Fedex Corporation, 2015: Final Group Case Study

STRATEGIC MANAGEMENT (SM) - MBSA 1213
SEMESTER 2 2017/2018
FINAL GROUP CASE STUDY:

FedEx Corporation, 2015
Prepared by : GROUP 1
Prepared for : Dr. Suzilawati Binti Kamarudin

Submission date : 27 May 2018 (Sunday)
Group Case Study: FedEx Corporation, 2015
Strategic Management MBSA1213
Prepared by : GROUP 1
Group’s Members
NO NAME MATRIC NUMBER
1. SHAHRIZAN BIN KHAIRUDIN MBS171072
2. LAVIN SHAH BIN MD ZULKIFLEE MBS171086
3. NORLILAWATI BINTI RAMLI MBS171060
4. NORMANJALINA BINTI HASSAN MBS171052
5. SOFIAH BINTI ABD GHAFAR MBS171048
6. MAI HAFIZATUL AZIMAH RAMLAN MBS171054
7. AFRA APRILIA MBS171089
8. ZAIDIN BIN MAT SAMAN MBS171040
1
TABLE OF CONTENTS
1.0 INTRODUCTION OF FEDEX CORPORATION, 2015 .................................................... 6
1.1 COMPANY BACKGROUND ......................................................................................... 7
1.2 VISION AND MISSION ANALYSIS ............................................................................ 9
1.2.1 Vision Statement Analysis ........................................................................................ 9
1.2.2 Mission Statement Analysis...................................................................................... 9
2.0 EXTERNAL ANALYSIS OF FEDEX .............................................................................. 11
2.1 PEST ANALYSIS OF FEDEX ...................................................................................... 11
2.2 COMPETITIVE FORCES ANALYSIS ........................................................................ 14
2.2.1 Table Competitive Force – United Parcel Service (UPS) ....................................... 14
2.2.2 Table Competitive Force – United States Postal Service (USPS) .......................... 16
2.2.3 Table Competitive Force – Deutsche Post (DPW.DE) ........................................... 17
2.3 INDUSTRY ENVIRONMENT ANALYSIS: PORTER 5 FORCES ............................ 18
2.3.1 Table of Rivalry Among Competitors .................................................................... 18
2.3.2 Table of Threats of New Entrants ........................................................................... 18
2.3.3 Table of Threats of Substitute Products/Services ................................................... 19
2.3.4 Table of Bargaining Power of Supply .................................................................... 19
2.3.5 Table of Bargaining Power of Buyer ...................................................................... 20
2.3.6 Summary of Five Porter Table ................................................................................ 20
2
2.4 SUMMARY TABLE OF OPPORTUNITIES AND THREATS ................................... 20
2.5 PRIORITIZE TABLE OF OPPORTUNITIES .............................................................. 21
2.6 PRIORITIZE TABLE OF THREATS ........................................................................... 23
2.7 EXTERNAL FACTOR EVALUATION (EFE) MATRIX ........................................... 25
2.8 STRATEGIC GROUP MAP .......................................................................................... 29
2.9 KEY SUCCESS FACTORS .......................................................................................... 30
2.10 THE COMPETITIVE PROFILE MATRIX (CPM) ................................................... 33
3.0 INTERNAL ANAYSIS OF FEDEX ................................................................................. 34
3.1 CULTURE ASSESMENT ............................................................................................. 34
3.2 MANAGEMENT FUNCTION ASSESMENT ............................................................. 39
3.3 MARKETING ASSESMENT........................................................................................ 47
3.4 FINANCIAL AND ACCOUNTING ASSESSMENT ................................................... 52
3.5 PRODUCTION/OPERATION ASSESSMENT ............................................................ 53
3.6 RESEARCH AND DEVELOPMENT ASSESSMENT (R&D) .................................... 56
3.7 MANAGEMENT INFORMATION SYSTEM ASSESSMENT (MIS) ........................ 56
3.8 SUMMARY OF STRENGTHS AND WEAKNESSES ................................................ 56
3.9 PRIOROTIZE TABLE OF STRENGTHS .................................................................... 57
3.10 PRIOROTIZE TABLE OF WEAKNESSES ............................................................. 58
3.11 INTERNAL FACTOR EVALUATION (IFE) MATRIX .......................................... 60
3.12 VALUE CHAIN ANALYSIS .................................................................................... 63
3
3.12.1 PRIMARY ACTIVITIES .................................................................................... 63
3.12.2 SUPPORT/ SECONDARY ACTIVITIES .......................................................... 64
4.0 STRATEGIC IN ACTION ................................................................................................ 65
4.1 LONG TERM AND SHORT TERM STRATEGIC OBJECTIVES.......................... 65
4.2 LONG TERM AND SHORT TERM FINANCIAL OBJECTIVES .......................... 69
4.3 CORPORATE LEVEL STRATEGY ......................................................................... 70
4.4 BUSINESS LEVEL STRATEGY .............................................................................. 72
5.0 STRATEGY FORMULATION PROCESS ...................................................................... 73
5.1 SWOT AND TOWS ANALYSIS .................................................................................. 73
5.1.1 SO STRATEGY...................................................................................................... 81
6.1.2 WO STRATEGY .................................................................................................... 82
5.1.3 ST STRATEGY ...................................................................................................... 82
5.1.4 WT STRATEGY .................................................................................................... 83
5.2 SPACE MATRIX ........................................................................................................... 84
5.3 BCG MATRIX ............................................................................................................... 86
5.4 INTERNAL EXTERNAL (IE) MATRIX ..................................................................... 88
5.5 GRAND STRATEGY MATRIX ................................................................................... 90
5.6 STRATEGIC CHOICES ................................................................................................ 91
5.7 QUANTITATIVE STRATEGIC PLANNING MATRIX ............................................. 92
5.7.1 STRENGTH............................................................................................................ 92
4
5.7.2 WEAKNESSES ...................................................................................................... 93
5.7.3 OPPORTUNITIES .................................................................................................. 94
5.7.4 THREATS............................................................................................................... 95
6.0 CONCLUSION .................................................................................................................. 96
5
1.0 INTRODUCTION OF FEDEX CORPORATION, 2015
Headquartered in Memphis, Tennessee, and founded in 1971, FedEx is one of the largest express
freight delivery companies in the world, having about 57,000 drop-off locations, 700 aircraft, and
62,000 vehicles. FedEx does business in over 220 countries and employs over 220,000 workers.
(Page 434 para 3)
FedEx primary business segments are FedEx Express, FedEx Ground, and FedEx Freight. (Page
436 para 7) FedEx reported 2015 revenues of $47.4 billion with net income of over $1 billion
(down from over $2 billion in 2014) (Page 437 para 4)
FedEx acquired GENCO Distribution System, Inc. in January 2015. The GENCO acquisition is
expected to further FedEx’s commitment to its customers by improving logistics offerings. (Page
442 para 3) FedEx is flying high. In mid-2015, the company signed a deal to buy 50 additional
Boeing Co (BA.N) 767-300 freighters in the biggest order ever for the plane, allowing Boeing to
extend its production line well into the next decade. (Page 442 para 4)
6
1.1 COMPANY BACKGROUND
Name FedEx Corporation
Founder Frederick Smith in 1971 (Page 434 para 3)
1971 Frederick Smith bought a controlling interest in Arkansas Aviation
Sales. (Page 434 para 3)
Smith named his new company Federal Express in hope obtaining a
contract with Federal Reserve Bank…….. The contract…. denied.
(Page 434 para 3)
1973 Company officially began operating with 14 small aircraft. (Page 434
para 3)
1975 FedEx first turned a profit in 1975 and was instrumental in lobbying for
the deregulation of air cargo that was passed in 1977. (Page 434 para
History 4)
1983 The firm reached $1 billion in sales, marking the first ever for a US
company to reach this level of revenue without merger or acquisitions
within 10 years of operations. (Page 434 para 4)
1995 After a series of international acquisitions, FedEx starting offering
services to Europe, Asia, and China. (Page 434 para 4)
2014 About 90 percent of FedEx’s $1.2 billion investments were to boost
capacity or infrastructure. (Page 434 para 5)
FedEx opened a new hub in Mexico City. (Page 436 para 4)
7
2015 FedEx offered to acquire Dutch delivery firm TNT Express N.V. for
approximately $8.75 per share, or $4.8 billion. (Page 434 para 1)
FedEx appears not to have a written vision statement. (Page 436, paragraph 1)
FedEx Corporation will produce superior financial returns for its shareowners
Vision/
by providing high… …will be the first consideration in all operations.
Mission
Corporate activities will be conducted to the highest ethical and professional
standards. (Page 436 para 2)
Product Freight delivery companies (Page 434 para 1)
Operating FedEx does business in over 220 countries (Page 434 para 1)
Location
FedEx primary business segments are (Page 436 para 7)
FedEx Express (claims to be the largest express transportation company in the
Business world)
Segment by FedEx Ground (principle player in the United States and Canada ground
Region package delivery system.)
FedEx Freight. (Top U.S. provider of less-than-truckload (LTL) freight
services.)
FedEx Express Revenue (2014):
US - $11.6billion
Revenue by
International - $8.7 billion
Division
FedEx Total Revenue (2014) - $45.5 billion
(Page 437 para 1)
8
1.2 VISION AND MISSION ANALYSIS
1.2.1 Vision Statement Analysis
A vision statement should answer the basic question, “What we want to become”, that the firm
strives to achieve in the long term. At a minimum, a vision statement should reveal the type of
business the firm engages. A clear vision provides the foundation for developing a comprehensive
mission statement.
Proposed vision statement:
FedEx’s vision is "To be the leader in worldwide courier services by providing universally
accessible services, most customer focused and sustainable growth."
1.2.2 Mission Statement Analysis
Mission statement describes organization’s purpose, customers, products or services, market,
philosophy, and basic technology. There are few components that FedEx should consider in
developing a good mission. The components are as below:
1. Customers - who are the firm’s customers?
2. Products or services - What are the firm’s major products or services?
3. Markets - Geographically, where does the firm compete?
4. Technology - Is the firm technologically current?
5. Concern for survival, growth, and profitability - Is the firm committed to growth and
financial soundness?
6. Philosophy - What are the basic beliefs, values, aspirations, and ethical priorities of the firm?
9
7. Self-concept - What is the firm’s distinctive competence or major competitive advantage?
8. Concern for public image - Is the firm responsive to social, community, and environmental
concerns?
9. Concern for employees - Are employees a valuable asset of the firm?
Existing mission statement:
FedEx Corporation will produce superior financial returns for its shareowners by providing high
value added logistics, transportation and related business services through focused operating
companies. Customer requirements will be met in the highest quality manner appropriate to each
market segment served. FedEx will strive to develop mutually rewarding relationships with its
employees, partners, and suppliers. Safety will be the first consideration in all operations.
Corporate activities will be conducted to the highest ethical and professional standards.
Proposed mission statement:
We are committed to meet the needs of individual, business and institutional customer (1) with the
latest technology innovation (4) in courier delivery services. (2) We believe in treating our
customer first, with highest possible service. (6) We will provide efficient and timely delivery
service (7) into the worldwide market (3) for the superior financial returns to our shareowner. (5)
We provide opportunities for employees to grow and succeed (9) as safety will be the first
consideration in all operations (8)
(72 words)
10
2.0 EXTERNAL ANALYSIS OF FEDEX
2.1 PEST ANALYSIS OF FEDEX
No. External Forces That Affect FedEx Opportunity Threat
1. Political
Not mentioned in the case.
2. Economic
Mexico is the third-largest U.S. trade partner, accounting
for 13.5 percent of all U.S. trade. (Page 436 para 5)
Africa will become more of a global player in the future.
(Page 440 para 3)
Possibly Mexico will become a larger player as
manufacturing plants want to relocate closer to the United
States, as fuel prices and labor wages in Asia increase.
(Page 440 para 3)
Delivery services outside the United States currently are a
$200 billion industry with 3 to 4 percent annual growth
expected through 2020, taking the overall projected
11
industry revenues to over $250 billion by 2020. (Page 439
para 1)
Demand for air cargo rose over 2 percent from May 2013
to May 2014. (Page 441 para 3)
With oil prices falling dramatically in 2014–2015, demand
for air freight is rising. (Page 441 para 3)
Even with an improving economy and lower oil prices,
freight demand outlook for international packages by air
travel is murky due to competition from large ocean
shipping companies, new ports, and quicker shipping times.
(Page 441 para 3)
In 2014, international markets accounted for over 50
percent of the airfreight ton-miles and have been increasing
steadily since then. (Page 441 para 4)
Domestic volumes are growing around 4 percent a year,
whereas volumes in Asia are growing nearly 20 percent a
year. (Page 441 para 4)
International rates tend to offer a higher margin as well,
since many customers internationally disproportionally use
next day service, which carries a significant price premium.
(Page 441 para 4)
12
Annual revenues in the LTL are over $50 billion. (Page 441
para 5)
In LTL, labor costs are high, with many drivers being
represented by the International Brotherhood of Teamsters
Union. (Page 441 para 5)
The trucking industry had high hopes for natural gas
powered trucks, especially in the United States, where
natural gas is plentiful but sales have lagged expectations.
(Page 441 para 6)
Only in select parts of the South and West are there reliable
natural-gas fuelling stations. (Page 441 para 6)
Natural gas powered trucks do save around $1.70 per
equivalent gallon on fuel after taking into account diesel
trucks are 20 percent more fuel efficient. (Page 441 para
6)
3. Social, Culture and Demographic
4. Technology
Mail volume continues to decrease, due to the increased use
of email, bank draft billing, and the transition from junk
mail advertising to internet. (Page 441 para 1)
13
5. Legal
On July 13, 2015, the European Commission (EC) raised
concerns about competition being restrained in the event of
the deal materializing. (Page 434 para 2)
6. Environment
TOTAL 12 5
2.2 COMPETITIVE FORCES ANALYSIS
2.2.1 Table Competitive Force – United Parcel Service (UPS)
No Key Variable Case Facts Opportunity Threat
1. Strengths Kentucky-based UPS Airlines, a division
of UPS, operates the world second largest
cargo aircraft fleet with 240 aircraft. (Page
440 para 1)
In 2014, UPS announced it is expanding
its service that allows customers to pick up
14
packages at convenience stores, dry
cleaners, UPS stores and many other
businesses. (Page 440 para 2)
UPS commitment to becoming more a
global player, especially with respect to
China and Vietnam. (Page 440 para 3)
2. Weaknesses The company’s 2014 net income,
however, declined to $3.0 billion from
$4.3 billion the prior year. (Page 439 para
4)
3. Opportunities Africa will become more of a global

