PESTEL Analysis of the Kuehne+Nagel International AG Company

Running Head: Managing Business Strategy 0
Kuehne+Nagel
Managing Business Strategy
SystemJP
5/29/2019
The report is prepared so that managing strategic can be explained which helps in operating the
business functions and logistics things in the better way. In this report the Kuehne+Nagel International
AG company has taken which is the transportation and the logistic company and provide the solutions
for the supply chain and the logistics things. In this report the PESTEL analysis of this company has
done through which it is evaluated that there were many political and the legal factors that affects the
business organization. The report has also design the balance scorecards through which the
performance metrics of the company is evaluated. The performance metrics of the company shows
that the performance of the company can be improved if the company use the updated technology
and use the innovative strategic management.
Contents

Managing Business Strategy 1
Introduction.................................................................................................................................................2
Introduce the company’s business nature and identify the mission, mission statement along with its core
competencies..............................................................................................................................................3
Design the balanced scorecard for the company, by highlighting the analytical report for the performance
metrics.........................................................................................................................................................4
Conduct the PESTEL analysis for the company..........................................................................................9
Using Porter’s five force model to evaluate the competitive forces of the market sector for the company 11
Use the strategy implementation method; relate your theoretical explanation on the ways to implement
innovative strategies..................................................................................................................................12
Recommendations and Conclusion............................................................................................................14
References.................................................................................................................................................15

Managing Business Strategy 2
Introduction
The report is prepared so that strategic analysis can be done for the company Kuehne+Nagel
International AG. This company is the logistics company and global transport company which
was founded by the August Kuhne Friedrich Nagel. The company was founded in the Bremen,
Germany 1890. The company has a headquartered in Schindellegi, Switzerland. The company
provides a transport facility for the worldwide area (Mia, 2017). The company provide many
solutions and services such as the freight and airfreight forwarding, contract logistics, etc. the
company was the leading global freight forwarder. The company was divided into different
segments such as sea freight, overland, airfreight, and contract logistics. The company focus on
providing the solutions which are based on IT-based logistics. The company does transportation
through different sources such as transport of the goods are done by road, rail, sea, air, etc.
Earlier the company was evolved in the traditional international freight which was later on
forwarded to the global provider. Now the company provides innovative transport facilities and
also provides the solution for the integrated supply chain. Earlier the company Kuehne+Nagel
was the world’s leading logistics provider which was working in over the 100 countries and has
the 1300 offices and around the 82000 employees (Hossain, 2017). They provide world-class
capabilities and have a good market position. Earlier the business was initiated on the cotton and
consolidated freight but later on, the operation of the company has expanded to the German
seaport city of Hamburg. But after the First World War, the business gets affected.

Managing Business Strategy 3
Introduce the company’s business nature and identify the
mission, mission statement along with its core competencies
Nature of the business: Kuehne+Nagel is the logistic company and global transport company so
the nature of the company is to provide the transport services. The nature of the company is to
transport the goods through different ways such as by bus, train, seashore, air flight, etc. It is the
transport company which was based in Schindellegi, Switzerland which was evolved in the
traditional international freight and also offers the logistics services. The company also provides
the supply chain solutions through the sea freight, road freight and airfreight (Nathanail, et al.,
2016).
The vision of the business: The vision of the company is to connect the people by transporting
the good and through logistics. Providing customers the logistic solutions so that, reliable and
innovative services can be given to them. The vision of the business is to be the number one
company in Switzerland and to increase the market share and the profitability of the company.
The trust of the customers will be gain and to utilize the resources at the maximum level.
Mission statement: The mission statements of the company are to extend the business. The
main mission of the company is to keep the strongest asset with them. The business has more
missions towards the integrated, innovative and dedicated things (Lieb and Lieb, 2012). The
company has majorly focused on the needs of the customers and also provides integrated
logistics solutions. The company provides quality services and also operates the things in the
excellence manner. The mission of the business is to build the success of the company which is
built on entrepreneurial and skilled employees.

