Introduction
FedEx is an American publicly traded company that functions in the sphere of transport, electronic commerce and solutions for business. Importantly, FedEx currently represents a network that covers more than 200 locations worldwide. Apart from focusing on shipping services, the company also offers a system, allowing tracking packages and providing one with data regarding current location of a package.
Initially, FedEx tended to emphasize ground- and air-based services. However, nowadays home delivery, retail division and the development of business solutions represent crucial elements of FedEx business. That is why FedEx is currently comprised of four segments, such as FedEx Express, FedEx Ground, FedEx Freight and FedEx Services.
Consolidated revenue of four FedEx segments constituted $47,453 that is by four percent higher than the revenue of 2014. Total current assets of the company constitute $10, 941,000. The assets of the company grew by more than one million U.S. dollars in 2014/2015. Total assets of the company account for $37,069,000 (including long-term investments, property plants and equipment, as well as intangible assets and goodwill) (Market Watch, 2016). The number of FedEx full-time employees currently exceeds 300 000. FedEx is available in more than 200 locations and 375 world’s most important airports. FedEx is an obvious market leader in the U.S., holding a market share of courier and express delivery services that accounts for approximately 43 percent (Market Watch, 2016). The company’s CEO is Frederick W. Smith. He is also a chairman and president of FedEx Corporation.
While the total assets of FedEx currently account for $37 069 000, the total liabilities of the company are 22 076 000. In turn, whereas the total current assets of the company are $10, 941,000, its total current liabilities constitute $5,957,000. The current ratio of FedEx is 1,84. The total shareholder equity is $ 14 993 000 (Market Watch, 2016).
Comparing FedEx stock price versus S&P 500 Index, it is necessary to mention that FedEx stock price showed the negative value of -9.67 in 2011. Over the period from 2012 to 2014, the figures went far above the zero with a peak of 57,39 in 2013. However, already in 2015 FedEx started to demonstrate a trend against the S&P 500 Index. Thus, FedEx stock price has decreased by 27,31 percent last year by comparison with S&P 500 Index that has returned negative (-9,12%) (Market Watch, 2016).
FedEx Corporation was founded as an export/import enterprise in 1997 in Delaware. FDX Corporation represents a result of the FedEx Corporation’s acquiring Calliber Systems Inc., a company, functioning in the sphere of road transportation services. Caliber Systems Inc owned a diverse range of subsidiaries, such as Viking Freight (a regional freight carrier), Caribbean Transportation Services (an air freight company) and Calliber Logistics.
In 2000 FDX Corporation conducted a powerful rebranding campaign, returning to FedEx Corporation brand. Bringing together all the subsidiaries, FedEx Corporation launched a new subsidiary called FedEx Corporate Services in order to provide for centralized marketing, sales and customer services across all the subsidiaries.
Important acquisitions, followed the rebranding of FedEx Corporation included the ones of Tower Group International (a logistics company), as well as Kinko’s (currently a chain of stores, providing retail, as well as printing, binding and copying services) and Watkins Motor Lines. One of the most significant achievements of FedEx Corporation is launching around-the-world flights to improve the connectivity of the major markets in the world. In 2009, FedEx introduced its up-to-date SenseAware system that provides almost real-time tracking of shipments’ locations.
Over the period from 2011 to 2015 FedEx Corporation acquired a number of companies, such as AFL Pvt Ltd, Polish Courier Company Opek, Bongo International and GENCO.
The mission of FedEx is to produce superior financial results for the company’s shareholders by providing high-quality transportation, logistics and related business services with the help of a range of focused operating enterprises. FedEx strives to meet customers’ requirements in a most high-quality manner and build up mutually rewarding relations with employees. Safety and compliance to professional and ethical standards with regard to the corporate activities are viewed as important goals of the company.
FedEx has six primary stakeholder groups. The board of directors enjoys most significant powers with regard to leading the company. They require to be continuously informed about the affairs and activities of the company in order to be able to handle external and internal threats. Management of the company also has significant powers and interests. The peculiarity of FedEx management deals with a significant degree of its decentralization. Stakeholders and investors of FedEx are characterized with different degrees of power and interest, dependent on the scope of their investments.
