Strategic Advantages of FedEx in the Logistics Industry

FedEx, a leading logistics company, employs various strategies to stay competitive in the market. Its Vendor Management Office (VMO) is responsible for negotiating the best deals with top vendors and providing IT leaders with information to make informed decisions. FedEx also focuses on five major growth strategies: international growth, core packaging business development, supply chain capabilities, technology and e-commerce, and new services and alliances. The company's current market position is strong, but it needs to focus more on quality to stay ahead of competitors like UPS. Furthermore, FedEx has a sound brand image, good reputation for on-time delivery, well-located hubs, and fine research and development. However, it faces threats such as high fixed costs, unionization attempts by workers and drivers, and competition from UPS. To capitalize on opportunities in the global market, particularly in Asia, FedEx should focus on expanding its Chinese market share while maintaining quality services.

Running head- Strategic Management
strategic management

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FEDEX
Industry overview
The main purpose of industry analysis is to evaluate the strength and opportunity of the
concerned industry. In this assignment whole or entire courier or e-commerce service providing
companies strength and its business opportunities and the threat has been analyzed. In this
assignment, the FedEx company industry analysis has been conducted which is also operating
and providing the major and reliable transportation, e-commerce and courier services to the
major part of the world. This company that is FedEx is been categorized into the transportation
industry. So this industry has been found much competitive as there are many consumers with
different need and preferences.
At the global level, FedEx major competitors are DHL that is Deutsche Post, FCML Courier,
LDH Express, and Royal Mail.
The current position of the FedEx is topmost in the courier and e-commerce industry operation at
domestic level. By providing the reliable and satisfying services on time to the customer.
FedEx overview
FedEx is mainly the service industry that it can be categorized in the transportation industry. The
main competitors of the FedEx are UPS that is United Parcel Service and the United States
Postal Service. FedEx has the global presence. Its major market share is in Europe and USA.
FedEx is the global solution and shipping corporation that mainly provides services to the major
consumer and businesses globally. It was incorporated in the way back to 1970 and since then it
is operating and dealing with the transportation, shipping, and courier delivery service sector.

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Current position
Currently, FedEx is the world leader in the service industry. The company that is FedEx flagship
division, FedEx Express, is currently the worldwide leader in the transportation and express
delivery market. Due to its supply chain management and same day delivery system it has to
gain the strategic and competitive advantage in the transportation industry.
Relevant general environment and their implications for successful implementation of
strategic goals.
The general environment of the transportation industry as well the environment of the FedEx
company influence the operational activities and its risk and opportunities. The environment is so
competitive in transportation industry at both the level that is at domestic as well as at the global
level (Kumar et al., 2015). To compete at both the level the strategy which the FedEx has
adopted is it has fine and sound supply chain management and policy of delivering the post on
the same day. Which leads it to gain the competitive and strategic advantage in the competing
industry where so many competitors are competing with each other. The main goals are to make
the global presence and to be the leader in the transportation and shipping industry. So for this
FedEx adopted the environment of fine supply chain management and providing the same day
delivery. It became successful in the industry by making the loyal and regular customer just by
providing the reliable and prompt service to the customer.
PESTLE Analysis
Political factors or environment- it plays a vital role in making any business or operation into a
great success. Transpiration and shipping industry requires the transportation of the goods and
services through the sea and by the airline. So here the proper rules and regulation are to be

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followed. Any political issues like instability in the political system in the country will hamper
the industry growth. But in case of FedEx, the political factors found to be stable in the country
and very favorable. It has fine international trade agreements which are boosting the growth of
the FedEx.
Economic environment or factors- economic factors also contribute the growth of the industry.
The economic segment of the general environment address changes and the conditions in the
economy which includes many factors such as interest, inflation, and unemployment, GDP, and
exchange rate (Boersen et al., 2015). So in case of transportation and shipping industry, it has
been found that the GDP has been increased over the time all over the world. Which is
contributing the courier and shipping industry to operate in a good manner and earn more profit.
With the change in the price of Dollar, FedEx is affected and it has impacted the economy.
Social factors- countries which have more population are more likely to have the major
customer. So same is the case with the transportation industry. Social factors include such as
literacy rate, lifestyle and so on. If more literate people are there then they demand more
transportation and shipping services so transportation and shipping industry will be benefited due
to more literate people. So FedEx is serving its major services in the region which are more
educated and developed so it has good opportunity to serve the maximum customer.
Technological factors- in any industry technology play a vital a role. Due to globalization and
technological advancement, the transportation and shipping, as well as courier industry and
company, gained a lot of importance. The increasing trend of online shopping has resulted to
increase the economy of the FedEx Company as it is also dealing in the same transportation and