player in the future and possibly Mexico
will become a larger player as
manufacturing plants want to relocate
closer to the United States, as fuel prices
and labor wages in Asia increase.
(Page 440 para 3)
4. Threats Not mentioned in the case.
TOTAL 2 3
15
2.2.2 Table Competitive Force – United States Postal Service (USPS)
1. Strengths The USPS continues to consolidate mail-
processing centers and reduce delivery
date on Standard Mail offerings. (Page
440 para 5)
The firm also is aggressively training
employee better to reduce waste. (Page
440 para 5)
Making many rural post offices part time
post offices. (Page 440 para 5)
Offering discount up to 58% to customer
who mail 50,000 parcels a year. (Page 440
para 5)
The USPS workforce is heavily
unionized, being represented by 4 Labor
Unions. (Page 440 para 6)
USPS is constantly downsizing
operations; replace many positions with
16
machines and consolidating mail routes.
(Page 441 para 1)
2. Weaknesses Not mentioned in the case
3. Opportunities Not mentioned in the case
4. Threats Not mentioned in the case
TOTAL - 6
2.2.3 Table Competitive Force – Deutsche Post (DPW.DE)
5. Strengths The world’s largest courier company.
(Page 441 para 2)
6. Weaknesses Not mentioned in the case
7. Opportunities Not mentioned in the case
8. Threats Not mentioned in the case
TOTAL - 1
17
2.3 INDUSTRY ENVIRONMENT ANALYSIS: PORTER 5 FORCES
2.3.1 Table of Rivalry Among Competitors
Competitive Force
No Case Facts
Strong Moderate Weak
1. In 2014, UPS announced it is expanding its service
that allows customers to pick up packages at
convenience stores, dry cleaners, UPS shops, and
many other businesses. (Page 440 para 2)
2. The USPS continues to consolidate mail
processing centers and reduce delivery days on
Standard Mail offerings. (Page 440 para 6)
Total 1 1 -
2.3.2 Table of Threats of New Entrants
Competitive Force
No Case Facts
1. Traditionally, FedEx, UPS, US Postal Service,
Deutsche Post, TNT International, and large
national postal services in other nations were the
main drivers of package delivery, along with many
smaller local companies. (Page 439 para 2)
18
Competitive Force
No Case Facts
2. International freight demand was up less than 1
percent between both the United States and Europe
as well as the United States and Asia in early 2014,
improving from 3 to 4 percent declines in 2013.
(Page 441 para 3)
Total 2 - -
2.3.3 Table of Threats of Substitute Products/Services
Competitive Force
No Case Facts
1. However, with e-commerce growing, new delivery
competitors such as Google, eBay, and Amazon
are offing delivery services. (Page 439 para 2)
Total - 1 -
2.3.4 Table of Bargaining Power of Supply
Competitive Force
No Case Facts
1. Premiums on the trucks upwards of 33 percent

have caused pause with potential customers. (Page
441 para 6)
Total 1 - -
19
2.3.5 Table of Bargaining Power of Buyer
Competitive Force
No Case Facts
1. USPS offering discounts up to 58 percent to
customers who mail 50,000 parcels a year. (Page
440 para 6)
Total - - 1
2.3.6 Summary of Five Porter Table
Competitive Force
No Case Facts
1. Rivalry among existing firms 1 1 -
2. Threats of new entrants 2 - -
3. Threats of substitute products - 1 -
4. Bargaining power of suppliers 1 - -
5. Bargaining power of consumers - - 1
Total 4 2 1
2.4 SUMMARY TABLE OF OPPORTUNITIES AND THREATS
External Analysis Opportunity Threat
PESTEL Political - -
Economic 12 3
Social, Culture and Demographic - -
Technology - 1
20
External Analysis Opportunity Threat
Legal - 1
Total (P) 12 5
Competitive United Parcel Service (UPS) 2 3
Analysis United States Postal Service (USPS) - 6

Deutsche Post (DPW.DE) - 1
Total (C) 2 10
GRAND TOTAL (P+C) 14 15
Total after eliminating possible overlapping 10 10
2.5 PRIORITIZE TABLE OF OPPORTUNITIES
From the summary table of opportunities and threats, there are 14 opportunities that already
identified in external analysis both in PESTEL and competitive analysis. All the opportunities are
listed as below to be ranked (1-10) based on their priority. The 10 key external factors of
opportunity later will be used in External Evaluation (EFE) Matrix.
External Analysis No Case Facts Priority
PESTEL 1. Mexico is the third-largest U.S. trade partner,
accounting for 13.5 percent of all U.S. trade.(Page 4
43, para 5)
2. Africa will become more of a global player in the

8
future. (Page 440 para 3)
21
3. Possibly Mexico will become a larger player as
manufacturing plants want to relocate closer to the

7
United States, as fuel prices and labor wages in Asia
increase.(Page 44 para 3)
4. Delivery services outside the United States currently
are a $200 billion industry with 3 to 4 percent annual
growth expected through 2020, taking the overall 1
projected industry revenues to over $250 billion by
2020. (Page 439 para 1)
5. Demand for air cargo rose over 2 percent from May

6
2013 to May 2014. (Page 441, paragraph 3)
6. With oil prices falling dramatically in 2014–2015,

2
demand for air freight is rising.(Page 44, para 3)
7. Domestic volumes are growing around 4 percent a
year, whereas volumes in Asia are growing nearly 20 5
percent a year. (Page 441 para 4)
8. International rates tend to offer a higher margin as
well, since many customers internationally

10
disproportionally use next day service, which carries
a significant price premium.(Page 441 para 4))
9. Natural gas powered trucks do save around $1.70 per

9
equivalent gallon on fuel after taking into account
22
diesel trucks are 20 percent more fuel efficient. (Page
44, para 6)
10. However, with e-commerce growing, new delivery
competitors are offing delivery service. (Page 439 3
para 2)
2.6 PRIORITIZE TABLE OF THREATS
From the summary table of opportunities and threats, there are 15 threats that already identified
in external analysis both in PESTEL and competitive analysis. All the opportunities are listed as
below to be ranked (1-10) based on their priority. The 10 key external factors of threat later will
be used in External Evaluation (EFE) Matrix.
PESTEL 1. Even with an improving economy and lower oil
prices, freight demand outlook for international
packages by air travel is murky due to competition 3
from large ocean shipping companies, new ports, and
quicker shipping times. (Page 441 para 3)
2. Only in select parts of the South and West are there
reliable natural-gas fuelling stations. (Page 441 para 7
6)
23
3. Mail volume continues to decrease, due to the
increased use of email, bank draft billing, and the

