Global Corporate Strategy of Fedex

global Corporate Strategy, FedEx

Global Corporate Strategy -- the Case of FedEx

In a world in which change became the only constant, all individuals and groups of individuals must find means to survive. As dramatic as the statement might sound, it is in fact very true. Most of the changes which impact and modify our contemporaneous society come from the evolution of technology, and evidence in this direction stands our daily usage of technology to do our work or live better. Aside technology however, change also comes from the growing forces of globalization, which allow individuals, companies and resources to more easily transcend boundaries and serve purposes other than those initially intended.

In a context of rapidly evolving circumstances, economic agents develop strategies that generally integrate technology as a creator of new organizational value, and then they strive to expand their operations globally. This is of course true for those entities which possess the necessary resources to fund these endeavors, such as courier company FedEx, the main actor of this report. The research commences with an introduction to the challenges of the contemporaneous society, and then continues with an introduction to the express transportation and logistics industry. The findings indicate that it is crucial for each player within the industry to forward a strong vision and a visionary leadership, and to posses a reliable transportation and logistics infrastructure and a hi-tech virtual information infrastructure. FedEx can pride itself on being the owner of all these.

Consistency was a continuous presence within the strategies implemented by FedEx. Regardless of time period, the executives at the courier company were focused on the integration of technology (including internet applications) within business models and processes, as well as on efforts to expand the company -- these would be most commonly materialize in mergers and acquisitions. Despite the successes, FedEx seems to have placed the staff members at a secondary position in the hierarchy of organizational needs and resources, and it is recommended that they readdress this particular situation.

1. Introduction

The evolution of technology, and alongside with it, the evolution of the human race, seems to gradually turn into the constant feature of our life. We use technological applications on daily basis to increase the quality of our life, to perform our professional chores or to enhance our leisure time. Given this situation, it was only natural of organizational owners and managers to desire and strive toward the implementation of the developments within the business operations. These actions then became more efficient, with a reduced consumption of resources, delivered within a shorter time period, delivering a product that would better satisfy the needs of a larger customer palette, and eventually materializing in higher levels of financial gain for the economic agent. These very desiderates were the objectives on the minds of the FedEx executives when they perfected their strategic approach to business.

Nonetheless, it has to be mentioned, that through the nature of the operations they handle, as well as through the abundance of resources at their disposal (human resources, technologies and mostly, capitals), FedEx was able to introduce technology-based strategies at a global level and as such enhance their profitability rates. This has been possible due to the growing forces of globalization and market liberalization, which allowed economic agents to transcend boundaries, benefit from the comparative advantages of other regions, and sell their own products to wider consumer markets. Globalization also meant that the circulation of people was liberalized, and, as more and more members of the family lived in globally diverse regions, they would send packages to one another and as such create an increased demand for package delivery services. All in all, in a favorable context, FedEx was able to seize the opportunities and use its resources and abilities in a means that led to even more success.

2. The express transportation and logistics industry

The express transportation and logistics industry is often overlooked as a major player and presence within global economics. One must not however forget that this industry contributed significantly to the international transportation of commodities and finished merchandise, meaning as such that it provided a major component of the infrastructural backbone of global development. The industry is then contributing to financial prosperity also through its creation of jobs across the globe, which consequently increases the living standards of the populations.

At a global level, the main players within the industry are UPS, FedEx, DHL Express, Express Courier International and World Express Courier. These large companies base their success on the increased access they have to resources, and compete against each other in terms of business efficiency levels. These large organizations also benefit from the relations they constructed with various global partners, the ability to purchase bulk fuel (which materializes in cost efficiencies) or their large fleets. The small size companies can generally complete at a local level or by offering niche services and delivering top niche consumer markets.

In terms of competition, this is generally increased among the participants to the express transportation and logistics industry operations. It is still useful that, as mentioned throughout the introductory section, the developments within the communities have also generated an increased demand for courier services. A final specification relative to the competition is that this is also common from other types of companies, especially those offering logistics and transportation services by other means than road. FedEx for instance is met with competition from airline and vessel carriers. Nevertheless, what has to be noted is that these services are generally perceived by consumers and industry participants as complementary services, rather than competitive ones (Hoovers, 2010).

