...2011 Airborne Express EMI and the CT scanner Juan Perez Strategic Management Juan Perez Strategic Management |Airborne Case 1 Strategic Management 6/7/2011 First Case Analysis: Airborne Express Analysis of the Express Mail Industry: In order to have a clear understanding of Airborne’s position and to make recommendations about future moves, it is critical to examine the industry environment—competitors, customers, and suppliers—and examine the firm internally. To do so, the Porter’s five forces framework and a resource & capability analysis will be utilized. Threat of Substitutes: In today’s aggressive environment, product substitutes are regarded as one of the most threatening forces in competition. In the case of Airborne, it wasn’t the exception. There were other two main players (Federal Express and United Parcel Service) offering similar a similar service –express mailing. The availability of substitutes made the demand for this industry elastic. The case also states that large customers weren’t known for their loyalty for a single carrier, once the contract was up, they look for the best bidder. Threat of Entry: The existent barriers of entry made hard for companies to enter the express mail industry. The costs of becoming established in this industry were so large that discourage potential entrants. For instance, a company entering this industry...
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...2011 Airborne Express EMI and the CT scanner Juan Perez Strategic Management Juan Perez Strategic Management |Airborne Case 1 Strategic Management 6/7/2011 First Case Analysis: Airborne Express Analysis of the Express Mail Industry: In order to have a clear understanding of Airborne’s position and to make recommendations about future moves, it is critical to examine the industry environment—competitors, customers, and suppliers—and examine the firm internally. To do so, the Porter’s five forces framework and a resource & capability analysis will be utilized. Threat of Substitutes: In today’s aggressive environment, product substitutes are regarded as one of the most threatening forces in competition. In the case of Airborne, it wasn’t the exception. There were other two main players (Federal Express and United Parcel Service) offering similar a similar service –express mailing. The availability of substitutes made the demand for this industry elastic. The case also states that large customers weren’t known for their loyalty for a single carrier, once the contract was up, they look for the best bidder. Threat of Entry: The existent barriers of entry made hard for companies to enter the express mail industry. The costs of becoming established in this industry were so large that discourage potential entrants. For instance, a company entering this industry would have to incur large upfront costs to operate, such as constructing a hub and several spokes, and purchasing...
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... Executive Summary In the Express mail industry there are three major companies Federal Express, UPS and Airborne which make up 85% of the total market. Together the three companies shipped more than 5 million packages each day and over 98% arrived on time. Each company had different business strategies to achieve competitive advantage over each other but the basic infrastructure and activities among the companies were similar. Here Federal Express is the market leader which covered 45% of the domestic express mail and UPS took second place and covered 25% share .Federal Express and UPS always tried to copy each other’s action and when a competitor came up with a formula that attracted the attention of potential customers, the other were compelled to follow suit with similar services, or better yet, an improved version .On the other hand Airborne Express is the third largest and fastest growing international mail expresses company in America. It held roughly 16% of the domestic express mail market by 1997. The company has several advantages over its rivals, such as it provides delivery services at a lower cost of up to 20% over FedEx and UPS; it operates the nation’s only privately owned foreign trade zone in Wilmington; it is more flexible and provides more customer-tailored services. It charges lower price but still much guarantee delivery dates .In case of adapting or installing any technology Airborne competitive behavior was...
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...EXECUTIVE SUMMARY Federal Express is seeking the way to increase the volume of Courier Pack which has tremendous growth kpotential for the company. Their goal is to increase the Courier Pack volume from 1300 to 6000 per day. However, shipping managers are avoiding a risk of choosing unapproved carriers and Federal Express lacked marketing efforts. Therefore, to achieve the goal, I recommend (1) Federal Express to use various advertising methods such as TV, magazines, newspapers, and radio (2) to focus on benefits of using Courier Pak and (2) to give enough education about the feature of Courier Pak to executives who make decisions. ANALYSIS Value Proposition of Courier Pak Courier Pak is a viable product and has huge opportunity because first of all, considering the delivery of documents or other small items are 870,000 pieces per day, the potential market for Courier Pack is huge if the item is weighted less than 2lb. Second, the variable cost of Courier Pak is $4.25 which is less than the cost of Priority One Package, $10.60 and Standard Air Service Package, $9.21. It implies that Courier Pak is more profitable. Third, Exhibit 4 shows that Courier Pak has unfilled potential because the sales had doubled in the past year even though Courier Pak prices had been increased three times. Fourth, the average weight of Courier Pak is one pound while the average weight of Priority One and Standard Service package is about 14pounds. Taking a cargo-carrying capacity of 6200 pounds...