1
transition from junk mail advertising to internet.
(Page 44, para 1)
4. Kentucky-based UPS Airlines, a division of UPS,
operates the world second largest cargo aircraft fleet 10
with 240 aircraft. (Page 440 para 1)
Competitive UPS 5. In 2014, UPS announced it is expanding its service
Analysis that allows customers to pick up packages at

3
convenience stores, dry cleaners, UPS stores and
many other businesses. (Page 44, para 2)
6. UPS commitment to becoming more a global player,
especially with respect to China and Vietnam. (Page 6
440 para 3)
USPS 7. The USPS continues to consolidate mail- processing
centers and reduce delivery date on Standard Mail 9
offerings. (Page 440 para 6)
8. USPS also is aggressively training employee better

8
to reduce waste. (Page 440 para 6)
9. USPS offering discount up to 58% to customer who

5
mail 50,000 parcels a year. (Page 440 para 6)
24
10. USPS is constantly downsizing operations; replace
many positions with machines and consolidating 4
mail routes. (Page 441 para 1)
2.7 EXTERNAL FACTOR EVALUATION (EFE) MATRIX
No Key External Factors Weight Rating Weighted Score
Opportunities
1. Delivery services outside the United States
currently are a $200 billion industry with 3 to 4
percent annual growth expected through 2020, 0.10 4 0.4
taking the overall projected industry revenues to
over $250 billion by 2020. (Page 439 para 1)
2. With oil prices falling dramatically in 2014–
2015, demand for air freight is rising.(Page 441 0.07 3 0.21
para 3)
3. However, with e-commerce growing, new
delivery competitors are offing delivery service. 0.04 4 0.16
(Page 439 para 2)
4. Mexico is the third-largest U.S. trade partner,
accounting for 13.5 percent of all U.S. 0.04 3 0.12
trade.(Page 43, para 5)
25
5. Domestic volumes are growing around 4
percent a year, whereas volumes in Asia are

0.05 2 0.1
growing nearly 20 percent a year. (Page 441
para 4)
6. With oil prices falling dramatically in 2014–
2015, demand for air freight is rising.(Page 44, 0.05 3 0.15
para 3)
manufacturing plants want to relocate closer to

0.06 3 0.18
the United States, as fuel prices and labor wages
in Asia increase.(Page 44 para 3)
8. Africa will become more of a global player in

0.06 2 0.12
the future. (Page 440 para 3)
9. Natural gas powered trucks do save around
$1.70 per equivalent gallon on fuel after taking

0.07 3 0.21
into account diesel trucks are 20 percent more
fuel efficient.(Page 44, para 6)
10. International rates tend to offer a higher margin
as well, since many customers internationally
disproportionally use next day service, which 0.07 3 0.21
carries a significant price premium.(Page 441
para 4)
26
Threats
1. Mail volume continues to decrease, due to the
increased use of email, bank draft billing, and

0.07 2 0.14
the transition from junk mail advertising to
internet. (Page 441 para 1)
2. Even with an improving economy and lower oil
prices, freight demand outlook for international
packages by air travel is murky due to

0.07 2 0.14
competition from large ocean shipping
companies, new ports, and quicker shipping
times. (Page 441 para 3)
3. In 2014, UPS announced it is expanding its
service that allows customers to pick up
packages at convenience stores, dry cleaners, 0.06 3 0.18
UPS stores and many other businesses. (Page
44, para 2)
4. USPS is constantly downsizing operations;
replace many positions with machines and 0.03 2 0.06
consolidating mail routes. (Page 441 para 1)
5. USPS offering discount up to 58% to customer
who mail 50,000 parcels a year. (Page 440 para 0.02 2 0.04
6)
27
6. UPS commitment to becoming more a global
player, especially with respect to China and 0.02 1 0.02
Vietnam. (Page 44, para 3)
7. Only in select parts of the South and West are
there reliable natural-gas fuelling stations. 0.03 3 0.09
(Page 441 para 6)
8. USPS also is aggressively training employee

0.04 1 0.04
better to reduce waste. (Page 440 para 6)
9. The USPS continues to consolidate mail-
processing centers and reduce delivery date on 0.02 2 0.04
Standard Mail offerings. (Page 440 para 6)
10. Kentucky-based UPS Airlines, a division of
UPS, operates the world second largest cargo

0.03 3 0.09
aircraft fleet with 240 aircraft. (Page 440 para
1)
TOTAL EFE SCORE 1.00 2.70
A total weight score of 2.70 out of 4.00 indicates that FedEx is responding in an outstanding way
to existing opportunity and threats in freight delivery industry.
28
2.8 STRATEGIC GROUP MAP
FedEx UPS U.S Portal Service
Employee 231,500 213,200 488,000
Net Income 2,100,000,000 4,400,000,000 (5,500,000,000)
Revenue 45,500,000,000 55,400,000,000 67,800,000,000
Revenue/Employee 196,544 259,849 128,934
In the delivery service, FedEx has few competitors in the markets. Because of limitation inputs of
scale in their operating system, FedEx need to aggressively compete with UPS, USPS and
Deutsche Post (DPW.DE) as they all have a large number of employees, efficient transport systems
and offer the best services to customers through various. Therefore, we will look at employees and
income generation in producing mapping for the shipping industry for FedEx, UPS and USPS.
29
2.9 KEY SUCCESS FACTORS
Key Success Companies within

No Case Facts
Factor the Industry
$45.5 Billion
1 Revenue $55.4 Billion
$67.8 Billion
30

No Case Facts
Factor the Industry
$35 Billion (€29.4 Billion)
$2.1 Billion
$4.4 Billion
2 Net income
$5.5 Billion
$1.65 Billion (€1.38 Billion)
231,500
213,200
Number of
3
Employee
488,000
488,000
62,000 vehicles, many of which are trucks
(Page 436 para 2), 50 additional Boeing
Number of Co are purchased in 2015 (Page 442 para

4 Vehicles
4)
UPS operates over 130,000 vehicles (Page
440 para 1)
31

No Case Facts
Factor the Industry
USPS operates over 218,000 vehicles,
including its fleets (Page 440 para 4)
Not mentioned in the case study
FedEx business segments are FedEx
Express, FedEx Ground, and FedEx
Freight. FedEx Express claims to be the
largest express transportation company in
the world, and FedEx Ground is a principle
player in the United States and Canada
ground package delivery system. FedEx
Freight is a top U.S. provider of less-than-

Business
5
Segments truckload (LTL) freight services. (Page
436 para 5)
UPS is broken down into three operating
segments: U.S Domestic package,
International Package, and Supply Chain &
Freight. Each segments account for about
62, 22, and 16 percent of total revenues
respectively. (Page 439 para 3)
32

No Case Facts
Factor the Industry
USPS is divided into five business
segments: (1) First Class Mail, (2)
Standard Mail, (3) Packages, (4)
International, and (5) Periodicals.
Revenues for the segments are $28, $17,
$12.5, $3, $1.6 billion respectively (Page
440 para 5)
2.10 THE COMPETITIVE PROFILE MATRIX (CPM)
Critical Success FedEx UPS USPS
Factor Weight Rating Score Rating Score Rating Score
Revenue 0.20 3 0.60 3 0.60 4 0.80
Net Income 0.20 3 0.60 3 0.60 4 0.80
Number of
0.15 3 0.45 3 0.45 4 0.60
Employees
Number of
0.15 2 0.30 4 0.60 4 0.60
Vehicles
Business Segments 0.30 3 0.90 3 0.90 4 1.20
Total 1.00 2.85 3.15 4.00
33
The CPM provided above shows that the most important factor is the business segment which is
can be said the service that each company offer to customers. As USPS received the highest
number, can be seen that USPS provides first class mail and letters, where customers have little
choice or bargaining power on who to do business with. However, it does not mean that FedEx is
doing a less better than UPS and USPS. It is just showing that USPS is doing better in certain area.
3.0 INTERNAL ANAYSIS OF FEDEX
3.1 CULTURE ASSESMENT
Companies Within The Industry

Competitors
No Items Strength Weakness
FedEx (UPS, USPS &
DPW.DE)
1. • FedEx is one of the • Kentucky-based
largest express UPS Airlines, a
freight delivery division of UPS,
Saga companies in the operates the
Historical world. (Page 434 world’s second-

para 1) largest cargo
narratives
• FedEx traces its aircraft fleet with
describing the
history to 1971, when 240 aircraft.
unique
Frederick Smith (the (Page 440, para
accomplishments
current CEO) bought 1)
of a group and
a controlling interest • The United
its leaders in Arkansas Aviation States Postal
Sales. (Page 434 Service (USPS)
para 3) is the oldest
postal service in
34

Competitors
FedEx (UPS, USPS &
DPW.DE)
• Deregulation allowed the country,
FedEx to use larger existing for over
aircraft, and today, 235 years (Page
FedEx is the world’s 440 para 4)
largest all cargo fleet. • Deutsche Post
(Page 434 para 4)
considered the
• FedEx is also
world’s largest
acquiring firms
around the world in courier
locations such as the company, (Page
United Kingdom,
441 para 2)
Poland, China, South
Africa, India, Brazil,
and many others.
(Page 436 para 5)
• FedEx Freight is a top
U.S. provider of less-
than-truckload (LTL)
freight services.
(Page 436 para 6)
2. Story • Traditionally, FedEx,

UPS, US Postal
Narratives
Service, Deutsche
usually based on
Post, TNT
true events
International, and
35

Competitors
FedEx (UPS, USPS &
DPW.DE)
large national postal
services in other
nations were the
main drivers of
package delivery,
along with many
smaller local
companies (Page
439 para 2)
3. • Customer
requirements will be
met in the highest
quality manner
appropriate to each
market segment
Values
served (Page 436
Life-directing
para 1)
attitudes that
• FedEx will strive to
serve as
develop mutually
behavioural rewarding
guidelines relationships with its
employees, partners
and suppliers. (Page
436 para 1)
• Safety will be the
first consideration in
36

Competitors
FedEx (UPS, USPS &
DPW.DE)
all operations. (Page
436 para 1)
• Corporate activities
will be conducted to
the highest ethical
and professional
standards. (Page 436
para 1)
• Also, the company
uses recycled paper
in most all of their
shipping packaging.
Most FedEx
envelopes are made
from 100 percent
recycled paper, and
boxes contain a
minimum of 40
percent recycled
content. (Page 436
para 3)
• FedEx also has
recycling programs
in place for a variety
of items, including
batteries, printer ink
cartridges, lights,
37