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courier services sector (Gleghorn et al., 2015). In regards to technology, FedEx is very much
sound and its adopted fine technology in its supply chain management.
Legal factors- FedEx has sincerely following the legal formalities for its operation. FedEx
follows the ISO 14001 certification regarding the environment as well as it also follows the
regulation and rule. FedEx provides the information security online and stands answerable in any
case of legal matter.
Environmental factors- it has a major impact on any industry. In case of transportation and
shipping industry in which FedEx also operate is getting affected by the environmental factor.
Change in the climate may affect the air transportation and led to delay in the delivery of the
goods. Apart from this FedEx ensure to make the environment healthy and clean.
External environment analysis of the logistics, transportation or courier industry.
FedEx is categorized in the logistic industry too that is determined by the porters five force
model which has been detailed to know the industry analysis in the external context. This
analysis includes 5 forces that are detailed below.
Five Force Model
Forces Strategic significance
1. Internal rivalry High
2. Supplier power Low to moderate
3. Buyer power Moderate
4. The threat of new entrants Very low

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5. Substitutes and complements Moderate
Internal rivalry- in the transportation, courier or shipping industry the existing rivals is high
such as the FedEx, UPS, USPS, and DHL. Regardless of the few competitors, still the
transportation and logistics industry remain so competitive and main reason is a large number of
the consumer, low cost of changing providers and poor demarcation among the competitors.
FedEx competes with other firms across of its service lines.
Supplier power- a major product of the transportation services are available easily. So the
power of the supplier is low in regards to service and transportation industry. There a huge
number of supplier available in the market who are ready to supply raw materials and other
required product to the transportation and service industry.
Buyer power- moderate or low due to medium shipping choice. In the same manner of
bargaining power of the supplier, the bargaining power of the buyer is also moderate. But at the
time it fluctuates also as a customer have full right to choose their service provider according to
the demand and time, need. But though they lack the right to negotiate on the price.
The threat of new entrant- transportation, logistic or courier industry is been credited or have
the advantage of minimum threat from the new entrant. Due to making the entry in this sector or
industry require a high cost. And require a high cost of operation and capital equipment also.
Substitutes and complements- it is moderate and sometimes said to be low due to limited
services for the large air freight and freight. Due to a low number of the substitutes or alternative
this logistic industry has low that from the substitute.

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Greatest threat and how to address it to make a profit. (Strategy)
According to five force analysis of the logistics and transportation industry, it has been found
that the industry is facing many challenges in regards of rivalry as there are few major
competitors in this industry namely UPS, USPS, DHL, and FedEx. So in a way to stay longer in
the market and to compete in the industry the organization needs to build and focus on the
strategies to cope with the challenges (Chen et al., 2017). And respond to the customer need in
such a way that it may attract more customer and make them loyal. So for this company need to
provide the reliable services.
So in a way to gain the competitive advantage, FedEx adopted the strategy of focusing on the
customer need and provide the prompt and reliable service to the customer. Finally, the FedEx
became a success in implementing this strategy that is to provide the same day delivery and
reliable services to the customer globally. Which lead FedEx gain the strategic advantage over
the competitors.
FedEx can use it supply chain management in an effective manner and try to focus on the
customer need in a way to gain the strategic advantage in the logistics industry.
VMO Strategy of the FedEx
FedEx focused to build a sound relationship with all the vendor and stakeholder. So for this, it
appointed the person to look into the matter of relationship with every vendor. It adopted
steward’s relationship tactic which led him in deploying the resources in much effective manner.