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...Airborne Express: Analysis of HBS Case Study Q1) 1. Threat of New Entry For the US Express Mail industry, the overall threat of new entry is very low. The following list and explanation captures the difficulty an entrepreneur might face in trying to penetrate the express mail market: * High capital requirements: In order to establish an express mail operation, the start-up capital required is too big for an individual to obtain. For example, Federal Express’ Superhub in Memphis has 2.4 million square feet of floor space and can hold 147 planes. UPS’s new hub will cost approximately $860 million. In addition, a cargo plane sells for $90 million. * Economies of scale: newly established postal service will have tough time competing against majors since small operation translates into higher prices for consumers. * Strong brand identification of existing firms: Express mail is an important part of doing business for many individuals and firms. They will naturally favor the traditional postal service that has gone through the test of times and proven reliable. * Aggressive reaction of incumbents: Both the first-tier majors and second-tier minors will react to a new entry by a player and will apply pressure by using their cost advantages and superior managerial knowledge. * Product differentiation: It will be hard for the new postal service to differentiate the company’s service since the express mail service has become standardized due to investments...
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...FEDERAL EXPRESS B Executive Summary Federal Express main services are delivering packages across United States though different locations within a short time. In this case we’re going to analyze the viability as a product of the Courier Pack among Priority Standard and Standard Air Service. Positioning the Courier pack in the right market and the right pricing; Courier Pak completely fit the company, from the increasing demand, cost and competitive view. So I think that Federal Express should dedicate special effort to the Courier Pak. Analysis One of the characteristic of the Courier Pak is a guarantee overnight delivery service, and the fact that can be delivered to anywhere in the Federal Express system for the cost of $12.5 with the weight up to 2 pounds regardless the distance of the destination. Furthermore, the Courier Pak's features envelope such as being waterproof and tear proof offered a special safe physical shipping method to the customers. Other fact to take into account is the market potential, there is an estimate of 870M pieces per day for documents and small package mailing. Moreover, the volume for Courier Pak is 30% more than Priority one and the variable cost is the lowest among other products. That means that Courier Pak market has a growing potential and is a more profitable product. The Courier Pak product was mostly used by executives or their secretaries rather than the shipping department. This type of customer is looking for the delivery...
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...Federal Express W hen Fred Smith finished that valuable paper which finally got a “C” grade while he was studying at Yale University. An adventure of U.S. air cargo transportation– the story of Federal Express was beginning. Since it was founding at 1971, Federal Express choose a high-cost development way that was really uncommon at that time. After Smith established the “Super Hub” at Memphis International Airport, Tennessee in 1973, Federal Express started overnight operations on April 17th. At the same time, Federal Express used its actions transferred a “super commitment” to their customers: “When it Absolutely, Positively has to be there overnight!” In 1975 Federal Express installed its first drop box. That means customers can just drop off packages without going to a local branch. Then in 1981, the first international operations started with the service to Canada. The FedEx continue promised: “Absolutely, Positively Anytime.” In 1994, Federal Express launched Fedex.com as the first transportation web site to offer online package tracking. Until now, the super commitment that Federal Express gave to all customers – “We live to deliver!” – is really impressed for everybody. People – Service – Profit (PSP). ––FedEx Corporate Philosophy As one of the most atypical successful marketing cases, Federal Express was not a low-cost company since it was founding...
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...Case Analysis: Federal Express Introduction Federal Express is an express transportation company, founded in 1973 by Frederick W. Smith. During his college years, he recognized that the United States was becoming a service-oriented economy and needed a reliable, overnight delivery service company designed to solely transport packages and documents. He wrote a Yale term paper on this idea, and received a ‘C’. His professor thought it would never work. Fortunately for Frederick Smith, he didn’t take it to heart and ended up building that company he dreamed of. He found investors willing to contribute $40 million, used $8 million in family money, and received bank financing. He started Federal Express with over $80 million, making it the largest company of its time ever funded by venture capital. Background Federal Express became successful so quickly because all their competition became weaker at the same time. They built a super-hub in Memphis, Tennessee, where all packages from the United States would be loaded on the correct transport and shipped out each night. Today, Federal Express has over 143,000 workers worldwide, and delivers more than 3 million express packages to 200 countries daily. One major change has affected Federal Express. In January of 1998, Federal Express changed to FDX Corporation. FDX Corporation now includes Federal Express, Roadway Packaging System (RPS), Viking Freight, Roberts Express, and Caliber Logistics. Even though FDX owns all...