Managing Business Strategy 4
Design the balanced scorecard for the company, by highlighting the
analytical report for the performance metrics
Balances scorecards help in analyzing the performance of the company by targeting the four
dimensions. The four dimensions are employees, suppliers, shareholders, community, etc. With
the help of metrics of the balance scorecards, the performance of the Kuehne+Nagel is analyzed
and the objectives can also be meeting which relates to the stakeholders (Winter, et al., 2018).
Every stakeholder have different wants such as employees in the company are depended upon
the employment, shareholders depend upon the investments, etc.
There are four perspectives of balance scorecards:
Financial perspective: By analyzing the financial perspectives of the company, financial
performance can be measured. By analyzing the financial ratios such as the net profit and the
gross profit, financial performance of the company Kuehne+Nagel can be evaluated. By
analyzing the financial performance of the company the comparison can also be done with the
other company. The shareholders, investors and other financial institutions heavily rely on the
financial performance of the company as they have to analyses the position of the company on
the market (Declerck and Buitelaar, 2012). When the financial perspectives have analyzed the
Vision
and
Strategy
Financial
Internal
business
process
learning
and growth
customers

Managing Business Strategy 5
success of the company Kuehne+Nagel can be viewed. It is the topmost perspective in the
balance scorecards in which financial objectives of the company is ascertained. In this
perspective, the revenue and the profit of the company is the main objective.
The financial objective of the company is to increase the profit of the company by 20% by 2020.
The objective of the Kuehne+Nagel is also to save the cost indulged in the transporting and to
reduce the production cost and to increase the efficiency of the company. Another objective is to
add more revenue sources to the company so that the financial performance of the company can
be improved (Fulconis and Paché, 2018). The balanced scorecard is helpful in analyzing the
financial performance of the company as it compares the performance by its historical data with
the current data. This metric is also helpful in analyzing how much cash the company has so that
overall financial health is good or not can be ascertained. It is also helpful in predicting the
financial performance of the company for the future by evaluating the ratio to the sales revenue
or the profit. The operating margins and the gross profit of the company can be improved by
putting the pressure on the financial statements of the company (Shoumick, 2017).
Customer perspective: The market segment is analyzed and customers are identified which
helps in measuring the performance of the company. In this perspective, the strategy is
formulated so that the generic and the core measures can be done (Gattuso and Cassone, 2012).
The main motive of this perspective is to analyses the customer’s satisfaction, new customer
acquisition, customer retention, customer’s profitability, etc. the market share is also measured in
the targeted segments. The value proposition is also analyzed so that the Kuehne+Nagel target
the market segments.
The core measurement includes certain factors such as:
Market share: The market share of the company is large as the number of customers is very
large in number. There are many customers who are indulged in transportation services to trade
their goods. The market share of the company has increased when the customer is migrating to
higher-end products as the customers base are increasing the lower segments (Bamberger, et al.,
2017).
Customer acquisition: The network of the customers is less effective and proving which is
exploiting the market. The investment for the customer-oriented services is very low which give

Managing Business Strategy 6
the advantage to its competitor's company. The company was not responding quickly to the large
base customers which were affecting the wellbeing of the company (Greengard, 2015).
Customer retention: It is the rate through which the rate of customers can be measured. In the
segment of water transportation, the company has to face the many challenges at that time
retention of the customer are very low. Customer retention in rural areas is very low as there was
a lack of infrastructure and also the vast distances which bring more cost to the company (Lieb
and Lieb, 2015).
Customer satisfaction: By analyzing the value proposition, the satisfaction level of the
customer can be tracked. As the preference of the customers is changing very rapidly, so they try
the new products and the technologies in the market. The company Kuehne+Nagel has to put
more focus on the Water transportation industry as the customers are not satisfying in that field.
The company has to monitor the different segments so that the level of the satisfaction of the
customers can be analyzed (Ansary, 2018).
Customer profitability: The net profit of the customer is measured so that the profitability of
the customer can be analyzed. The profitability of the customers is increased when government
regulations are increased. Earlier it was difficult to operate the water transportation industry but
later on when the transportation industry was started the customer base increased and the
profitability of the Kuehne+Nagel has also increased.
Internal business process perspective: Another performance metrics is the internal business
process. The process which is considered so that delivery to the customers can be done on time.
The internal operational objectives and goals are set so that business performance can drive well
(Vega and Roussat, 2015). The main objective of the Kuehne+Nagel is to improve their
transportation facility, especially in water transportation by adopting the streamlined process.
Another objective of the company is to use the shortest way so that the cost can be reduced. The
company has to update technology to boost up its efficiency so that the internal processes of the
company can be increased. To achieve higher performance and to increase the profit of the
company Kuehne+Nagel, they have to control their inputs.
The major focus in terms of the inputs is done on the high-quality services from the key suppliers
and the needs and the requirements of the customers. When any services are delivered through

