FedEx Marketing Strategy Fed Ex

FedEx Marketing Strategy

Fed Ex Marketing Strategy

FedEx Corporation (NYSE:FDX) has grown from a package and freight forwarding delivery service to become one of the most vertically integrated logistics providers operating on a global scale today. FedEx was able to set an achieve a series of very aggressive growth objectives through acquisition, creating a global logistics and freight forwarding system unrivaled today. What the case analysis also implies is how well FedEx manages its global acquisitions through a highly integrated strategy of process and it integration. FedEx is known for being one of the most advanced logistics companies operating today in their use of Information Technologies (it) for the automation of supply chain operations (Alghalith, 2007). FedEx has struggled to unify their entire company into a single value proposition, allowing each business unit to have its own identity. While this has been very good for the two top-performing units, FedEx Express and FedEx Ground, the remainder of the company is not as clearly defined. This is one of the most strategic marketing challenges the company has today. FedEx is also formidable due to their strengths in large-scale operations, use of analytics to track performance and gain greater efficiencies, and exceptional brand value, FedEx still is struggling with the marketing challenge of transitioning into a global logistics provider. The intent of this analysis is to complete a SWOT analysis, provide a problem statement related to the case, define three strategic alternatives, provide a strategic recommendation and marketing implementation. FedEx's direction for the future will be defined.

SWOT Analysis

The following is an overview of the strengths, weaknesses, opportunities and threats the company as defined by the case:

Strengths

FedEx is the most vertically integrated and well-managed freight forwarding and logistics provider operating globally today. Their core strengths in freight forwarding, logistics, supply chain management (SCM), fulfillment and value-based pricing are exemplified in how synchronized their operations are internally. A second strength is their extensive use of it to support their diverse business models and operations globally (Alghalith, 2007). A third strength is the exceptional agility and insight they have in orchestrating acquisitions and mergers. This is done so well that the comp[any has been able to successfully penetrate the highest-growth economies globally including those in India and China and Russia, three of the four top-growing nations globally. Third, their strength at managing a very diverse series of business models is apparent form the case, this includes the logistics of managing 44,000 drop boxes, 700 world service centers, and 6,500 authorized service centers. The online initiatives are just as successful, with FedEx generating 20M visitors per year to its websites.

Weaknesses

As the case analysis shows, the company is plagued with many class action lawsuits, with 50 being the figure mentioned in the analysis, across 40 different states. This is a major drain on their profitability and most likely is costing the company significant amounts of time at the executive level, as their senior managers, VPs and C-level executives work to overcome these limitations to operating efficiency. A second significant weakness is the high level of reliance their business model has on fuel prices., With fuel prices rising 30% over the last year of the case study period, FedEx management must consider alternative means to trim this cost, including the use of fuel hedging strategies like Southwest Airlines does. A third weakness is the unionization that is beginning to occur in the company, which will significantly drive up their largest cost component, which is payroll and salaries. A fourth weakness is the declining level of business services sales during one period of the case study, brought about by the economic recession impacting areas of the global economy unevenly.

Opportunities

FedEx can expand significantly more into the highest-growth economies of the world by pursuing more acquisitions in specific logistics and transportation management companies. As one of their core strengths is growth through acquisition, the company needs to consider how to more fully support their growth potential in China and India especially. Their growing base of operations in Russia could further be supported by moving into ancillary businesses there. The continual refinement of Boeing aircraft and their supporting technologies shows significant potential as well, in addition to the strategy of consolidating jet aircraft models in their fleets. This is a critical success factor for driving down costs, as Southwest Airlines readily learned from their standardization on the Boeing 737. Another opportunity is to create a more integrated global supply chain and logistics operation, unifying their businesses electronically to an even greater extent than they already have. As it integration is one of their core strengths, FedEx needs to consider how best to leverage this expertise with greater performance across divisions (Alghalith, 2007).

Threats

The most significant threat is the escalating fuel costs the company has to continually contend with to stay profitable. Like Southwest, FedEx needs to consider using fuel hedging to trim costs of fuel and get in control of this major liability to their cost structure. Another threat is the continued consolidation of the logistics and freight forwarding industry, including the development of more automated means of translating supply chain complexity into greater performance gains for their corporate accounts.

Problem Statement

FedEx is at a transition point in their business model, moving from freight forwarding to world-class logistics and supply chain management services through a series of intelligent, insightful acquisitions.

Three Strategic Alternatives