FedEx needs to cooperate with a range of governmental agencies, such as U.S. Postal Service. Employers constitute a crucial group of FedEx stakeholders, and the corporation makes its best to develop the relations with them. Finally, customers tend to exert significant impact upon the activities of FedEx, and ensuring quality customer service is one of the basic aims of the company.
SWOT analysis
Strengths of FedEx
One of the key strengths of FedEx deals with a strong brand and image of the company. As it is put by FedEx itself, the FedEx brand is more than just a well-known brand It is designed to be associated with the company’s values and attributes, so that a spirit of the company and its identity can be traced. The major values, emphasized by FedEx, include simplifying (the development of quality straightforward procedures), optimizing to the needs of customers, inventiveness, certainty, connections and being personal.
A second important strength of FedEx stems from its developed network and resulting size. The FedEx network currently encompasses more than 220 locations and unites over 300 000 employees worldwide (Market Watch, 2016). Over the period from 1984 to 2015 FedEx has acquired a variety of companies (e.g., Gelco Express International, Tiger International, Inc., Calliber Systems Inc., Parcel Direct, American Freightways, GENCo etc.), not only expanding geographically, but integrating knowledge to reach significant competitive advantage at both the U.S. and global markets. The FedEx share at the U.S. market accounts for 43 percent (Schmidt, 2015).
Furthermore, FedEx has demonstrated a strong revenue growth over recent years, despite economic fluctuations and a highly challenging competitive environment. In 2011 the company reported revenue of $39.3 billion. Over the period from 2012 to 2015 FedEx managed to grow its revenue from $42.68 billion to 45.57 billion. Already in 2015 the company’s revenue reached 47 billion (Market Watch, 2016).
Another strength of FedEx that helps the company expand, despite competitive threats, deals with a multi-year expertise of technological innovation. Already in 1978 FedEx was the first transportation and logistics company in the world to launch the first automated customer service centre. The system called SuperTracker, aimed to help customers conduct tracking of their parcels, is one of the most developed telecommunications systems in the world. FedEx customers can use three ways to track their shipping, such as FedEx website, FedEx Ship Manager, as well as specially designed FedEx World Shipping Software. The functioning of the above means of tracking parcels is enabled with the help of COSMOS (Customer Operations Service Master Online Systems).One of the basic principles, governing the use of technology by FedEx is customer orientation (FedEx Express, 2016).
Importantly, FedEx also owns a special satellite-to-ground Command and Control operations system that aims to determine fastest, safest and most convenient routes to deliver packages. The system brings together 750 customer service workstations, as well as more than 500 traffic and air traffic hubs. Despite the fact that customers do not see the way the system is used to ensure the functioning of FedEx, it represents one of the most valuable technological assets of the company. Other technological tools, allowing FedEx to function smoothly, are APEC Tariff Database (Internet-based tariff and customs database) and 46 fully equipped call centers all over the globe (FedEx Express, 2016).
Last, but not least, it is worth emphasizing that FedEx has three decades of experience in transportation and logistics services. This experience helps it not only to ensure the daily operation of the large network, consisting of a variety of multiple segments, but successfully track the developments in the industry and elaborate complex solutions to sustain competitive advantage.
Thus, the strengths of FedEx encompass strong brand and image of the company, highly developed network and resulting size, strong revenue growth, the use of a state-of-the-art technology, as well as a significant experience in transportation and logistics services.
Weaknesses of FedEx
One of the crucial weaknesses of FedEx deals with its dependence on the U.S. market. Evidently, FedEx is currently a strong market leader, whose market share is almost twice as large as the one, held by its nearest competitor, the U.S. Parcel Service (UPS). However, FedEx is not so successful at the global market, whereby its market share constitutes only 14 percent (Schmidt, 2015). Therefore, FedEx is highly vulnerable to the developments, taking place at the U.S. market, and is almost not capable of using the opportunities, existing at the global market in case of challenges at the market of the U.S.