Managing Business Strategy 7
transportation how much cost is indulged are tracked (Clausen, et al., 2013). So to reduce this
transportation cost by effective processing helps in measuring the operational results. By
tracking the area of the route the company measures their productivity.
The learning and the growth perspective: This perspective of measuring the performance is
focused on the intangible drivers of the performance. In this perspective, human capital is
measured. The company Kuehne+Nagel has very less capital so their performance management
scores get declined. The company also don’t have the updated technology infrastructure so their
database is not that much strong (Sharma and Ghosh Choudhury, 2014). The company has a
good corporate culture and also has good employees who work in a good team.
As the employees of the company are much satisfied so the productivity and quality in delivering
the transportation services are better. When the employees of the company are satisfied then only
the customers can be satisfied. The training is given to employees for driving properly and no
drivers can drive without any license. The turnover of the employees in the company is also good
so the employee’s retention is high. The technology infrastructure of the company is not the good
but climatic place is good which enables the employees in satisfying at the same extent
(O'Connor, et al., 2016).

Managing Business Strategy 8
Balance Scorecards
Financial perspective Customer perspective Internal business process
perspective The learning and the growth
perspective
The financial
objective of the
company is to
increase the profit
of the company by
20% by 2020.
The company
Kuehne+Nagel has very
less capital so their
performance
management scores get
declined. The company
also does not have the
updated technology
infrastructure
The main objective of the
Kuehne+Nagel is to
improve their
transportation facility,
especially in water
transportation by adopting
the streamlined process.
Another objective of the
company is to use the
shortest way so that the
cost can be reduced.
The network of the
customers is less
effective and proving
which is exploiting the
market. The investment
for the customer-
oriented services is very
low which give the
advantage to its
competitor's company.

Managing Business Strategy 9
Conduct the PESTEL analysis for the company.
Political factors that affect the Kuehne+Nagel: The new government has changed many
policies which affect the company in the prominent market. The political factors include certain
factors such as fiscal policies, trade policies, tariffs policy, etc. The government also has made
the rules for the freight forwarding industry which create an important role in the company. The
freight forwarding business gets affected due to the co-relations with the other countries, tax
imposition rules, border relations, etc. The governance system has brought a lot of challenges for
the company and there were many armed conflicts also which has impacted the business in a
very large manner. The company also monitors the local strategy and executions and lobbies
these changes effectively (Wagner and Sutter, 2012).
Economic factors that affect the Kuehne+Nagel: The economic performance of the company
is determined. The long term impact has been seen in the freight forwarding business which was
affecting the business. When the inflation rate rises the company gets affected as the price of the
product and services are get impacted (Vijayvargiya and Dey, 2010). The prices of the other
competitor's companies are affecting the purchasing power of the company and change the mind
of the customers to willing the services.
Many other factors also affect the company’s Kuehne+Nagel such as the interest rate, economic
growth pattern, inflation rate, foreign exchange rate, etc. As there was a great recession in the
year 2018, so the company has also got impacted in arranging the liquidity funds. AS the core
infrastructure was increased by the government so the company uses the penetrate tier 2 and 3
tier markets. To arrange the liquidity through the equity markets are easy for the company as the
company has a good brand reputation globally (Clausen, et al., 2013). The short and long term
investment plans of the company get affected due to change in the exchange rate.
Social factors that affect the Kuehne+Nagel: The customer’s opinions, attitudes, interest are
getting affected by the cultural and social forces. Kuehne+Nagel have to provide the services that
are satisfying the needs and the requirements of the customers. The market share of the company
can be lost when the company doesn't respond to the changes quickly. The company can do the
business in a more effective way when they eliminate the borderline from the business. The
leisure interest, demographics, attitude towards health and safety, migration and education level