Competitors
FedEx (UPS, USPS &
DPW.DE)
paper, oil, tires,
plastics, and many
other products. (Page
436, para 3)
4. • FedEx operates in a
business where large
carbon footprints are
the norm. (Page 436,
Belief para 2)
Understanding
of particular • In addition, working

phenomena with customers on
their own supply
chain has helped
reduced fuel usage.
(Page 436, para 2)
Total 14 -
38
3.2 MANAGEMENT FUNCTION ASSESMENT
No Items Competitors Strength Weakness

FedEx (UPS, USPS &
DPW.DE)
1. Planning After a series of UPS’s service of
Planning international acquisitions, dropping off

consists of all
those
managerial FedEx starting offering packages at a
activities
related to
preparing for services to Europe, Asia, specified pick-up
the future
and China through a 1995 location has worked
acquisition (Page 434 well in Europe, which
para 4) currently has over
12,000 pick-up
locations with plans
to expand to over
20,000 in Europe
alone by year-end
2015 (Page 440 para
2)
Efforts made to reduce UPS will relocate the
carbon emissions are a part manufacturing plants
of FedEx’s overall closer to he US, and
strategy and the company Mexico possibly will
reports its fleet miles per become a larger
39

FedEx (UPS, USPS &
DPW.DE)
gallons has dropped 14% player because of
since 2005 with a goal of a that. (Page 440 para
20% reduction by 2020 3)
(Page 436 para 2)
To establish strong USPS is aggresively
footprint for domestic training employees
package delivery is better to reduce waste
FedEx’s strategy in (Page 440 para 6)
acquiring firms around the
world (Page 436 para 5)
FedEx Express is the main
revenue driver of the
company and plans on a
increase in expenses in
2015 and 2016 as the
segment modernizes its
airline and trucking fleet
(Page 437 para 1)
40

FedEx (UPS, USPS &
DPW.DE)
FedEx acquisition with
Genco is expected to
further FedEx’s
commitment to its
customers by improving
logistics offerings. FedEx
also plans to allow
GENCO to operate as
subsidiary and keep its
management team (Page
442 para 2)
In mid 2015, FedEx signed
a deal to bu 50 additional
Boeing Co 767-300
freighters to extend its
production line well into
the next decade (Page 442
para 3)
41

FedEx (UPS, USPS &
DPW.DE)
After a series of UPS’s service of
international acquisitions, dropping off
FedEx starting offering packages at a
services to Europe, Asia, specified pick-up
and China through a 1995 location has worked
acquisition (Page 43, para well in Europe, which
4) currently has over
12,000 pick-up
to expand to over
20,000 in Europe
alone by year-end
2015 (Page 440 para
2)
2. Organizing FedEx uses a divisional- As mail volume
Organizing by-product organizational continues to decrease,

includes all
those
managerial structure, but the firm does due to the increased
activities that
result in a
structure of not appear to have use of email, bank
task and
authority executives with popular draft billing, and the
relationships
titles such as COO, CTO, transition from junk
42

FedEx (UPS, USPS &
DPW.DE)
HRM, or R&D. (Page 434 mail advertising to
para 6) Internet, USPS is
constantly
downsizing
operations, replacing
many positions with
machines and
consolidating mail
routes (Page 441 para
1)
In 2014, 90% of FedEx’s
$1.2 billion invenstment
were to boost capacity or
infrastcuture, the
investment is designed to
address the rapid growth
of consumer goods
ordered online (Page 434
para 4)
43

FedEx (UPS, USPS &
DPW.DE)
FedEx opened a new hub
in Mexico City in 2014 to
help aid in shipments to
more than 800 shipping
locations across Mexico.
The hub should better
enable 2-day shipping
across Mexico and speed
deliver between Mexico
and the United States
(Page 436 para 4)
FedEx also opened a new
hub in Osaka, Japan, in
2014 to better facilitate
transport of shipments
from Asia to the United
States (Page 436 para 4)
3. Motivating Not mentioned in the case Not mentioned in the
Motivating - -
study case study
involves efforts
directed
toward shaping
44

FedEx (UPS, USPS &
DPW.DE)
human
behaviour.
4. Staffing As Christmas approached, USPS is aggressively
FedEx hired about 50,000 training employees
seasonal workers, up from better to reduce
40,000 the prior year. waste, making many
(Page 434 para 5) rural post offices part-
time post offices
(Page 440 para 6)
As FedEx Ground The USPS workforce
compete with UPS in the is heavily unionized,
LTL (Less than Truck being represented by
Load), LTL requires a four labor unions: (1)
large hub structure and American Postal
also high costs at labor Workers Union; (2)
(Page 441 para 4) National Association
of Letter Carriers; (3)
National Rural Letter
Carriers Association;
(4) National Postal
45

FedEx (UPS, USPS &
DPW.DE)
Mail Handlers Union
(Page 440 para 7)
5. Controlling FedEx uses recycled paper UPS announced it is
in most all of their expanding its service
shipping packaging. Most that allows customers
FedEx envelopes are made to pick up packages at
from 100% recycled convenience stores,
paper, and boxes contain a dry cleaners, UPS
minimum of 40% recycled shops, and many
content. FedEx also has other businesses. The
recycling programs in strategy has worked
place for a variety of well in Europe, which
items, including batteries, currently has over
printer ink cartridges, 12,000 pick-up
lights, papers, oil, tires, locations. The firm
plastics, and many other has determined that
product. (Page 436 para 3) saving 1 second per
driver per day will
result in $14.5 million
46

FedEx (UPS, USPS &
DPW.DE)
in savings annually
(Page 440 para 2)
Total 13 1
3.3 MARKETING ASSESMENT
Competitors
FedEx (UPS, USPS &
DPW.DE)
1. Customer The business segment
Analysis provides worldwide
delivery in anywhere
from 1 to 5 business days
based on client
needs.(Page 437 para 1)
2. Selling Last-minute, holiday …, and USPS
Products online free shipping deals offering discounts up
and have proliferated in to 58 percent to
Services recent years. (Page 434 customers who mail
para 5) 50,000 parcels a
47
Competitors
FedEx (UPS, USPS &
DPW.DE)
year.(Page 440 para
6)
3. Product and FedEx Express plans on
Service an increase in expenses in
Planning 2015 and 2016 as the
segment modernizes its
airline and trucking
fleet.(Page 437 para 1)
4. Pricing With Amazon’s size
and package volume,
the firm can negotiate
attractive shipping
prices for its
customers..(Page 439
para 2)
For $5 per package or
$40 annual
membership,
customers can have
packages dropped off
48
Competitors
FedEx (UPS, USPS &
DPW.DE)
at a specified pick-up
location.(Page 440
para 1)
5. Distribution With Amazon’s size
and package volume,
attractive shipping
prices for its
para 2)
$40 annual
membership,
customers can have
location.(Page 440
para 1)
With Amazon’s size
and package volume,
49
Competitors
FedEx (UPS, USPS &
DPW.DE)
attractive shipping
prices for its
para 2)
$40 annual
membership,
customers can have
location.(Page 440
para 1)
and package volume,
attractive shipping
prices for its
para 2)
50
Competitors
FedEx (UPS, USPS &
DPW.DE)
$40 annual
membership,
customers can have
location.(Page 440
para 1)
and package volume,
attractive shipping
prices for its
para 2)
6. Marketing Not mentioned in case. Not mentioned in

Research - -
case.
7. Cost/ Not mentioned in case. Not mentioned in

Benefit - -
Analysis case.
Total 8 4
51
3.4 FINANCIAL AND ACCOUNTING ASSESSMENT

Competitors
FedEx (UPS, USPS &
DPW.DE)
1. Revenue 2015 $47.45 UPS : $58.2
billion
billion
2014 $45.5 billion UPS : $55.4

billion
2013 Not UPS : Not
mentioned
mentioned in
the case
2. Operating 2015 $1.8 billion Not mentioned
Income 2014 $3.4 billion Not mentioned
3. Total 2015 $22 billion not mentioned

Liabilities
2014 $17 billion not mentioned
4. Net Income 2015 $1.05 billion not mentioned
2014 $2.1 billion UPS : $4.4

billion
5. Net Profit 2015 0.022
Margin
not mentioned
2014 0.046
Total 1 4
52
3.5 PRODUCTION/OPERATION ASSESSMENT

FedEx (UPS, USPS &
DPW.DE)
1. Process FedEx is one of the largest UPS operates over
103,000 vehicles and
express freight delivery
owns 33,000
companies in the world,
package containers.
having about 57,000 drop- Kentucky-based
UPS Airlines, a
off locations, 700 aircraft,
division of UPS,
and 62,000 vehicles. (Page
operates the world’s
440 para 1) second-largest cargo
aircraft fleet with
240
aircraft. (Page 440
para 1)
Efforts made to reduce
carbon emissions are a part
of FedEx’s overall strategy
and the company reports
its fleet miles per gallon
has dropped 14 percent
since 2005 with a goal of a
20 percent reduction by
2020. (Page 436 para 3)
53

FedEx (UPS, USPS &
DPW.DE)
FedEx Corporation will
produce superior financial
returns for its shareowners
by providing high value-
added logistics,
transportation and related
business services through
focused operating
companies. (Page 436
para 3)
2. Capacity Not mentioned in the case Not mentioned in the - -
case
3. Inventory Across Europe, FedEx The strategy has

worked well in
opened 100 new stations
Europe, which
across 11 different nations
currently has over
between 2011 and May of 12,000 pick-up
2014. (Page 436 para 6)
to expand to over
20,000 in Europe
alone by year-end
2015. Receiving a
54

FedEx (UPS, USPS &
DPW.DE)
fee to drop off at
central locations
is a bonanza for UPS.
(Page 440 para 2)
4. Workforce Safety will be the first The firm also is
consideration in all aggressively training
operations. Corporate employees better to
activities will be reduce waste,
conducted to the highest making many ruralu
ethical and professional post offices part-time
standards. (Page 436 para post offices, (Page
2) 440 para 6)
5. Quality FedEx is fraught with
excess packaging boxes,
tape, and other products
used to protect items
during shipment. Efforts
made to reduce carbon
emissions are a part of
FedEx’s overall strategy
and the company reports
55

