the low labor turnout realized by the company.
5.0.2 Hersey and Blanchard’s Situational Theory
Hersey and Blanchard’s Situational theory is more of a contingency strategy as opposed to a standard procedure for the day to day operations. This theory purports that the leadership of an organization depends on individual situations. As a result, a single leadership style cannot be sufficient in tackling all the organizational situations (DiTullio, 2010). It is important to note that this theory is related to the leadership style applied at FedEx Corporation. Prior to the launch of Express Nacional in October 2008, FedEx Corporation purposefully increased employee engagement with the aim of effectuating the launch of the product. This new product was meant to introduce a delivery service that would see the company deliver goods to any address in México overnight. FedEx Corporation used employee engagement to tackle leadership skills and moral issues in one of the departments that was not performing as required by the company (Berger, 2011; Kotler, Pfoertsch, & Michi, 2006; Plunkett, 2008; Plunkett, 2009; Punnett, & Shenkar, 2004; Hopfe, 1968; Lunenburg, & Ornstein, 2012; Scott, & United States, 1975; Schermerhorn, 2011).
Continuation of FedEx Corporation’s success
In spite of the overall success of FedEx Corporation, the company can still do a little more in order to further its success. It is noteworthy how well the company has done, especially in its local markets. It has managed to capture over 40% of the market share despite the stiff competition from rival companies. Additionally, FedEx Corporation has done quite well in its acquisition strategies, but much can still be done (DiTullio, 2010).
FedEx Corporation has in the past tried to make as many acquisitions as possible. This move has made the company achieve a considerable sustainable competitive advantage over its rival companies. However, this is not enough. It needs to explore further markets like China by setting up outlets or acquiring related companies. It is important to note that China is an increasingly growing market for shipping companies because it is gradually turning into an international hub for imports and exports (Hopfe, 1968). Additionally, the company should stretch its influence to the Far East, where the market is increasingly growing as well. This will significantly improve the company’s competitive advantage and give it an upper hand over its rival companies in these regions.
It is worth noting that FedEx Corporation is doing quite well in its respective markets with minimum marketing. The fact that the company exhibits increases revenues, assets and stockholders each year should not make it relent on its marketing strategies. However, FedEx Corporation should consider coming up with transferable marketing strategies with the aim of enhancing its brand recognition in the foreign markets. A good example of a transferable marketing strategy is celebrity endorsement. On most occasions, celebrities perform quite well in marketing products and services for various companies as a result of the following they have amongst the masses. For this reason, FedEx Corporation can endorse some worldwide celebrities in a bid to market its services on a global marketplace that would see it gain brand recognition in all corners of the planet.
Owing to the recent digitalization of the present systems, most entrepreneurs now prefer doing business online. FedEx Corporation has done quite a commendable job on its website (investors.fedex.com). Through this website, a client is able to make an order remotely. This has since played a significant role in easing communication between clients and the company. Additionally, the fact that the company’s website allows for online billing makes it easy for clients to pay their bills without having to go through the tiresome paper works associated with bank slips. However, FedEx Corporation should consider including live customer support on its website. This is because the website offers numerous online services, most of which can be confusing for an ordinary customer. For this reason, the live customer support will play a pivotal role in ensuring that the needs of customers are well taken care of (Lunenburg, & Ornstein, 2012; Scott, & United States, 1975; Schermerhorn, 2011).
When it comes to marketing, FedEx Corporation is doing considerably well. This is especially because it makes good return on investment and registers an increase in total revenue each year. Increased revenue in every business organization is a clear indication of increased customers of clients and this is usually championed by the application of competitive marketing strategies. However, in my opinion, FedEx Corporation is focusing on keeping its existing customers as opposed to seeking new customers. This is because its advertisement strategies are aimed at locations where it already has enough influence. I recommend that the company takes its marketing further to markets like Africa. Most African countries are developing rapidly and as a result, they need shipping services for their manufacturing industries. That notwithstanding, most African industries import raw material and this places them in a better position to require shipping services offered by FedEx Corporation as opposed to developed countries. Therefore, FedEx Corporation should consider marketing its services to these countries via their respective internet servers. The Clearing and Forwarding companies of these nations may also form good platforms for the marketing of FedEx Corporation services.
References
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