Managing Business Strategy 10
also affects the business. In transportation and the freight forward business the company has to
keep in mind the health and safety of the customer's product otherwise too much cost is indulged
in that (Macharis, et al., 2014). The present market of the company is declining due to the
broader attitude towards migration as the international talent is bringing to manage the
operations of the country. The research and development centers are developed in the local
markets by the company so that the education level can also be increased.
Technological factors that affect the Kuehne+Nagel: The technological factors affect the
Kuehne+Nagel for the freight forwarding business. As the company whole process is based on
technology so this factor affects the business (Colicchia, et al., 2013). The company always tries
to get updated with the new technologies and resources so that they can meet the market demand.
Updated technology is very important in the business so that more customers can be grabbed and
to compete with the competitors in the competitive world the updated technology is required.
Kuehne+Nagel has restructured the supply chain so that more flexibility can be brought and the
need of the customers can be fulfilled. The company has updated with the latest technology so
that the lower cost of the production will indulge and the cost structure can also be managed. By
applying the supply chain model in the technological innovation the company can access to the
greater information (McFarlane, et al., 2016).
Legal factors that affect the Kuehne+Nagel: The liberalization has put the business on the next
level. By removing the border and eliminating the legal factors the market position of the
business get increased by forwarding the logistics and freight market. The company faces many
legal issues such as the rules, taxes, legal directives which also needs the general authorization
document (Frémont, 2009). As per the new legal policies the company also has to invest in the
environmental policy solutions so that the can serve to nature also.
Environmental factors that affect the Kuehne+Nagel: As the company is indulged in the
transporting facilities so it has a great effect on the environment and the greenhouse gases in the
atmosphere. A lot amount of carbon dioxide is released when the ship leaves the border
(Auvinen, et al., 2014). So the company has to keep in mind that while doing the freight
forwarding business they should not exploit the environment. The government is also providing

Managing Business Strategy 11
subsidies to the investors who they invest in the renewable sector so the company starts investing
in that.
Using Porter’s five force model to evaluate the competitive forces of
the market sector for the company
The industry structure of the company is determined by the porter five forces which are
stated below:
Rivalry among existing players: To earn a sustainable profit is very difficult for the companies
as it becomes very difficult for the existing players to fight with the intense competition. There
are many competitors which the company has which are dealing in the same logistic and the
transportation services. In the five forces of Porter's, this is the strongest way. The company
Kuehne+Nagel has many competitors but the major competitors of the company are Domestic
Company GATI, Unorganized transporters, International players like DHL, etc.
The threat of substitute’s products and services: As there were many companies in the market
who are offering the substitute services to the customers so the substitute of the threat is very
high. The company should start investing in the research and development programs more
otherwise the company will lose the risk to disruptors (Fulconis and Paché, 2018). There are
many transporter companies which are providing the services at the cheap rates so they are the
threat of the substitutes of the company.
Bargaining power of buyers of Kuehne+Nagel: The Company can earn a less sustainable
profit when buyers have strong bargaining power. If the buyers will drive the price down then it
will limit to earn the profit of the company. As there is a sufficient number of the logistics
companies in the market so the company Kuehne+Nagel has the medium bargaining power of
the buyers.
Bargaining powers of the suppliers of the Kuehne+Nagel: If the bargaining power of the
supplier will be strong the suppliers will extract higher prices from the company. The high power
bargaining of suppliers maintain the above average profits in the transportation and logistics
industry. The inputs are required by the business to carry out the certain operations such as raw
material, laborers, etc. which involves huge cost and it affects the profitability of the company