FedEx (UPS, USPS &
DPW.DE)
its fleet miles per gallon
has dropped 14 percent
since 2005 with a goal of a
20 percent reduction by
2020. (Page 436 para 2)
Total 5 1
3.6 RESEARCH AND DEVELOPMENT ASSESSMENT (R&D)
Not mentioned in the case
3.7 MANAGEMENT INFORMATION SYSTEM ASSESSMENT (MIS)
Not mentioned in the case
3.8 SUMMARY OF STRENGTHS AND WEAKNESSES
Internal Analysis Opportunity Threat
Culture Assessment 14 -
Management Function Assessment 13 1
Marketing Assessment 8 4
Financial and Accounting Assessment 1 4
Production/Operation Assessment 5 1
Total 41 10
56
3.9 PRIOROTIZE TABLE OF STRENGTHS
From the summary table of opportunities and threats, there are 41 strengths that already identified
in internal analysis through all the assessments involved (culture, management function,
marketing, financial/accounting, production/operation and MIS) . All the strengths are listed as
below to be ranked (1-10) based on their priority. The 10 key internal factors of strengths later will
be used in Internal Evaluation (IFE) Matrix.
No Case Facts Priority
1. FedEx has 700 aircrafts (Page 434 para 1), In mid 2015, FedEx signed a deal
to buy 50 additional Boeing Co 767-300 freighters to extend its production line 1
well into the next decade (Page 442 para 3)
2. FedEx opened a hub in Mexico City and Osaka Japan to better facilitate the
4
delivery of shipments (Page 436 para 4)
3. The business segment provides worldwide delivery in anywhere from 1 to 5

2
business days based on client needs.(Page 437 para 1)
4. The declines are partly from newer more fuel-efficient engines, but also from
building more strategically located hubs and dispatch facilities. (Page 436 10
para 3)
5. Between 2011 and 2012, revenues from “international domestic” operations

6
rose from $650 million to $1.4 billion. (Page 436 para 5)
6. FedEx Ground is a principle player in the United States and Canada ground
5
package delivery system. (Page 436 para 6)
57
7. FedEx freight is a top U.S. provider of less-than-truckload (LTL) freight

9
services (Page 436 para 6)
8. FedEx Express covers many services focused on timely delivery but also on
3
cost savings (Page 436 para 7)
9. Working with customers on their supply chain has help reduced fuel usage
8
(Page 436 para 2)
10. FedEx acquisition with Genco is expected to further FedEx’s commitment to
its customers by improving logistics offerings. FedEx also plans to allow

7
GENCO to operate as subsidiary and keep its management team (Page 442
para 2)
3.10 PRIOROTIZE TABLE OF WEAKNESSES
From the summary table of opportunities and threats, there are 10 weaknesses that already
identified in internal analysis through all the assessments involved (culture, management function,
marketing, financial/accounting, production/operation and MIS) . All the weaknesses are listed as
below to be ranked (1-10) based on their priority. Only 7 key internal factors of weaknesses later
will be used in Internal Evaluation (IFE) Matrix.
1. The firm paid 35% taxes in fiscal year 2015, and has over $3 billion in
7
goodwill on the balance sheet (Page 437, para 4)
58
2. FedEx net profit margin in 2015, 0.022 lower than in 2014 (0.046) (Page 436
5
Exhibit 3)
3. FedEx total liabilities in 2015, $22 billion increased than in 2014 ($17 billion)
4
(Page 436 Exhibit 3)
4. FedEx net income in 2015, $1.05 billion lower than in 2014 ($2.1 billion)
6
5. FedEx has 62,000 vehicles, which is lower than UPS who owns 103,000
1
vehicles (Page 434, para 1) (Page 440, para 1)
6. As FedEx Ground compete with UPS in the LTL (Less than Truck Load),
LTL requires a large hub structure and also high costs at labor (Page 441, 2
para 4)
7. FedEx operating income in 2015, $1.8 billion lower than in 2014 ($3.4
3
billion) (Page 436 Exhibit 3)
59
3.11 INTERNAL FACTOR EVALUATION (IFE) MATRIX
Strengths
1. Delivery services outside the United States
currently are a $200 billion industry with 3 to 4
percent annual growth expected through 2020, 0.10 4 0.4
taking the overall projected industry revenues to
over $250 billion by 2020. (Page 439 para 1)
2. With oil prices falling dramatically in 2014–2015,

0.07 3 0.21
demand for air freight is rising. (Page 441 para 3)
3. However, with e-commerce growing, new
delivery competitors are offing delivery service. 0.04 4 0.16
(Page 439 para 2)
4. Mexico is the third-largest U.S. trade partner,
accounting for 13.5 percent of all U.S. trade. 0.04 3 0.12
(Page 436 para 5)
5. Domestic volumes are growing around 4 percent
a year, whereas volumes in Asia are growing 0.05 2 0.1
nearly 20 percent a year. (Page 441 para 4)
6. Demand for air cargo rose over 2 percent from

0.05 3 0.15
May 2013 to May 2014. (Page 441 para 3)

0.06 3 0.18
manufacturing plants want to relocate closer to the
60
United States, as fuel prices and labor wages in
Asia increase.(Page 440 para 3)
8. Africa will become more of a global player in the

0.06 2 0.12
future. (Page 440 para 3)
9. Natural gas powered trucks do save around $1.70
per equivalent gallon on fuel after taking into

0.07 3 0.21
account diesel trucks are 20 percent more fuel
efficient. (Page 441 para 6)
10. International rates tend to offer a higher margin as
well, since many customers internationally
disproportionally use next day service, which 0.07 3 0.21
carries a significant price premium. (Page 441
para 4)
Weaknesses
1. FedEx has 62,000 vehicles, which is lower than
UPS who owns 103,000 vehicles (Page 434 para 0.07 1 0.07
1) (Page 440 para 1)
2. As FedEx Ground compete with UPS in the LTL
(Less than Truck Load), LTL requires a large hub

0.05 1 0.05
structure and also high costs at labor. (Page 441
para 4)
61
3. FedEx operating income in 2015, $1.8 billion
lower than in 2014 ($3.4 billion) (Page 436 0.05 1 0.05
Exhibit 3)
4. FedEx total liabilities in 2015, $22 billion
increased than in 2014 ($17 billion) (Page 436 0.03 1 0.03
Exhibit 3)
5. FedEx net profit margin in 2015, 0.022 lower than

0.03 2 0.06
in 2014 (0.046) (Page 436 Exhibit 3)
6. FedEx net income in 2015, $1.05 billion lower

0.04 2 0.08
than in 2014 ($2.1 billion) (Page 436 Exhibit 3)
7. The firm paid 35% taxes in fiscal year 2015, and
has over $3 billion in goodwill on the balance 0.02 2 0.04
sheet (Page 437 para 4)
TOTAL 1.00 3.11
A total weight score of 3.11 out of 4.00 indicates that FedEx have a strong internal position to be
a leading express freight delivery company in the world.
62
3.12 VALUE CHAIN ANALYSIS
3.12.1 PRIMARY ACTIVITIES
Inbound logistic
1. FedEx is one of the largest express freight delivery companies in the world, having about
57,000 drop off locations worldwide. (Page 434 para 1)
Outbound logistic
1. FedEx SmartPost business uses the United States Postal Service (USPS) to deliver
smaller packages that are less time sensitive. (Page 437 para 2)
Marketing/ sales
1. FedEx service oversees marketing, information technology, communications, and other
managerial needs. (Page 436 para 7)
2. FedEx also has recycling programs in place for a variety of items, including batteries,
printer ink cartridges, lights, paper, oil, tires, plastics, and many other product. (Page
436 para 4)
Operational
1. FedEx is comprised of subsidiaries; FedEx ground, FedEx express, FedEx freight, and
FedEx service. (Page 434 para 1)
Service
1. FedEx Ground offers services to nearly 100 percent of all U.S. residences and most
Canadian residences as well.(Page 437 para 2)
63
3.12.2 SUPPORT/ SECONDARY ACTIVITIES
Firm infrastructure
1. FedEx have about 700 aircraft, and 62,000 vehicles. (Page 434 para 1)
2. FedEx opened a new hub in Mexico City in 2014; FedEx also opened a new hub in Osaka
japan in 2014. (Page 436 para 5)
Human resource
1. FedEx uses a divisional by product organizational structure, but the firm does not appear
to have executives with popular titles such as COO, CTO, CSO, HRM, or R&D. (Page
434, paragraph 6)
Technology advancement
1. The declines are partly from newer more fuel-efficient engines, but also from building
more strategically located hubs and dispatch facilities. In addition, working with
customers on their own supply chain has helped reduced fuel usage. (Page 436,
paragraph 3)
Based from the value chain analysis, there were several recommendations that we can suggest to
improve its work process. Under outbound logistic, FedEx can introduce pickup location as their
competitor done. It will help their customer to collect their items based on their time and flexibility,
and it’s also can reduce the operational cost.
Second suggestion is under technology advancement where FedEx can implement e-commerce
payment method, it will help the consumer since that the world payment method are heading to
cashless systems. The technology advancement recommendation will affect the FedEx market
64
grow in future in-term of branding of the company and will increase the sale due to better payment
method.
4.0 STRATEGIC IN ACTION
4.1 LONG TERM AND SHORT TERM STRATEGIC OBJECTIVES
Remarks:
No. Long Term Objectives Short Term Objectives Successful/
Unsuccessful
Smith named his new company
Federal Express in hopes of
obtaining a contract with the
Federal Reserve Bank and to draw
public interest though the term
Federal. The contract proposal

Unsuccessful
1 with the Federal Reserve was
denied, but the company officially
began operating in 1973 with 14
small aircraft from Memphis,
Tennessee, by delivering 186
packages to 25 different U.S.
cities. (Page 434, para 3)
The firm reached $1 billion in

2 Successful
sales in 1983, marking the first
65
Remarks:
Unsuccessful
ever for a U.S. company to reach
this level of revenues without
mergers or acquisitions within 10
years of operations. (Page 434,
para 4)
Efforts made to reduce carbon
emissions are a part of FedEx’s
overall strategy and the company
reports its fleet miles per gallon

3 Successful
has dropped 14 percent since 2005
with a goal of a 20 percent
reduction by 2020. (Page 436,
para 2)
Continuing its global expansion,
FedEx opened a new hub in
Mexico City in 2014 to help aid in
shipments to more than 800