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A purchasing and sourcing group. To ensure FedEx Corp. and its operating companies get the
best deals from their vendors, the corporate IT department created a purchasing and sourcing
group within its vendor management office. The group is responsible for staying on top of the
company’s top 100 contracts and the competitive landscape associated with each of those
vendors (Thomas et al., 2016). It also provides the IT leaders of the operating companies with a
dossier on their top vendors containing information they can use to negotiate the best deals. All
these VMO strategies enable FedEx to be competitive and build a strong image.
Organization strategic
FedEx focus on the below major five strategies to grow.
 It's focus to grow internationally
 Developing core packaging business
 Focus to grow or develop the supply chain capabilities
 Focus and concentrate to grow with technology and e-commerce (Thomas et al., 2016)
 Focusing to grow new services and alliances
Strategic Group Mapping
High high
DHL
Ups
FedEx
ed
DHL
FedEx
Ups
Service Difference
Quality

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Low Market share Low price
So from the above picture, it can be concluded that the level of service delivery of FedEx is
better and fine in comparison to other competitors in the industry. Whereas it has to focus more
on the quality because in regards of quality UPS is better but the quality of FedEx Is also fine
and better but it needs to concentrate little more in a way to stay in the market and to make a
more loyal customer.
Through the adoption of the effective supply chain management, FedEx has gained the strategic
advantage in the industry.
Its current position in the market is at the top that is FedEx is the leader in the logistics industry.
SWOT Analysis
Strength
It has a sound brand image
Good reputation for on-time delivery
Well located hubs, great routes
Fine Research and development
More focus on customer needs and making
Weaknesses
Relative high price
Lacks quality in regards to UPS
Not fully differentiable from UPS

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satisfied
A leader in the domestic express delivery
market
Opportunities
Growth chances more in Asia China
Specifically due to economy beginning to
recover (Burner et al., 2017).
Growth chance due to continued
globalization
Expansion of online retailing creates a
great opportunity
Threats
High fixed cost
Worker and drivers are trying to form the
union
UPS is trying to take market share in the
express delivery arena
Opportunities- through the continued globalization online buying has been growing
exponentially. IBIS World research forecasted that per year 8.6 percent increase online revenue
(Mishra et al., 2015). So it is the opportunity for the FedEx to utilize this opportunity and earn
maximum revenue by delivering the quality services to the customer it can also expand the
Chinese market in a way to cover the maximum market share at the global level.

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Threats- the price of the fuel has increased tremendously. Back in the 90s, fuel cost about a
50percent gallon. Presently it is near about 3.60 per gallon. The major market is been cover by
the UPS and it is trying to tap the major market at the global level so to compete with this it is
somewhat threatening. E-substitute from the ever-growing popularity of the internet it is creating
the major challenges to the FedEx (Grant et al., 2016). It is relating with the VMO strategy as
VMO strategy of FedEx is to ensure the sound relation with all the sourcing group to ensure
effectiveness in the operation it strategy is also that it appointed an authorized person to look
after the relationship of each vendor to maintain the relationship strong and competitive.

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Recommendation
At the end of this assignment various recommendation can be sought and recommended such as
after analyzing the external environment of logistics and transportation industry where FedEx is
also operating it can be recommended that it needs to focus and concentrate on the global
expansion of the business as the China market is a good opportunity to serve and to generate
more revenue and make the global presence. Beside this, it need also to focus on the fuel policy
at the global level to meet the requirement as if the oil or fuel rate rise the delivery cost will also
need to be addressed accordingly.
Need to concentrate on the quality of the services also as it lacks the UPS services proved in
regards to quality.

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References
Mishra, S. (2015). Effective communication for corporate sector: A need for a paradigm
shift. Indian Journal of Health and Wellbeing, 6(7), 749.
Bruner, R. F., Lipson, M. L., Carr, S., & Lipson, M. L. (2017). FedEx Corp. versus United Parcel
Service of America, Inc.: Who Will Deliver Returns from China?. Darden Business Publishing
Cases, 1-14.
Grant, R. M. (2016). Contemporary strategy analysis: Text and cases edition. John Wiley &
Sons.
Boersen, N., Niehues, K., Scott, H., & Weyrich, S. (2015). SimplyVisa.
Chen, S., Wang, C., & Ou, S. M. (2017, August). The Key Success Factors of Developing
Intelligent Logistics Within Pharmaceutical Industry in Fujian Free Trade Area. In 2017
International Conference on Green Informatics (ICGI) (pp. 149-154). IEEE.
Gleghorn, G. D., & Harper, A. (2015). Logistics and Supply Chain Management and the Impact
of Information Systems and Information Technology. In Technology, Innovation, and Enterprise
Transformation(pp. 295-301). IGI Global.