There are three necessary requirements for any company activating within this industry to stand any chances of success. First of all, the organization would have to construct its business model on a strong strategic vision, which would be accomplished through the efforts of a visionary leadership. Secondly, there is the impending necessity for a strong transportation and logistics infrastructure. Finally, the organization would have to base its operations on a strong virtual information infrastructure. FedEx has succeeded in simultaneously complying with all three needs.

Strategic vision

It is without any doubt that the ultimate scope of the FedEx operations is that of registering as many financial gains as possible. Yet, in achieving this desiderate, it was necessary to draw the favorable attention of the public, by presenting the company in a positive light. With this objective in mind, they have created a strong vision of the company's actions and intents, in order to reveal the benefits they can create for the communities and the entire world. In this order of ideas, the "FedEx Corporation's vision is a world where goods and information move quickly and seamlessly. A world where businesses source raw materials and parts globally, then move high-value goods quickly between continents and across time zones. A world where global information and transportation networks can shrink time and distance, creating competitive advantages for customers" (FedEx Corporation SEC Filling, 2000). In other words, FedEx is acting in accordance to a vision of making the world a better place by enhancing the populations' access to information, commodities and products.

Visionary leadership

The visionary leadership at the FedEx Corporation can be succinctly presented as a business approach in which the managerial team looks towards the future, and develops and implements strategies which will answer to emergent changes, ensure customer satisfaction, and organizational development and alignment to new requirements. The backbone of the FedEx leadership has been constituted by a strategy to innovate, focused on a sustained improvement of the logistics and technological infrastructure. Another component of their leadership has been that of creating a pleasant and dynamic working environment, in which employees are both rewarded, as well as stimulated and trained to perform at superior levels of quality. Then, another element is constituted by the desire to expand to other regions, best depicted by the company's investment policy. What must not be forgotten is that the courier company has also been rather prudential, and has not jumped to any business opportunity, but has weighted its win -- lose characteristics.

Given the various elements in the visionary leadership implemented at the FedEx Corporation, it becomes only natural for a person occupying a highly decisive position within the organization to simultaneously posses the following nine attributes: charisma, high intellect, individual consideration, courage, responsibility and dependability, flexibility, integrity, high judgment, and finally, a high respect for people (Fast Company, 2010).

Transportation and logistics infrastructure

The second pivotal component for any player in the express transportation and logistics industry is that of a strong and reliable transportation and logistics infrastructure. This is on the one hand given by the actual fleet allowing the corporation to collect and then transport the products and commodities. On the other hand, it is represented by the very people who make the operations possible. In terms of the staff members, their numbers are of an estimated 140,000 globe-wide. The employer is striving to capitalize on their capabilities by creating a suitable working environment. The company offers training sessions for their staff members and presents them with several incentives, such as discounts on the organization's services or employee empowerment. This virtually means that the individual staff members are valued as vital organizational assets, and their input is considered throughout the decision making process.

The second component of the transportation and logistics infrastructure is given by the fleet. This is composed from the following:

654 aircraft fleet, out of which 71 are Airbus A300; 56 are Airbus A310; 13 are ATR 72s; 26 are ATTR 42s; 79 are Boeing 727; 1 is Boeing DC10 (10s); 6 are Boeing DC10 (30s); 57 are Boeing MD 10 (10s); 12 are Boeing MD 10 (30s); 57 are Boeing MD (11s); 10 are Cessna 208As; 242 are Cessna 208Bs and finally, 24 are Boeing 757-200s

43,000 vehicle fleet over 100,000 power ships over 2 million ships and ship managers for the online FedEx operations an estimated 1,100 world service centers over 2,000 authorized FedEx centers (Official Website of the FedEx Corporation, 2010)

All these numbers virtually point out to the fact that FedEx possesses a vast, diverse and complex aircraft fleet that is able to serve the needs of the customers. Extrapolating, it can be concluded that these functional and material features are now included in a wider and more comprehensive supply chain, used to better serve customer needs and generate more profits for the organization.