4 Successful
shipping locations across Mexico.
The hub should better enable 2-
day shipping across Mexico and
speed deliver between Mexico
66
Remarks:
Unsuccessful
and the United States. Currently,
Mexico is the third-largest U.S.
trade partner, accounting for 13.5
percent of all U.S. trade. Also, the
New Mexico City hub is expected
to expedite service to Latin
America, where revenues are
growing rapidly. (Page 436, para
4)
FedEx is also acquiring firms
around the world in locations such
as the United Kingdom, Poland,
China, South Africa, India, Brazil,
5 and many others. It is FedEx’s Successful
strategy to establish a strong
footprint in these areas for
domestic package delivery. (Page
436, para 5)
FedEx has capitalized on these
6 trends, especially in China, but Successful
also in Germany, to help facilitate
67
Remarks:
Unsuccessful
a growing European market as
well. (Page 441, para 4)
The GENCO acquisition is
expected to further FedEx’s
7 commitment to its customers by Successful
improving logistics offerings.
(Page 442, para 3)
FedEx signed a deal to buy 50
additional Boeing Co (BA.N)
767-300 freighters in the biggest
8 order ever for the plane, allowing Successful
Boeing to extend its production
line well into the next decade.
(Page 442, para 4)
68
4.2 LONG TERM AND SHORT TERM FINANCIAL OBJECTIVES
Remarks:
Unsuccessful
FedEx Express is continuing its
acquisition of foreign companies
to establish domestic services for
those areas. Freight accounted for
$4.1 billion of FedEx Express’s
1 Successful
2014 revenues. FedEx Express
plans on an increase in expenses in
2015 and 2016 as the segment
modernizes its airline and
trucking fleet. (Page 437, para 1)
As Christmas approached, the
company hired about 50,000
seasonal workers, up from 40,000
the prior year. The investment is
designed to address the rapid
growth of consumer goods ordered

2 Successful
online. Peak volume, referring to
the busiest day of the year, had
climbed dramatically in recent
years for FedEx, to 26-plus million
packages on one day near
Christmas. That busiest day
69
recently jumped 40 percent at rival
UPS, to 31 million packages. (Page
434, para 5)
International markets continue to

be important for future growth in
the airfreight industry. In 2014,
international markets accounted
3 Successful
for over 50 percent of the
airfreight ton-miles and have been
increasing steadily since then.
(Page 441, para 4)
4.3 CORPORATE LEVEL STRATEGY
No. Strategy Case Facts
1 Forward Integration FedEx acquired GENCO Distribution System, Inc. in January
2015. The GENCO acquisition is expected to further FedEx’s
commitment to its customers by improving logistics offerings.
(Page 442 para 2)
2 Backward Integration FedEx traces its history to 1971, when Frederick Smith (the
current CEO) bought a controlling interest in Arkansas Aviation
Sales. The frustration of being unable to effectively deliver
packages in 2 days created the idea of determining a more
effective way to handle freight. (Page 434 para 3)
70
3 Horizontal Integration FedEx is also acquiring firms around the world in locations such
as the United Kingdom, Poland, China, South Africa, India,
Brazil, and many others. It is FedEx’s strategy to establish a
strong footprint in these areas for domestic package delivery.
(Page 436 para 5)
4 Market Penetration Across Europe, FedEx opened 100 new stations across 11
different nations between 2011 and May of 2014. (Page 436
para 5)
5 Market Development Continuing its global expansion, FedEx opened a new hub in
Mexico City in 2014 to help aid in shipments to more than 800
shipping locations across Mexico. (Page 436 para 4)
6 FedEx also opened a new hub in Osaka, Japan, in 2014 to better
facilitate transport of shipments from Asia to the United States.
(Page 436 para 4)
7 Product Development As Christmas approached, the company hired about 50,000
seasonal workers, up from 40,000 the prior year. The
investment is designed to address the rapid growth of consumer
goods ordered online. (Page 434 para 5)
8 Related Diversification Not mention in the case study
9 Unrelated Not mention in the case study
Diversification
10 Retrenchment Not mentioned in the case
71
11 Divestiture Not mentioned in the case
12 Liquidation Not mentioned in the case
4.4 BUSINESS LEVEL STRATEGY
1 Cost Leadership LTL includes shipments on trucks smaller than 18 wheelers
with packages generally weighing less than 150 pounds. This
provides great cost savings for many customers who do not
need the volume of a full-size truck. (Page 436 para 6)
2 Cost Leadership FedEx Express covers many services focused on timely
delivery but also on cost savings if expenses are more important
than time. (Page 436 para 7)
3 Differentiation Also, the company uses recycled paper in most all of their
shipping packaging. Most FedEx envelopes are made from 100
percent recycled paper, and boxes contain a minimum of 40
percent recycled content. (Page 436 para 3)
72
5.0 STRATEGY FORMULATION PROCESS
5.1 SWOT AND TOWS ANALYSIS
Strengths (S) Weaknesses (W)
S1. FedEx has 700 aircrafts W1. FedEx has 62,000
(Page 434 para 1), in mid vehicles, which is lower
2015, FedEx signed a deal than UPS who owns
to buy 50 additional 103,000 vehicles (Page
Boeing Co 767-300 434 para 1) (Page 440
freighters to extend its para 1)
production line well into W2. As FedEx Ground
the next decade (Page 442 compete with UPS in
para 3) the LTL (Less than
S2. The business segment Truck Load), LTL
provides worldwide requires a large hub
delivery in anywhere from structure and also high
1 to 5 business days based costs at labor. (Page
on client needs. (Page 437 441 para 4)
para 1) W3. FedEx operating
S3. FedEx Express covers income in 2015, $1.8
many services focused on billion lower than in
timely delivery but also on 2014 ($3.4 billion)
73
cost savings (Page 436 W4. FedEx total
para 7) liabilities in 2015, $22
S4. FedEx opened a hub in billion increased than in
Mexico City and Osaka 2014 ($17 billion)
Japan to better facilitate (Page 436 Exhibit 3)
the delivery of shipments W5. FedEx net profit
(Page 436 para 4) margin in 2015, 0.022
S5. FedEx Ground is a lower than in 2014
principle player in the (0.046) (Page 436
United States and Canada Exhibit 3)
ground package delivery W6. FedEx net income
system. (Page 436 para 6) in 2015, $1.05 billion
S6. Between 2011 and 2012, lower than in 2014
revenues from ($2.1 billion) (Page 436
“international domestic” Exhibit 3)
operations rose from $650 W7. The firm paid 35%
million ro $1.4 billion. taxes in fiscal year
(Page 436 para 5) 2015, and has over $3
S7. FedEx acquisition with billion in goodwill on
Genco is expected to the balance sheet (Page
further FedEx’s 437 para 4)
commitment to its
customers by improving
74
logistics offerings. FedEx
also plans to allow
GENCO to operate as
subsidiary and keep its
management team (Page
442 para 2)
S8. Working with customers
on their supply chain has
help reduced fuel usage
(Page 436 para 2)
S9. FedEx freight is a top U.S.
provider of less-than-
truckload (LTL) freight
services (Page 436 para 6)
S10. The declines are partly
from newer more fuel-
efficient engines, but also
from building more
strategically located hubs
and dispatch facilities
(Page 436 para 3)
75
Opportunities (O) SO Strategies WO Strategies
O1. Delivery services Market Penetration Product Development
outside the United States SO1. Open more new store WO1. As International
currently are a $200 billion in Mexico over the next three rates tend to offer a higher
industry with 3 to 4 percent years. (S2, S4, S6, O4, O7) margin, and customers
annual growth expected internationally use next day
through 2020, taking the Product Development service, which carries a
overall projected industry SO2. FedEx introduce e- significant premium price,
revenues to over $250 commerce payment services as FedEx has a possibility to
billion by 2020. (Page 439 the business are growing and develop and offer premium
para 1) this help the company to service to increase FedEx’s
O2. With oil prices falling smooth the business process both net income and net
dramatically in 2014–2015, while reduce time delivery that profit margin (W5, W6,
demand for air freight is covered the worldwide O10)
rising.(Page 441 para 3) market. (S2, S3, O3, O10)
O3. However, with e- Market Development
commerce growing, new WO2. With the latest
delivery competitors are development that Africa
offing delivery service. will more of a global player
(Page 439 para 2) in the future, FedEx should
O4. Mexico is the third- open its new hub in Africa
largest U.S. trade partner, to generate more income
accounting for 13.5 percent and revenue in order to
76
of all U.S. trade.(Page 43, compete with its
para 5) competitor, UPS. (W5, W6,
O5. Domestic volumes are O8)
growing around 4 percent a
year, whereas volumes in
Asia are growing nearly 20
percent a year. (Page 441
para 4)
O6. With oil prices falling
dramatically in 2014–2015,
demand for air freight is
rising.(Page 44 para 3)
O7. Possibly Mexico will
become a larger player as
manufacturing plants want
to relocate closer to the
United States, as fuel prices
and labor wages in Asia
increase.(Page 44 para 3)
O8. Africa will become
more of a global player in
the future. (Page 440 para
3)
77
O9. Natural gas powered
trucks do save around $1.70
per equivalent gallon on
fuel after taking into
account diesel trucks are 20
percent more fuel
efficient.(Page 44, para 6)
O10. International rates tend
to offer a higher margin as
well, since many customers
internationally
disproportionally use next
day service, which carries a
significant price premium.
(Page 441 para 4)
Threats (T) ST Strategies WT Strategies
T1. However, with e- Market Penetration Product Development
commerce growing, new ST1. Since FedEx the most WT1. FedEx will
delivery competitors are strength is having more complete their operation
offing delivery service. aircraft than its competitors in efficiency by using
(Page 439 para 2) (700 existing & 50 carriage machine to
T2. Mail volume continues to additional aircraft), FedEx reduce cost of labor which
decrease, due to the also could penetrate China this plan will help to
78
increased use of email, and Vietnam market to increase the net income
bank draft billing, and the compete UPS. (S1, T7) and net profit margin.
transition from junk mail (W5, W6, T5)
advertising to internet.
(Page 441 para 1) Product Development Market Penetration
T3. Even with an improving ST2. FedEx could imitate WT2. FedEx collaborate
economy and lower oil UPS by introducing with Alibaba.com for
prices, freight demand customers pick up packages market acquisition in
outlook for international if they are not at home during China and Vietnam to
packages by air travel is the delivery of packages to increase their territory in
murky due to competition avoid missing packages and both countries as a new
from large ocean shipping theft. This new approach approach to increase its
companies, new ports, and seems aligned with its operating income and
quicker shipping times. culture; provides worldwide overall net income. (W3,
(Page 441 para 3) delivery in anywhere from 1 W6, T7)
T4. In 2014, UPS announced it to 5 business days based on
is expanding its service that client needs and services
allows customers to pick up focused on timely delivery
packages at convenience but also on cost savings. (S2,
stores, dry cleaners, UPS S3, T4)
stores and many other
businesses. (Page 440 para
2)
79
T5. USPS is constantly
downsizing operations;
replace many positions with
machines and consolidating
mail routes. (Page 441
para 1)
T6. USPS offering discount up
to 58% to customer who
mail 50,000 parcels a year.
(Page 440 para 6)
T7. UPS commitment to
becoming more a global
player, especially with
respect to China and
Vietnam. (Page 440 para 3)
T8. Only in select parts of the
South and West are there
reliable natural-gas fuelling
stations. (Page 441 para 6)
T9. USPS also is aggressively
training employee better to
reduce waste. (Page 440
para 6)
80
T10. The USPS continues to
consolidate mail-
processing centers and
reduce delivery date on
Standard Mail offerings.
(Page 440 para 6)
5.1.1 SO STRATEGY
SO Strategies Factors
Market Penetration
SO1. Open more new store in Mexico over the next three years. (S2, S4, S6, O4,
O7)
Product Development
SO2. FedEx introduce e-commerce payment services as the business (S2, S3, O3, O10)
are growing and this help the company to smooth the business
process while reduce time delivery that covered the worldwide
market.
81
6.1.2 WO STRATEGY
WO Strategies Factors
Product Development
WO1. As International rates tend to offer a higher margin, and (W5, W6, O10)
customers internationally use next day service, which carries a
significant premium price, FedEx has a possibility to develop and
offer premium service to increase FedEx’s both net income and
net profit margin.
Market Development
WO2. With the latest development that Africa will more of a global (W5, W6, O8)
player in the future, FedEx should open its new hub in Africa to
generate more income and revenue in order to compete with its
competitor, UPS.
5.1.3 ST STRATEGY
ST Strategies Factors
Market Penetration
ST1. Since FedEx the most strength is having more aircraft than its (S1, T7)
competitors (700 exisiting & 50 additional aircraft), FedEx also
could penetrate China and Vietnam market to compete UPS.
Product Development
ST2. FedEx could imitate UPS by introducing customers pick up (S2, S3, T4)
packages if they are not at home during the delivery of packages to
82
ST Strategies Factors
avoid missing packages and theft. This new approach seems
aligned with its culture; provides worldwide delivery in anywhere
from 1 to 5 business days based on client needs and services
focused on timely delivery but also on cost savings.
5.1.4 WT STRATEGY
WT Strategies Factors
Product Development
WT1. FedEx will complete their operation in efficiency by using (W5, W6, T5)
carriage machine to reduce cost of labor which this plan will help
to increase the net income and net profit margin.
Market Penetration
WT2. FedEx collaborate with Alibaba.com for market acquisition in (W3, W6, T7)
China and Vietnam to increase their territory in both countries as
a new approach to increase its operating income and overall net
income.
83
5.2 SPACE MATRIX
Internal Analysis: External Analysis:

Financial Position (FP) Stability Position (SP)
Return on Investment (ROI) 4 Rate of Inflation -2
Leverage 4 Technological Changes -5
Liquidity 5 Price Elasticity of Demand -2
Working Capital 6 Competitive Pressure -1
Cash Flow 3 Barriers to Entry into Market -3
Financial Position (FP) Average 4.4 Stability Position (SP) Average -2.6
Internal Analysis: External Analysis:

Competitive Position (CP) Industry Position (IP)
Market Share -3 Growth Potential 4
Product Quality -2 Financial Stability 4
Customer Loyalty -3 Ease of Entry into Market 4
Technological know-how -3 Resource Utilization 5
Control over Suppliers and Distributors -6 Profit Potential 5
Competitive Position (CP) Average -3.4 Industry Position (IP) Average 4.4
FP
Conservative 7.0 Aggressive
5.0
UPS
3.0
FedEx
1.0
CP IP
-7.0 -5.0 -3.0 -1.0
-1.0 1.0 3.0 5.0
USPS 7.0
-3.0
-5.0
Defensive -7.0 Competitive

SP
84
FedEx falls under Aggressive which is a financially strong firm that has achieved major
competitive advantages in a growing and stable industry. They are in excellent position to use its
internal strengths to take advantage of external opportunities, overcome internal weaknesses, and
avoid external threats.
Based on the analysis, below are the strategies that we can suggest for FedEx:
Horizontal Integration: to acquire or in hand with other company that may help increase market
share. FedEx should acquire or acquisition with competitor to increase their market share in the
market.
Product development: Variety of the services, FedEx sould follow the segment by USPS to
business segments: (1) First Class Mail, (2) Standard Mail, (3) Packages, (4) International, and (5)
Periodicals. (page 440 para 5)
Market penetration: FedEx is acquiring firms around the world in locations such as the United
Kingdom, Poland, China, South Africa, India, Brazil, and many others. It is FedEx’s strategy to
establish a strong footprint in these areas for domestic package delivery. (page 436 para 5)
Market Development: FedEx should open/increase its new hub inside and outside of USA. New
Mexico City hub is expected to expedite service to Latin America, where revenues are growing
rapidly. FedEx also opened a new hub in Osaka, Japan, in 2014 to better facilitate transport of
shipments from Asia to the United States. (page 436 para 5)
85
5.3 BCG MATRIX
Relative Market Share Position

High 1.0 Low 0.0
Stars Question Marks

High 0.20
Industry Sales Growth Rate
Internaltional
Domestic
Freight Account
Services
Services
Low -0.20
Cash Cows Dogs
As shown in the chart above, FedEx and UPS have high revenues within it business. However,
USPS have low revenue compared with both company FedEx and UPS and USPS also have
different market share position. Thus, result shows that FedEx recorded to be in the star position
in this BCG matrix.
Stars is one of the division located in quadrant 2 at the upper left side on the BCG matrix. Stars
represents the organization’s best long-run opportunities for growth and profitability. Thus, stars
operate in high growth industries and maintain high market share. Stars are both cash generators
and cash users. They are the primary units in which the company should invest its money, because
stars are expected to become cash cows and generate positive cash flows. Yet, not all stars become
cash flows. This is especially true in rapidly changing industries, where new innovative products
can soon be outcompeted by new technological advancements, so a star instead of becoming a
cash cow, becomes a dog. Refer to the result above, only FedEx and UPS in the column star.
86
Question marks is the division in Quadrant I at the upper right side have a low relative market
share position, yet they compete in a high-growth industry. Generally, these firms’ cash needs are
high and their cash generation is low. These businesses are called question marks because the
organization must decide whether to strengthen them by pursuing an intensive strategy (market
penetration, market development, or product development) or to sell them. This question marks
refer to the USPS Company has different position market position.
Therefore, suitable strategic choices for FedEx are:
1. Backward integration 4. Market Penetration
2. Forward integration 5. Market development
3. Horizontal integration 6. Product Development
87
5.4 INTERNAL EXTERNAL (IE) MATRIX
THE IFE TOTAL WEIGHTED SCORES

Strong Weak
4.0 1.0
High
4.0
THE EFE WEIGHTED SCORES
FedEx
Low
1.0
88
Total IFE 3.11

Total EFE 2.70
Backward, Forward or Horizontal

Integration
I, II, IV Grow and Build Market Penetration
Market Development
Product Development
Market Penetration
III, V, VII Maintain and Hold
Product Development
IV, VII, IX Divest or Harvest Retrenchment

Divestiture
Based from the IE Matrix above, FedEx was located in IV quadrant which is “Grow and Build”
strategies. In this strategy the suitable for the particular quadrant are intensive strategies which
consist of market penetration, market development and product development and also integrative
strategies which consist backward integration, forward integration or horizontal integration.
89
5.5 GRAND STRATEGY MATRIX
Rapid Market Growth
Quadrant II Quadrant I
FedEx
FedEx Ground
Freight
Weak Competitive Strong Competitive
FedEx Express
Position
Quadrant III Quadrant IV
Slow Market Growth
From the matrix above, it shows that all division within FedEx are located at Quadrant 1 in Grand
Strategy Matrix except FedEx Express that doesn’t have really strong market growth. However,
FedEx Ground and FedEx Freight have strong market position and strong competitive position. In
Quadrant 1 also shows that there is rapid growth in the market.
Therefore, the strategies that could be proposed for such strong firm are:
1. Market development
2. Market penetration
3. Product development
4. Forward integration
5. Backward integration
6. Horizontal integration
7. Related diversification
90
5.6 STRATEGIC CHOICES
MATRIX Backward Forward Horizontal Market Market Product Related

Integration Integration Integration Development Penetration Development Diversification
SPACE ✓ ✓ ✓ ✓
IE ✓ ✓ ✓ ✓ ✓ 2.
BCG 3. 4. 5. 6. 7. 8.
GRAND 9. 10. 11. 12. 13. 14. 15.

STRATEGY
TOTAL 3 3 4 4 4 4 1
91
5.7 QUANTITATIVE STRATEGIC PLANNING MATRIX
5.7.1 STRENGTH
Market Penetration Product Development
Strengths Weight AS TAS AS TAS
FedEx has 700 aircrafts (pg 434, para 1), In mid 2015, FedEx signed
0.10 4 0.40 1 0.10
a deal to buy 50 additional Boeing Co 767-300 freighters to extend
1 its production line well into the next decade (pg 442, para 3)
The business segment provides worldwide delivery in anywhere 0.09 4 0.36 3 0.27
2 from 1 to 5 business days based on client needs.(pg 437 para 1)
FedEx Express covers many services focused on timely delivery
0.08 3 0.24 4 0.32
3 but also on cost savings (pg 436, para 7)
FedEx opened a hub in Mexico City and Osaka Japan to better
0.06 4 0.24 2 0.12
4 facilitate the delivery of shipments (pg 436, para 4)
FedEx Ground is a principle player in the United States and
0.06 2 0.12 4 0.24
5 Canada ground package delivery system (pg 436, para 6)
Between 2011 and 2012, revenues from “international domestic” 0.06 4 0.24 3 0.18
6 operations rose from $650 million ro $1.4 billion. (pg 436, para 5)
FedEx acquisition with Genco is expected to further FedEx’s
commitment to its customers by improving logistics offerings.
0.07 0 0.00 0 0.00
FedEx also plans to allow GENCO to operate as subsidiary and
7 keep its management team (pg 442, para 2)
Working with customers on their supply chain has help reduced
0.07 3 0.21 1 0.07
8 fuel usage (pg 436, para 2)
FedEx freight is a top U.S. provider of less-than-truckload (LTL)
0.07 3 0.21 2 0.14
9 freight services (pg 436, para 6)
The declines are partly from newer more fuel-efficient engines,
but also from building more strategically located hubs and 0.05 4 0.20 1 0.05
10 dispatch facilities (Page 436 para 3)
92
5.7.2 WEAKNESSES
Weaknesses Weight AS TAS AS TAS