A related weakness deals with significant intensity of global competition within the industry and resulting limits for growth. As FedEx is already an industry leader in the U.S. market, and a variety of other companies tend to do their best to sustain and increase their competitive advantage, it is hardly expected to reach considerable growth rates in the U.S. market. At the same time, concentrating on the U.S. market, the company does not do a lot to adjust to region-specific conditions and increase its competitiveness in the global market.
Another weakness that is especially considerable for the markets of developing countries deal with high prices of FedEx services. Therefore, many potential customers worldwide prefer to use postal services and refer to FedEx only in cases, when they need a prompt delivery or send exceptionally important documents.
FedEx opportunities
A trend to globalization and th growing interconnectedness of world markets leads to the fact that transportation and logistics services become ever more popular among the companies, functioning within multiple industries. The reason for that deals lies in the fact that such services constitute a part of infrastructure of global business, along with banking and infrastructure services. Therefore, as long as the individual economies actively cooperate, there will be a demand for transportation and logistics services.
In this regard, a special opportunity deals with elaborating region-specific strategies of popularizing FedEx beyond the USA. Taking into account modern economic developments, it is important to ensure tackling the markets of China, India, post-Soviet space, as well as Africa and Latin America.
Furthermore, FedEx can consider an opportunity of expanding its online services. For instance, it can build long-term sustainable partnerships with e-stores, so that customers get discounts, if they use FedEx services for delivery. A growing number of e-stores and other online enterprises worldwide constitute an excellent opportunity for FedEx to expand its activities and sustain competition.
Finally, taking into account a successful acquisition strategy of FedEx, further acquisitions can be viewed as a good chance to expand and broaden the range of services on offer. For instance, there is still a significant potential of going beyond the provision of logistics and transportation services per se and dedicating more efforts to enhance business solutions-related direction of the company’s functioning.
Thus, globalization, the development of region-specific strategies, as well as cooperative and acquisition strategies are major opportunities for the company’s further development.
FedEx treats
One of the crucial concerns for FedEx activities deals with the global lack of natural resources and a resulting growth of fuel prices. A continuing growth of prices for natural fuels can lead to the fact that FedEx will be forced to raise prices for its services and, thus, will lose some of its customers, especially in developing countries. Furthermore, it is evidently in need of energy-efficient shipping solutions.
Both global and local competition constitutes threats for FedEx. On the one hand, global competitors (e.g., UPS, DHL) prevent FedEx from increasing its market share in the global market of transportation and logistics services in general. On the other hand, local competitors can overplay FedEx at many local markets due to lower prices, despite the low quality of services and inefficient tracking systems.
Another important threat deals with the entry of new competitors. A recent example of such situation deals with the introduction of the Amazon Flex system that currently recruits drivers with their own cars to deliver goods to customers (Roston, 2016). While the details are not yet clear, it is evident that Amazon seeks to compete with the major companies within the transportation and logistics industry, such as FedEx and DHAL. Taking into account that it is highly beneficial for large e-storest develop their own transportation and logistics systems, it is likely that the example of Amazon can be followed by other companies.
Finally, the activities if Amazon can be threatened by the changes in governmental policies worldwide, especially dealing with customs regulations and tariffs.
References
FedEx Express (2016). Technological innovation at FedEx. Retrieved 22 February 2016 from http://www.fedex.com/ma/about/overview/innovation.html
Market Watch (2016). Annual financials for FedEx Corp. Retrieved 22 February 2016 from http://www.marketwatch.com/investing/stock/fdx/financials
Roston, B.A. (2016). Amazon may compete with FedEx, UPS via its own delivery fleet. Retrieved 22 February 2016 from http://www.slashgear.com/amazon-may-compete-with-fedex-ups-via-its-own-delivery-fleet-18427786/
Schmidt, A. (2015). FedEx: how a college paper idea turned into delivery giant. Retrieved 22 February 2016 from http://marketrealist.com/2015/06/fedex-college-paper-idea-turned-delivery-giant/
