If it is felt that this is not the case, then another question needs to be answered -- to what extent are the policies and strategies of FedEx management related to the company's performance. Although it has long been held that the company is an economic bellwether on account of their customer base, there are certain aspects of the firm's business model that contribute to their performance, in particular vs. The performance of other firms in the industry.
There are other critical questions as well. The relation of FedEx's performance to the health macroeconomic environment has long been considered to be strongly correlated. It is hypothesized that this correlation has diminished in recent years. The company has expanded its business offerings, which should serve to increase that correlation by allowing the company to appeal to a broader range of business customers. However, these changes have been driven by increased segmentation within the shipping industry. This segmentation has been driven by inflation driven by higher fuel prices, and by the need for competitors to break the tight grip that FedEx and UPS have traditionally had on the courier business by adopting different business models. The impact of these changes should be that successful performance in the industry going forward will depend less on the state of the overall economy but on the ability of management to adapt to the changing environment. This study therefore asks the question of the degree to which FedEx's performance in recent years has been a function of management or a function of the economy. The answer will give us clues as to how well the company has adapted and to how well the company can be expected to perform in the next few years.
We hypothesize that FedEx Corporation's recent performance is mostly a reflection of the current economic circumstances, but that the firm's lack of industry leadership on many key metrics reflects weaknesses in their business model. These weaknesses likely stem from a dependence on the overnight business...
It is expected that the future direction of the company, should it continue to be so dependent on these variables, will be weak. Management therefore will need to take an active leadership role in steering the company towards more diversified revenue streams, more sustainable businesses and more growth segments.
Financial statement analysis, both in terms of statistics and accounting strategy, is a critical tool for understanding a firm's operations. Financial statements always contain a variety of distortions, the result of accounting policy, some of which the firm's management has control over and some of which it does not. By deconstructing the statements, it is possible to determine the reality of the company's operations. This reality can then be used to help gain an understanding about the company's future direction.
FedEx has long had its performance tied to the broader economy. Yet, the company's business is under pressure from macroeconomic shifts. This represents a significant test for the company's leadership, most of whom have significant tenure with the company. Leadership is an important issue for the future of FedEx because the firm has only ever had one CEO, founder Fred Smith. The ability of the company to manage its unique challenges can be effectively analyzed by its ability to manage these challenges over the past couple of years.
The steps taken in the financial analysis will lead us to undo the accounting distortions, which in turn will allow us to determine the company's fitness going forward. It is believed that the company's strong business model has brought it to a position of industry dominance but that there are weaknesses either in the model or in its execution that have lead it to lack industry leadership in many key financial metrics. It is hoped that this dissertation will allow us to better understand what those weaknesses are and whether the company is capable of addressing them.
FedEx 2008 Annual Report. Retrieved July 8, 2009 from http://files.shareholder.com/downloads/FDX/677397546x0x223284/b51e2e11-6edc-44a3-bcad-e5379c70a765/FedEx08ar.pdf
Palepu, Krishna G. (no date) Business Analysis & Valuation: Using Financial Statements. Cengage Learning. Chapter 3.
FedEx In the case of FedEx, some elements of its business would be subject to regulatory oversight from the Department of Justice, which enforces the nation's antitrust statutes. These laws exist to protect consumers from unfair business practices. If the DoJ were to be involved in a FedEx merger this might imply that the company was attempting to merge with UPS. The result of that merger would be to take the
FedEx was founded by Fred Smith after his tour in Vietnam, and he continues to run the company today, as the only CEO that FedEx has ever known. The company began by offering overnight courier services, an industry that to that point had not existed. Today, that unit is known as FedEx Express and it is still the largest in the company. There are competitors, however, mostly notably UPS, DHL
FedEx is a worldwide delivery service specializing in the transportation of parcels and packages, and is the largest express transportation company with about 30 per cent of the market share. Since its founding in 1973, FedEx has done business with an eye to technological improvement. When it became one of the first companies to do business using the Internet in 1994, it was considered one of the only companies to
FedEx Corporation offers worldwide delivery services in the overnight and ground businesses, along with other related logistics services. The company operates around the world, utilizing either wholly-owned subsidiaries or service partners to gain market entry. If the company is considering making an investment in a foreign country, it can start by determining the cost of capital. Most of the company's business is in the U.S., so the domestic cost of
FedEx Exchange Risk The majority of FedEx's transactions are in the U.S. dollar, but foreign exchange currency risk exists with the British Pound, Canadian dollar, Chinese Yuan, euro, Hong King Dollar, and the Japanese yen. During 2012 and 2011, foreign currency fluctuations positively impacted the operating income. At May 31, 2012, a uniform 10% strengthening in the value of the dollar relative to currencies in which transactions were denominated would result
FedEx Company: Five Forces Analysis The company examined is FedEx and the relevant industry is the overnight and express ground delivery business. There are a few different types of market participants. The first of these are the overnight and ground providers, FedEx and UPS. These are the market leaders and offer the most comprehensive route networks and packages of services. TNT and DHL offer some competition but have a much more