Virtual information infrastructure

As the express transportation and logistics industry evolved, it was only natural for the value chains of the players in the industry to evolve along. A relevant example in this sense was the inclusion of the informational infrastructure into the value chain of the entity. In other words, the use of information (and the infrastructure utilized in capitalizing on information) is now perceived as a new means in which the company can enhance its value. In other words, FedEx uses its information infrastructure to better communicate with customers mainly, but also with other categories of stakeholders. The company uses its website to register customer orders from around the globe, and as such centralize information. Aside this however, the website is also useful in attracting new and capable candidates which will then add more value to the company by allowing it to perform at higher quality levels.

Aside the actual websites, the company has used information technology to improve the very quality of the services and to further enhance customer loyalty. A relevant example in this sense has been the development of a small software application (which can be downloaded from the company's website) that allows customers to track their package since they sent it to the company throughout its final destination (Business Wire, 1995).

3. Branding and business structure up until 19 January 2000

The Federal Express Company was first opened in 1973, and laid as such the basis for the modern day courier industry. Few years into operations, the FedEx executives recognized the necessity for operational efficiency and innovation. They as such introduced COSMOS, an electronic computerized system which centralized information and allowed higher quality management of the fleet, the employees, the packages collected and delivered, as well as prospective weather scenarios. Throughout the forthcoming years, the company gradually introduced more and more technological applications (such as the computer based automated shipping system or the Super Tracker), most of which were not purchased off the store shelf, but customized to best meet the internal needs of FedEx.

With its course set for innovation and operational efficiency, Federal Express became ready to launch its activities at a global scale. They began by expanding into the Canadian market in 1981, where they operated as such. The penetration of other regions was however more challenging than initially believed. It as such became necessary to overcome the barriers with the aid of an internal transportation and logistics company.

The mergers and acquisitions of domestic courier companies were relatively common practices throughout the 1980s. As the forces of globalization were just beginning to emerge, organizations in the United States identified international growth opportunities. Yet, in those days, most markets were not liberalized, meaning that American corporations were met with tremendous barriers upon their attempts to penetrate the national industry. This then gave way to a new penetration opportunity -- through the merger with or the acquisition of domestic companies. Smaller size entities which possessed limited financial resources would generally merge with the domestic players, whilst larger size companies, with a wider access to financial resources would acquire the domestic players. Federal Express was one of the larger companies, which possesses sufficient financial resources and as such purchased the national courier organizations. The company used the M&A strategies (mergers and acquisitions) first in 1984, when it purchased Gelco Express International in order to ensure its fruitful penetration of the European and Asian / Pacific markets.

M&A strategies were also implemented by the courier organizations in order to increase their capabilities. In this order of ideas, companies would unite forces with other players in the transportation and logistics industry in order to either increase their fleet and reduce competition, or to expand their service palette. A relevant example of how Federal Express capitalized on this possibility was their purchase of Flying Tigers in 1989. The company was a United States-based courier, with vast expertise in airline freight transportation. With the purchase of this player, the Federal Express significantly increased its global presence, and diversified its service offering.

In the following years, the entity continued to expand globally and to innovate. It became the recipient of several quality awards, and the FedEx brand was born as the representative of "fast and reliable service" (FedEx Corporation SEC Filling). In 1998, the company would make the historic acquisition of Caliber System Inc., the end result being a new organization, called the FedEx Corporation. This acquisition was the one that offered FedEx the much desired diversified service offering, and its much longed for international presence.

4. Events leading up to the January 2000 reorganization

As it has been mentioned throughout the previous section, the FedEx Corporation has implemented and followed a strategy focused on international expansion through mergers and acquisitions, based on which they would diversify their service offering, as well as increase the numbers of customers. In achieving this desiderate, the company has undergone a series of processes, all which led up to the acquisition of Caliber Systems Inc. In 1998. The respective decade (the 1990s) commenced with FedEx being awarded the Malcolm Baldrige National Quality Award for the outstanding quality of the services they delivered. Three years later, the company developed yet another customized application, called the Express Clear SM Electronic Customs Clearance System, which would "expedite regulatory clearance while cargo is en route" (FedEx Corporation SEC Filling).