Executing Strategies in a Global Environment Essay Example for Free

Executing Strategies in a Global Environment EssayAbstractThis paper bequeath analyze federal move bring outicial excerpts value creation frontier, and mark dark which of the four puddleing blocks of competitive improvement the union needs in frame to continue their above average profitability. It go forth besides explore the main aspect of increase differentiations and capacity control of the company to maintain an edge on their rivals. Further more than, for this assignment I will enterprise examine the qualification of FedExs current railway line model and recommend a new business level schema that will give federal official pull out a competitive advantage over it rivals. In summarizeition, this paper will also examine the manner in which overall, global competition whitethorn influence my recommended business strategy and I will suggest a signifi pilet way that federal official chatter can confront its global competition.Introductionfederal official le t loose began in operation(p) in 1973, to a lower place the leadership of Fred smith Jr. Before Federal register, a major portion for small packaging channelizefreight flew on commercial passenger flights. Fred Smith believed that these two operate should be treated differently, because the commercial passenger and cargo shipper had different needs. The commercial passenger they wanted the convenience of day quantify flights. As for the cargo shippers, they preferent night services, which would afford them late afternoon pickups and next day economy (Hill,2013). Since small-package airfreight only went out ground on the commercial flight scheduling, it was hard for cargo shippers to achieve next day pitching. To remedy the rapture issue cargo shippers had Smith aimed to build a system that could achieve next day tar of small package airfreight (Hill,2013).Today Federal Express has grown from a express deli very company to a global logistic and supply chain management c ompany (Crane, et al., 2003). all over the years Federal Express was up to(p) to grow through acquistions and large investmenst in information technoloy. The company was also able to stand out from the rest best on their business model operate independently, postulate collectively. Smith segmented his compnay into 6 differentcomponent FedEx Express, FedEx Ground, FedEx Freight, and FedEx Services, which allowed each component to focus on their own give birtht segment. By segmenting of each component it provided Federal express the oppurtunity to focus more on client. Even though Federal Express 6 different components operated seperatley the repugnd together under FedEx Corporation. Federal Expresss Value initiation Frontier and Their Four Building Blocks of Competitive Advantage Federal Express profitability depends on common chord factors The value a client places on their services, the price Federal Express charges for their services, and the cost Federal Express has to in cur to let the services they provide (Hll Jones, 2013).The more favorable these factors ar the more value is bestowed on Federal Expresss intersection. To accurately value, a companys ware management must distinguish the difference between utility and price (Hill Jones, 2013). Utility is the guests happiness or happiness with using or owning a companys product or services. Federal Express has stepped up to the plate by making transit easier and well-to-do for their customer. Today we can find unlade off boxes in front of office buildings and small neighborhood shipping stores. Having drop off boxes broadens the customer anytime drop offs and no waiting time. Federal Express has also invested heavily in innovation to confer to the customers experience (Crane, et al., 2003). The option of wireless engineering and the ability to track deliveries and schedule picks on the companys website provides the customer shipping right at their fingertips.For their global customer Fed eral Express can offer shipping option to more than two hundred companies. The prices Federal Express mass for their services are higher(prenominal) than many of their competitors. Federal Express pricing is considered a premium, which reflects the high prime(a) level of service FedEx provides (Crane, et al., 2003). Based on FedEx stance, their premium pricing is worth it, but they fail to infer their very price sensitive customer who may go with a more cheaper option for sure services (UPS). In this case it pay back it difficult for Fedex to standout based on branding and the amenties they offer. They may bring on to think of a different way to differeinate themselves from the competitior. Since Federal Expresss growth and customer, satisfaction comes with a high price tag. Their return on invested capital (ROIC) is very low compared to its biggest competitor UPS. In 2011, FedEx ROIC was 7.41% and UPS was 19.39%(Hill, 2013). whatever say in time the money FedEx spent to build up their company, technology infra construction, and customer satisfaction may soon pay off. The other positive side is that FedEx spending and acquisition expenses lead do it hard for new companies to enter and compete in the packaging industry Along with value creation, a company must excel in the four building block of competitive advantage efficacy, step, innovation, and customer responsiveness. How well a company performs in these four areas will determine their profitability and competitive advantage over the competitor. These four generic building blocks are a product of a companys distinctive competencies, which will allow a company to differentiate its product and lower its cost