FedEx's global logistics integration and unified marketing strategy challenges

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.

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

Frist, FedEx could continue to pursue an acquisition-based strategy to penetrate the fastest-growing economies including India, China and Russia. A second strategic alternative would be to more fully vertically integrate their business model into the areas of 3rd party logistics by creating more services directly competitive with United Parcel Service. The third strategic alternative is to concentrate on creating a more streamlined approach to new service development, as FedEx has relied more on their acquisition strategy to generate new revenue sources. FedEx needs to concentrate more on how to create an effective new product development strategy that can quickly generate revenue across all divisions while at the same time unifying the company.

Strategic Recommendation

Concentrate on creating an entirely new product development and introduction process that will also serve to unify all service divisions, while at the same time driving greater innovation across the entire company. FedEx needs to create an entirely new approach to defining new service development as well, with a focus on how to capitalize on more effective use of their highly fuel-dependent assets.

Marketing Implementation

The marketing implementation needs to concentrate on unifying FedEx into a single organizational entity with strong focus on innovation of services and the customer experience. In the haste to create a global organization through acquisition the customer experience aspects have been potentially lost. The focus on getting plugged into the customers' perception of time is especially important. That also needs to come out clearly in the marketing implementation.