Managing Business Strategy 12
(Gogas, et al., 2017). In the company Kuehne+Nagel, the bargaining power of the suppliers
depends on certain factors such as the price of the fuels, government policies, taxes, cost of land,
increase in rents, etc.
The threat of new entrants: If the new entrants are coming in the market and they are imposing
a strong threat to the current players then to reduce the threat the company Kuehne+Nagel will
earn less profit. The company has a major threat from the logistics business such as from the
various cargo companies. The company Kuehne+Nagel also has a threat from the entry of the
international companies as they were declining the profit of the company such as the UPS.
Use the strategy implementation method; relate your theoretical
explanation on the ways to implement innovative strategies.
This method is very critical for the success of the company and also helps in reaching the goals
and the objectives of the company. The innovative strategies are implemented by the company so
that goals can be achieved and objectives can be obtained. So basically, the company has the four
aspects of the strategic innovation (Talukder, 2018). The first is the innovative drivers which are
the updated technology which the company needs to innovate so that the customer's wants can be
meet and the business value of the innovation can be perceived. The second is the innovative
strategy which is planned by the company to grow the market share and the profit of the
company. The innovation in the services of the logistics is made so that product improvement
can be done. After that, the innovation strategy is implemented which is more difficulties for the
companies as there are many confusion and uncertainties.
The company has decided to make the innovation in the sea freight, airfreight, road and rail
logistic, and the contract logistics. After implementing the innovative strategy the growth has
been seen in the company and the turnover of the company has increased by 16.4%. When the
container volume has increased by the company the growth momentum has been seen in the
company during the pre-crisis years. The cargo has been increased in all the routes so that 25 %
of increment has been seen in the airfreight products (Holfeld, et al., 2018). The number of new
contracts has been gained world widely by the because of the new innovation strategy which led
to an increase in the profit of the company.

Managing Business Strategy 13
The company has the Innovation Centre in Asia and Europe which were accelerating the digital
transformation. The operated robot was invented by them which provide the best solution for the
supply chain and the logistic solutions. The innovative technologies have been picked up so that
the innovative supply chain solutions can be developing. The innovative strategies are also
developed as the company has the weak returns and margins so to improve this margin of return
the innovative strategies are adopted (Fulconis and Paché, 2018).

Managing Business Strategy 14
Recommendations and Conclusion
From the above report, it is concluded that business needs the proper strategies so that the
function of the business can be managed properly. Kuehne+Nagel is the logistics and the
transport business operator which has the business in Switzerland. The company has engaged in
the four major logistic services such as the airfreight, sea freight, rail and road, and the contract
logistics. The companies major operations are focused on the two countries Europe and the
Americans. The company has employees around the 51075 people and the organic growth and
the net revenue of the company have increased in the year 2007. The PESTEL analysis of the
Kuehne+Nagel has done and its competitors and bargaining power of buying and supplying has
also analyzed by using the model of Porter's five force model. The balance scorecards of the
company have also designed and the four performance metrics have been analyzed.
In this report, the nature of the business and the vision and the mission are also stated. The main
missions of Kuehne+Nagel were to the company are to extend the business. The company has
majorly focused on the needs of the customers and also provides integrated logistics solutions.
The company provides quality services and also operates the things in the excellence manner.
The profitability of the company is getting affected due to certain factors such as the political,
legal, environment, legal, economic, social and culture which has clearly stated in this report. In
this report the major problem or the issue which the Kuehne+Nagel faces were the new
implementing the new technology. The customers of the company want the new services with
the time but the company doesn’t have the appropriate sources and technologies so they were not
providing any updated services. So it is recommended that the Kuehne+Nagel should use the
updated technologies so the demand of the customers can be meeting and their requirements can
be fulfilled.

Managing Business Strategy 15
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Managing Business Strategy 16
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Managing Business Strategy 17
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