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...Case Analysis: Airborne Express (A), Harvard Business School. Not so long ago, there was no such thing as overnight express service and freight delivery. Then Federal Express, United Postal Service (UPS) and Airborne Express, among six second-tier companies, came upon the scene. In 1973, Federal Express invented the concept of overnight express package, soon followed by the other two largest express companies–UPS and Airborne, during the 1980s. The fast growth of the Express Mail industry was mainly due to the success of the express delivery service. Thanks to Frederick Smith, a Yale undergraduate back in 1965, who had envisioned a whole different system on his economics term paper. Smith proposed an airline dedicated exclusively to express delivery of mail. Regardless of a “C” grade received on his paper, Smith incorporated Federal Express in 1971and officially began operations on April 17, 1973. Some of the features in the evolution of the Express Mail Industry includes but is not limited to the creation of the hub system and air express service. Created by Federal Express, the hub system is the symbol of the modern air courier industry. It made possible the large-scale, overnight deliveries and it has remained the standard operating method in use to this day. This system allows air courier industry to ship all freight to the company’s central hub, where it is sorted, and rerouted to its final destination. Also under consideration, the air express service played an important...
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...Airborne Express Case Q&A Info other than Case * Airborne Express is acquired by DHL in 2003 * DHL retained ownership of Airborne's ground operations and spun off its air operations as ABX Air, Inc. * Currently DHL is the number 1 delivery service company.(2nd is Fed Ex and 3rd is Blue Dart) Airborne Express Case Q&A 1. Consider the structure of the Express Mail industry in the US and how it has evolved. Why has it evolved this way? 2nd heading is about Express Mail Industry in US (in case study given) * In 1996 shipments was $16-17b Company. * Quick on-time physical delivery was coming * Use of technology was changing the game like routing * Tracking of shipment was a new service offered * Customer service was improving 2. What is Airborne’s strategy? How has it positioned itself in the industry? How is it different from FedEx or UPS? * Targeted business customer that regularly shipped large volumes of urgent items like Xerox (Position) * Never advertised much publically, instead focused on larger shipping companies * Sales force was given good freedom to negotiate volume discounts. * It positioned themselves as low price service. * They owned airports which served as its major hub to reduce the operational cost * Selective in technology selection. Wanted others to use it first. 3. How does Airborne deliver value to its customers? * High-quality, reliable service * Company offers...
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...Airborne Express Case Q&A Info other than Case * Airborne Express is acquired by DHL in 2003 * DHL retained ownership of Airborne's ground operations and spun off its air operations as ABX Air, Inc. * Currently DHL is the number 1 delivery service company.(2nd is Fed Ex and 3rd is Blue Dart) Airborne Express Case Q&A 1. Consider the structure of the Express Mail industry in the US and how it has evolved. Why has it evolved this way? 2nd heading is about Express Mail Industry in US (in case study given) * In 1996 shipments was $16-17b Company. * Quick on-time physical delivery was coming * Use of technology was changing the game like routing * Tracking of shipment was a new service offered * Customer service was improving 2. What is Airborne’s strategy? How has it positioned itself in the industry? How is it different from FedEx or UPS? * Targeted business customer that regularly shipped large volumes of urgent items like Xerox (Position) * Never advertised much publically, instead focused on larger shipping companies * Sales force was given good freedom to negotiate volume discounts. * It positioned themselves as low price service. * They owned airports which served as its major hub to reduce the operational cost * Selective in technology selection. Wanted others to use it first. 3. How does Airborne deliver value to its customers? * High-quality, reliable service * Company offers...