structure (Hill Jones, 2013). In turn, sustain a competitive advantage and better profitability outcomes over their competitor.When determining a companys efficiency we can look at what it takes (inputs) to produce a product or services (outputs). According to Hill and Jones, the more efficie nt a company is the fewer inputs it required to produce a particular output. The most common way to measure a companys efficiency is through employee productivity the out pout produced per employee (Hill Jones, 2013). When examining FedEx efficiency they were the first packaging company to invest in technology that enabled their employees to access company information wireless 24 mos a day. This wireless feature also allows the employee to collect packaging data, which allows employees to quickly enter packages into the companys package tracking system, which reduces the possibility of phantasm (Crane, et al., 2003).As for FedEx service, they can be review by its features, performance, durability, reliability, style, and design (Hill Jones, 2013). These features are used by customers to determine the quality level of the services that are offered by FedEx. Based on FedExs history, spending to build its infrastructure, and premium pricing FedEx is committed to providing a servic e of high quality standings. FedEx has also invested heavily in new technologies, which will improve their services, make it more reliable, and valuable to its customers (Amsler, Cullen, Erdmenger, 2010). An example that show FedEx is all some quality is their technology efforts such as tracking deliveries on their website, and offering convenient shipping at the customers fingertips. As mentioned before FedEx is all about innovation.They are into creating new servicesand processes to make shipping easy and convenient for their customers. One of their major investments is the joint venture with University of Memphis. University of Memphis and FedEx have joined and create the FedEx Institute of Technology. This investment will ensure that FedEx will not be let in raunchy when it comes to new technology (Crane, et al., 2003). When it comes to customer satisfaction FedEx tries to identify their customer needs. FedEx heard the customers demanded for a more convenient way of shipping .FedEx has extended drop off times by three hours, offer drop off boxes, and the ability for customer to schedule pickups on FedExs website. The only dissatisfaction is the premium pricing set on their services. FedEx fail to adhere to the demands of their cost sensitive customers. These are the customers who only care about inexpensive delivery services. This group of people may use FedEx as a last resort for their shipping needs. harvest-feast DifferentiationThe idea behind product differentiation is creating a product that satisfies the customers needs (Hill Jones, 2013). In order for a company to obtain a competitive advantage they must offer a product that better satistfies the customers need than its rival. When a company creates a stratergy that involves innovation, execellence, quality, and customer responsiveness they are offering custumers differentiation product. When the a companys stratergy is about finding ways to increase efficiency and reliablity to reduce cost they are offering the customer low priced product (Hill Jones,2013). In the case of Federal Express their stratergy is not about offering a low priced product, but offering a product that is innovative, meets a high standard of execellence, high quality, and basing the product on the customers need.Federal Express understood the importance of differentiation. Since their strategy is not based on offering a low cost product Federal Express had to focus on information technology. Today customers are interested in monitoring their shipments, estimating arrival times, price and cost of shipments. These elements are important to most businesses and consumers as well as the safety of their delivery (Crane, et al., 2003). To satisfy the needs of their customers and to stand out from their competitor FedEx hasinvested heavily in the technology infrastructure, which provides options for customers to track and validate shipments at their personal computer.Federal Express works hard to create a h igh quality level of service that is difficult for their rival to match (Crane, et al., 2003). Over the years, FedEx has been gon as an innovator in the shipping sector, and providing a high level of quality services. collectable to FedExs higher prices the level of service they provide may become unnoticed. To differentiate their standard of quality from their competitor FedEx lets their customers know that if they are willing to pay more it will be worth it (Crane, et al., 2003).Capacity ControlWith technology, forecasting, and preparation strategies Federal Express is able to handle the fluctuating demand in shipping. With General Information apprehension (GIS) Federal Express is able to build alleys for the driver, guide sorting activities of inbound freight, estimate and record delivery times. This information is stored on a cloud, which is use for future planning and test the durability of a route to accommodate package volume fluctuation (Conger, Dezemplen, Haas, McLeod, 2010).Efficiency of Federal Expresss Current barter ModelFederal Expresss current business model is to operate independently, compete collectively. soon Federal Express is under the leadership of FedEx Corporation. FedEx Corporations provides strategic direction and financial reporting for the following operating(a) companies that compete collectively, but operate separately worldwide FedEx Express, FedEx Ground, FedEx