FedEx has 62,000 vehicles, which is lower than UPS who owns
0.07 0 0.00 0 0.00
1 103,000 vehicles (pg 434, para 1) (pg 440, para 1)
As FedEx Ground compete with UPS in the LTL (Less than Truck
Load), LTL requires a large hub structure and also high costs at 0.05 2 0.10 1 0.05
2 labor (pg 441, para 4)
FedEx operating income in 2015, $1.8 billion lower than in 2014
0.05 3 0.15 2 0.10
3 ($3.4 billion)
FedEx total liabilities in 2015 ,$22 billion increased than in 2014
0.03 2 0.06 3 0.09
4 ($17 billion)
5 FedEx net profit margin in 2015, 0.022 lower than in 2014 (0.046) 0.03 2 0.06 3 0.09
FedEx net income in 2015, $1.05 billion lower than in 2014 ($2.1
0.04 2 0.08 3 0.12
6 billion)
The firm paid 35% taxes in fiscal year 2015, and has over $3
0.02 4 0.08 3 0.06
7 billion in goodwill on the balance sheet (pg 437, para 4)
93
5.7.3 OPPORTUNITIES
Opportunities Weight AS TAS AS TAS

1 Delivery services outside the United States currently are a $200
billion industry with 3 to 4 percent annual growth expected
0.10 4 0.40 3 0.30
through 2020, taking the overall projected industry revenues to
over $250 billion by 2020. (Page 439, paragraph 1)
2 With oil prices falling dramatically in 2014–2015, demand for air
0.07 4 0.28 3 0.21
freight is rising.(Page 441, paragraph 3)
3 In 2014, international markets accounted for over 50 percent of
the airfreight ton-miles and have been increasing steadily since 0.04 3 0.12 4 0.16
then. (Page 441, paragraph 4)
4 Mexico is the third-largest U.S. trade partner, accounting for 13.5
0.04 4 0.16 3 0.12
percent of all U.S. trade.(Page 436, paragraph 5)
5 Domestic volumes are growing around 4 percent a year, whereas
volumes in Asia are growing nearly 20 percent a year. (Page 441, 0.05 1 0.05 4 0.20
paragraph 4)
6 Demand for air cargo rose over 2 percent from May 2013 to May
0.05 4 0.20 3 0.15
2014. (Page 441, paragraph 3)
7
Possibly Mexico will become a larger player as manufacturing
0.06 4 0.24 3 0.18
plants want to relocate closer to the United States, as fuel prices
and labor wages in Asia increase.(Page 440, paragraph 3)
8 Africa will become more of a global player in the future. (Page
0.06 1 0.06 3 0.18
440, paragraph 3)
9 Natural gas powered trucks do save around $1.70 per equivalent
gallon on fuel after taking into account diesel trucks are 20 0.07 0 0.00 0 0.00
percent more fuel efficient.(Page 441, paragraph 6)
10 International rates tend to offer a higher margin as well, since
many customers internationally disproportionally use next day 0.07 3 0.21 4 0.28
service, which carries a significant price premium.(Page 441,
94
5.7.4 THREATS
Threats Weight AS TAS AS TAS

Mail volume continues to decrease, due to the increased use of
email, bank draft billing, and the transition from junk mail 0.07 3 0.21 4 0.28
1 advertising to internet. (Page 441, paragraph 1)
Even with an improving economy and lower oil prices, freight
demand outlook for international packages by air travel is murky
0.07 1 0.07 2 0.14
due to competition from large ocean shipping companies, new
2 ports,
In and
2014, quicker
UPS shipping
announced it istimes.(Page
expanding 441, paragraph
its service 3)
that allows
customers to pick up packages at convenience stores, dry
cleaners, UPS stores and many other businesses. (Page 440, 0.06 0 0.00 0 0.00
3 paragraph 2)
USPS is constantly downsizing operations; replace many
positions with machines and consolidating mail routes. (Page
0.03 1 0.03 3 0.09
4 441, paragraph 1)
USPS offering discount up to 58% to customer who mail 50,000
0.02 0 0.00 0 0.00
5 parcels a year. (Page 440, paragraph 6)
UPS commitment to becoming more a global player, especially
0.02 4 0.08 1 0.02
6 with respect to China and Vietnam. (Page 440, paragraph 3)
Only in select parts of the South and West are there reliable
0.03 3 0.09 1 0.03
7 natural-gas fuelling stations. (Page 441, paragraph 6)
USPS also is aggressively training employee better to reduce
0.04 0 0.00 0 0.00
8 waste. (Page 440, paragraph 6)
The USPS continues to consolidate mail- processing centers and
reduce delivery date on Standard Mail offerings. (Page 440, 0.02 0 0.00 0 0.00
9 paragraph 6)
Kentucky-based UPS Airlines, a division of UPS, operates the
world second largest cargo aircraft fleet with 240 aircraft (Page
0.03 0 0.00 0 0.00
10 440 para 1)
TOTALS 4.95 3.14
Based on the strategy selection table above, the most strategies in common are taken into
consideration, but two of the most common are chosen for QSPM analysis. The strategies are:
Strategy 1:
Market Penetration; Open more new store in Mexico over the next three years.
(S2, S4, S6, O4, O7)
95
Strategy 2:
Product Development; FedEx introduce e-commerce payment services as the business are
growing and this help the company to smooth the business process while reduce time delivery that
covered the worldwide market.
(S2, S3, O3, O10)
6.0 CONCLUSION
According to the QSPM Matrix, the sum total attractiveness score of Strategy 1 – Market
Penetration is 4.95 while Strategy 2 – Product Development is 3.14. The chosen strategy in this
analysis is S1 -Market Penetration by way that FedEx open more new store in Mexico over the
next three years. (S2, S4, S6, O4, O7). This strategy is related to the fact that FedEx in year between
2011 and 2012, revenues from “international domestic” operations rose from $650 million to $1.4
billion (Page 436 para 5). From this strength it is also supported that FedEx opened a hub in
Mexico City and Osaka Japan to better facilitate the delivery shipments (Page 436 para 4). In
addition, it is also stated the opportunity in Mexico is the third-largest U.S trade partner, accounting
for 13.5 percent of all U.S trade (Page 436 para 5). There is, possibly Mexico will become a larger
player as manufacturing plants want to relocate closer to United States, as fuel prices and labor
wages in Asia increase (Page 440 para3). Therefore, the chosen strategy can be considered by
FedEx in order to be implemented in the company.
96

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STRATEGIC MANAGEMENT (SM) - MBSA 1213

FINAL GROUP CASE STUDY:

Prepared for : Dr. Suzilawati Binti Kamarudin

NO NAME MATRIC NUMBER

1. SHAHRIZAN BIN KHAIRUDIN MBS171072

2. LAVIN SHAH BIN MD ZULKIFLEE MBS171086

3. NORLILAWATI BINTI RAMLI MBS171060

4. NORMANJALINA BINTI HASSAN MBS171052

5. SOFIAH BINTI ABD GHAFAR MBS171048

6. MAI HAFIZATUL AZIMAH RAMLAN MBS171054

7. AFRA APRILIA MBS171089

8. ZAIDIN BIN MAT SAMAN MBS171040

1.0 INTRODUCTION OF FEDEX CORPORATION, 2015 .................................................... 6

1.1 COMPANY BACKGROUND ......................................................................................... 7

1.2 VISION AND MISSION ANALYSIS ............................................................................ 9

1.2.1 Vision Statement Analysis ........................................................................................ 9

1.2.2 Mission Statement Analysis...................................................................................... 9

2.0 EXTERNAL ANALYSIS OF FEDEX .............................................................................. 11

2.1 PEST ANALYSIS OF FEDEX ...................................................................................... 11

2.2 COMPETITIVE FORCES ANALYSIS ........................................................................ 14

2.2.1 Table Competitive Force – United Parcel Service (UPS) ....................................... 14

2.2.3 Table Competitive Force – Deutsche Post (DPW.DE) ........................................... 17

2.3 INDUSTRY ENVIRONMENT ANALYSIS: PORTER 5 FORCES ............................ 18

2.3.1 Table of Rivalry Among Competitors .................................................................... 18

2.3.2 Table of Threats of New Entrants ........................................................................... 18

2.3.3 Table of Threats of Substitute Products/Services ................................................... 19

2.3.4 Table of Bargaining Power of Supply .................................................................... 19

2.3.5 Table of Bargaining Power of Buyer ...................................................................... 20

2.3.6 Summary of Five Porter Table ................................................................................ 20

2.4 SUMMARY TABLE OF OPPORTUNITIES AND THREATS ................................... 20

2.5 PRIORITIZE TABLE OF OPPORTUNITIES .............................................................. 21

2.6 PRIORITIZE TABLE OF THREATS ........................................................................... 23

2.7 EXTERNAL FACTOR EVALUATION (EFE) MATRIX ........................................... 25

2.8 STRATEGIC GROUP MAP .......................................................................................... 29

2.9 KEY SUCCESS FACTORS .......................................................................................... 30

2.10 THE COMPETITIVE PROFILE MATRIX (CPM) ................................................... 33

3.0 INTERNAL ANAYSIS OF FEDEX ................................................................................. 34

3.1 CULTURE ASSESMENT ............................................................................................. 34

3.2 MANAGEMENT FUNCTION ASSESMENT ............................................................. 39

3.3 MARKETING ASSESMENT........................................................................................ 47

3.4 FINANCIAL AND ACCOUNTING ASSESSMENT ................................................... 52

3.5 PRODUCTION/OPERATION ASSESSMENT ............................................................ 53

3.6 RESEARCH AND DEVELOPMENT ASSESSMENT (R&D) .................................... 56

3.7 MANAGEMENT INFORMATION SYSTEM ASSESSMENT (MIS) ........................ 56

3.8 SUMMARY OF STRENGTHS AND WEAKNESSES ................................................ 56

3.9 PRIOROTIZE TABLE OF STRENGTHS .................................................................... 57

3.10 PRIOROTIZE TABLE OF WEAKNESSES ............................................................. 58

3.11 INTERNAL FACTOR EVALUATION (IFE) MATRIX .......................................... 60

3.12 VALUE CHAIN ANALYSIS .................................................................................... 63

3.12.1 PRIMARY ACTIVITIES .................................................................................... 63

3.12.2 SUPPORT/ SECONDARY ACTIVITIES .......................................................... 64

4.0 STRATEGIC IN ACTION ................................................................................................ 65

4.1 LONG TERM AND SHORT TERM STRATEGIC OBJECTIVES.......................... 65

4.2 LONG TERM AND SHORT TERM FINANCIAL OBJECTIVES .......................... 69

4.3 CORPORATE LEVEL STRATEGY ......................................................................... 70

4.4 BUSINESS LEVEL STRATEGY .............................................................................. 72

5.0 STRATEGY FORMULATION PROCESS ...................................................................... 73

5.1 SWOT AND TOWS ANALYSIS .................................................................................. 73

6.1.2 WO STRATEGY .................................................................................................... 82