FedEx Global Corporate Strategy: Technology and Expansion

Introduction

The evolution of technology, and alongside it the evolution of the human race, seems to be gradually becoming the defining constant of modern life. We use technological applications on a daily basis to increase the quality of our lives, to perform our professional tasks, and to enhance our leisure time. Given this situation, it was only natural for organizational owners and managers to pursue the integration of these developments into business operations. Processes became more efficient, with reduced resource consumption, shorter delivery times, products that better satisfied a larger customer base, and ultimately higher levels of financial gain for the economic agent. These very objectives were at the forefront of FedEx executives' minds as they refined their strategic approach to business.

It must be noted that, through the nature of the operations they handle, as well as through the abundance of resources at their disposal — human resources, technologies, and most importantly capital — FedEx was able to introduce technology-based strategies at a global level and thereby enhance their profitability. This was made possible by the growing forces of globalization and market liberalization, which allowed economic agents to transcend national boundaries, benefit from the comparative advantages of other regions, and sell their products to wider consumer markets. Globalization also meant that the movement of people was liberalized; as more and more family members came to live in geographically diverse regions, they sent packages to one another, creating increased demand for package delivery services. In a favorable context such as this, FedEx was able to seize opportunities and deploy its resources in ways that generated further success.

The express transportation and logistics industry is often overlooked as a major force within the global economy. One must not forget, however, that this industry contributes significantly to the international transportation of commodities and finished merchandise, providing a critical component of the infrastructural backbone of global development. The industry also contributes to financial prosperity through its creation of jobs across the globe, which consequently raises the living standards of 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 greater access to resources and compete against one another in terms of operational efficiency. They also benefit from relationships built with global partners, the ability to purchase fuel in bulk (generating cost efficiencies), and their large fleets. Smaller companies generally compete at a local level or by offering niche services to targeted consumer markets.

The Express Transportation and Logistics Industry

Competition within the express transportation and logistics industry is generally intense. It is useful to note, however, that developments within communities have also generated increased demand for courier services. A further point regarding competition is that it also comes from companies offering transportation and logistics services by means other than road. FedEx, for instance, faces competition from airline and vessel carriers. Nevertheless, these services are generally perceived by consumers and industry participants as complementary rather than directly competitive offerings (Hoovers, 2010).

There are three necessary requirements for any company in this industry to stand a realistic chance of success. First, the organization must build its business model on a strong strategic vision, realized through visionary leadership. Second, there is an essential need for a robust transportation and logistics infrastructure. Third, the organization must ground its operations in a strong virtual information infrastructure. FedEx has succeeded in simultaneously meeting all three requirements.

The ultimate aim of FedEx operations is, without question, to generate as much financial return as possible. Yet in pursuing that goal, it was necessary to attract favorable public attention by presenting the company in a positive light. With this objective in mind, FedEx developed a strong vision of its actions and intentions in order to demonstrate the benefits it creates for communities and the broader world. In this spirit, "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 Filing, 2000). In other words, FedEx operates in accordance with a vision of improving the world by enhancing people's access to information, commodities, and products.

The visionary leadership at FedEx Corporation can be described as a business approach in which the management team looks toward the future and develops and implements strategies that address emerging changes, ensure customer satisfaction, and promote organizational development in alignment with new requirements. The backbone of FedEx's leadership has been a strategy of innovation, focused on sustained improvement of both the logistics and technological infrastructure. Another component has been the creation of a dynamic and rewarding working environment in which employees are recognized, stimulated, and trained to perform at superior levels of quality. Additionally, there is a consistent desire to expand into new regions, best reflected in the company's investment policy. Notably, FedEx has also been prudent, declining to pursue every business opportunity that presented itself and carefully weighing the potential gains and losses of each.

Given the various elements of the visionary leadership model implemented at FedEx, it becomes natural that a person occupying a highly decisive position within the organization should simultaneously possess the following nine attributes: charisma, high intellect, individual consideration, courage, responsibility and dependability, flexibility, integrity, sound judgment, and a high respect for people (Fast Company, 2010).

The second pivotal component for any player in the express transportation and logistics industry is a strong and reliable transportation and logistics infrastructure. This is defined, on one hand, by the actual fleet that enables the corporation to collect and transport goods. On the other hand, it is defined by the people who make those operations possible. In terms of staff, FedEx employs an estimated 140,000 people worldwide. The company strives to capitalize on their capabilities by creating a suitable working environment, offering training sessions, and providing several incentives such as service discounts and employee empowerment. This approach means that individual staff members are treated as vital organizational assets whose input is considered throughout the decision-making process.

The second component of the transportation and logistics infrastructure is the fleet, which comprises the following:

A 654-aircraft fleet, including 71 Airbus A300s; 56 Airbus A310s; 13 ATR 72s; 26 ATR 42s; 79 Boeing 727s; 1 Boeing DC10 (10); 6 Boeing DC10 (30s); 57 Boeing MD-10 (10s); 12 Boeing MD-10 (30s); 57 Boeing MD-11s; 10 Cessna 208As; 242 Cessna 208Bs; and 24 Boeing 757-200s. In addition, FedEx operates a fleet of 43,000 vehicles, over 100,000 power ships, over 2 million ships and ship managers for online FedEx operations, an estimated 1,100 world service centers, and over 2,000 authorized FedEx centers (Official Website of FedEx Corporation, 2010).

These figures point to the fact that FedEx possesses a vast, diverse, and complex fleet capable of meeting customer needs at scale. Taken together, these material and functional features form part of a wider and more comprehensive supply chain designed to better serve customers and generate greater profits for the organization.

As the express transportation and logistics industry evolved, it was natural for the value chains of its players to evolve as well. A relevant example is the incorporation of information infrastructure into the value chain. The use of information — and the infrastructure used to capitalize on it — is now regarded as a new source of organizational value. FedEx uses its information infrastructure primarily to communicate with customers, but also with other stakeholder groups. The company's website registers customer orders from around the world and centralizes that information. In addition, the website serves as a platform for attracting capable candidates who add further value to the company by enabling it to perform at higher quality levels.

Beyond its website, FedEx has used information technology to improve service quality and enhance customer loyalty. A notable example is the development of a small software application — downloadable from the company's website — that allows customers to track their package from the moment it is collected through to its final destination (Business Wire, 1995).

The Federal Express Company was first founded in 1973, thereby laying the foundation for the modern courier industry. Only a few years into operations, FedEx executives recognized the necessity for operational efficiency and innovation. They introduced COSMOS, an electronic computerized system that centralized information and enabled higher-quality management of the fleet, employees, packages, and anticipated weather scenarios. In the years that followed, the company gradually introduced more and more technological applications — such as a computer-based automated shipping system and the Super Tracker — most of which were not purchased off the shelf but customized to meet FedEx's internal needs.