Freight, and FedEx Services (Amsler, Cullen, Erdmenger, 2010). The idea behind Operate independently, compete collectively is that each company will operate independently, compete collectively and manage col getatively. By operating independently, each of the organizational components (FedEx Express, FedEx Ground, FedEx Freight, and FedEx Services) can focus solely on their mart segment. Also by segmenting off each component by its own market segment has provided FedEx the competitive advantage in customer responsiveness and has limited wasted time and resources o n problem that are not associated with each market (Amsler,Cullen, Erdmenger, 2010).The benefit of all the organizational component competing collectively is carrying and competing under a well know construct FedEx, which is one of the most recognized names in the industry (Smith, 2005). Even though operate independently, compete collectively has worked for Federal Express thus far, but keep in mind it only provided FedEx with a competitive edge in specific customer focus. To gain a stronger competitive advantage FedEx should add cost leadership to their business level strategy. Cost leadership is a business model strategy that works towards lowering a companys cost structure so they can make and sell their products at a lower price than its competitors (Hill Jones, 2013). This has been difficult for FedEx, because of their constant expenditures in their infrastructure (Amsler, Cullen, Erdmenger, 2010).Due to FedEx costly expenditures, they are unable to compete with their bigg est rival, UPS in setting prices. Global Competition and the Impact on Suggested Business Strategy Based on the international shipping demand among integrated global heaps and manufactures it will be FedExs as well as its competitors best interest to enter into the global shipping industry. Global manufactures are interested in keeping their inventory at a minimum and have just in time delivery option. This way global manufactures can keep cost down, pop their production, and meet delivery deadlines (Hill, 2013) . As for global corporation their shipping need are different. They are in need of fast and a safe way to ship document that are to confidential for meshwork transmisson or require a real signiture. These global coroporation are seeking for the same shipping services the receive in the U.S for their global operations (Hill, 2013).According to Case 7 The Evolution of the Small parcel of land Express Delivery Industry, 1973 -2010 the trend for global shipping need is forca sted to grow approxiamently 18% annually from 1996 to 2016. This inwardness there is a big demand for air cargo operators to build global shipping mesh topologys that will allow them to provide shipping services across the globe with in a 48 hour time frame. Through acquistion Federal Express was able to build a global shipping network to meet the demand among intergrated global corporations and manufactures. The acquisition expenses, international start cost, customs regulation cost , labor issue associated with global shipping, and the barries to attaining landing right in many markets prevented FedEx toinclude cost leadership in their global busines stratergy.Eventhough FedEx does not have the competitive edge when it come to pricing they are t more visible in the global shipping industry than their competitors. They can offer services and shipping time frames their rivals can not offer. FedEx also has shipping hubs all over the world, which include 600 or so air crafts , which allows them to provide shipping option most of their comepitives can not offer. Based on history this was very difficult for other companies to establish this task. Since very few competitor have the same golobal infrastructure as FedEx global companies relay more FedEx for the international shipping needs (Crane, et al., 2003)ConclusionIn conclusion, Federal Expresss competitive advantage is not based on cost, but on its technology infrastructure. Over the years, Federal Express has spent heavily on technology and in acquisitions in order to offer delivery options and services their competitor cannot. The spending was geared towards satisfying the needs of the customer, innovation, offering a quality product and excellence services. The only negative side on spending heavily is that the cost was passed on to the customer, but Federal express stance is that they offer premium services and products. Federal Express can offer their international customers shorter delivery time, becau se of the major acquisition transactions Federal Express was involved in over the years. As for their domestic business, it may be a little difficult to stand out from their competitor. Currently the competitor (UPS) can offer similar services and convenient shipping options at a lower cost.ReferencesAmsler, M., Cullen, J., Erdmenger, J. C. (2010). strategic Report for FedEx Corporation. Vector Strategy Group. Conger, R., Dezemplen, R., Haas, J., McLeod, J. (2010). Using GIS Strategic Planning and Execution at FedEx Express. Crane, B., Landthorn, B., Miri, B., Relph, J., Sanchez, C., Vernerova, A. (2003). FedEx Corpration Strategic Management Project. Hill, C. L. (2013). Case 7 The Evolution of the Samll Package Express Delivery Industry, 1973-2010. In C. L. Hill, G. R. Jones, Strategic Management AnIntegrated Approach (pp. C83-C96). Independence Cengage. Hill, C. L., Jones, G. R. (2013). Strategic Management An Integrated Approach (10th ed.). Independence Cengage. Smith, F. W. (2005). FedEx. Retrieved from FedEx corporation annual report http//www.fedex.com/us/investorrelations/financialinfo/2005annualreport/online/msg_chair.html