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...1. What is the history of airborne express? Airborne express is the third largest express delivery company in the United States. The company keeps a lower profile than rivals FedEx and United Parcel Service of America Inc. (UPS). Airborne boasts the lowest cost structure and targets high-volume corporate customers. It had grown faster than either of its bigger, better known rivals. In 1997 it held 16% of internal market. Progress came slowly and competition was stiff. To begin with, Airborne of California merged with Pacific Air Freight of Seattle. The airline moved there headquarters and changed its name to Airborne Freight Corporation. In 1980, the airline changed their name to Airborne Express. After buying Midwest Air Charter, Airborne Express made history by buying the Clinton County Air Force Base in Wilmington and became the first airline in the history to own and operate an airport. In 1988, Airborne started offering same day delivery after buying Sky Courier in worldwide. In 1991, Airborne received awards from 3 major companies, which including Volvo, and In 1992, the airline introduced Flight-Ready SM, and a prepaid express letters and pack systems. In 1993,Airborne introduced the Airborne Logistics System, which provided Airborne with warehousing and distribution services. In 1994, Airborne opened the Ocean Services Division, and ALS established the first new film distribution program for Hollywood since 1944. In addition, relations were established with...
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...Federal Express The Federal Express is an express transportation company, created in 1973 by an innovative entrepreneur Frederick W. Smith. During his college years, he saw the idea that the United States was becoming more of a service-oriented economy and that it needed a reliable, overnight delivery service company that would transport packages, documents, medicine, computer parts and electronics. Frederick Smith born in Memphis, TN in 1994 perhaps has became one of the most innovative entrepreneurs with his corporation. In 1966 he graduated from Yale University with an economics degree. While pursuing his career, “he authored a paper describing the concept of a freight-only airline that would fly all packages to one central point, where they would then be distributed and flown out again to their respective destination (Hisrich, 2010, pg. 226).” The operations would take place overnight when airports were less crowded, and with the proper logistics, the packages would reach their destination by the next day. The professor did not think the idea was feasible so Smith received a C grade for his paper. Fortunately for Frederick Smith, he didn’t take it to heart and ended up building that company he dreamed of. After graduating from Yale, he enrolled in the Marines he served two tours of duty, first as a rifle platoon leader in the U.S. Marines and later as an air controller. His four year term was well spent because it permitted him the opportunity to examine a working...
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...Federal Express – delivering the goods Kevan Scholes This case study looks at how new business models can create vast improvements in competitiveness. However, the models must be suited to the business environment at the time and will have a ‘shelf-life’ as the business environment changes. The case study looks at one on the world’s most successful adopters of a new business model that transformed the airfreight and package delivery sectors worldwide. But the advent of the internet in the mid-1990s meant that the FedEx business model had to change or the company would decline. This is also the story of how it rose to that challenge. l l l In 1965, Yale University undergraduate Frederick W. Smith wrote a term paper about the passenger route systems used by most airfreight shippers, which he viewed as economically inadequate. Smith wrote of the need for shippers to have a system designed specifically for airfreight that could accommodate time-sensitive shipments such as medicines, computer parts and electronics. In August of 1971 following a stint in the military, Smith bought a controlling interest in Arkansas Aviation Sales, located in Little Rock. While operating his new firm, Smith identified the tremendous difficulty in getting packages and other airfreight delivered within one to two days. This dilemma motivated him to undertake research on how to resolve the inefficient distribution system. In an interview with Fortune Small Business in 2002 he...
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...Federal Express – delivering the goods Kevan Scholes This case study looks at how new business models can create vast improvements in competitiveness. However, the models must be suited to the business environment at the time and will have a ‘shelf-life’ as the business environment changes. The case study looks at one on the world’s most successful adopters of a new business model that transformed the airfreight and package delivery sectors worldwide. But the advent of the internet in the mid-1990s meant that the FedEx business model had to change or the company would decline. This is also the story of how it rose to that challenge. l l l In 1965, Yale University undergraduate Frederick W. Smith wrote a term paper about the passenger route systems used by most airfreight shippers, which he viewed as economically inadequate. Smith wrote of the need for shippers to have a system designed specifically for airfreight that could accommodate time-sensitive shipments such as medicines, computer parts and electronics. In August of 1971 following a stint in the military, Smith bought a controlling interest in Arkansas Aviation Sales, located in Little Rock. While operating his new firm, Smith identified the tremendous difficulty in getting packages and other airfreight delivered within one to two days. This dilemma motivated him to undertake research on how to resolve the inefficient distribution system. In an interview with Fortune Small Business in 2002 he explained his business...
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