Between 1973 and 2000, FedEx developed and implemented a strategy that integrated the various business units and processes. Such strategy may be best explained by examining it based on the three levels that De Wit and Meyer (2003) suggested, these being the business, corporate, and network levels of strategy. However, two important elements stand out in Federal Express’ strategy. One of these was evident in all levels and this was the use of technology, particularly the advances in information technology to restructure and reorganize the company, its subsidiaries, its units, and it business functions (Conley et al, 2000, Rigsby & Greco, 2002). Secondly, capital investment was a major part of the strategy.
FedEx Strategy at the Business Level Federal Express’ clients ranged from large scale business to individual customers that required a wide range of services. As such, Federal Express needed to find a way to meet the needs of the various groups of customers that it provided services to. By streamlining its operations and by integrating its various systems, the company was able to develop a customer logistics management segment of its business to cater especially to its large-scale business clients that required such service (Conley et al, 2000). This included providing warehousing and distribution services that cut the costs for its business customers. Such strategy demonstrates the company’s way of dealing with the paradox of market adaptation and resource leveraging. Having identified the needs of its clientele, FedEx used the extensive resource base it had in order to meet these needs. Since the company had established a logistics infrastructure, it merely put to good use the resources it already had. Federal Express understood the value of information for all its clients. As such, it continuously searched for various ways to improve the transfer of information between itself and its customers. Even before the FedEx website was launched in 1994, the company had already developed a number of computer programs and systems that allowed customers to acquire the information they needed regarding shipments including ordering and tracking. This is another demonstration of the company’s ability to use it resources in order to adapt to the demands in the market. Since the demand was for better information sources, FedEx used its IT expertise in order to come up with a system that meets such needs.
FedEx Strategy at the Corporate Level Acquisition became the strategy to better meet the needs of Federal Express Customers. After officially acquiring Parts Bank in 1988, FedEx later on acquired Caliber Systems in 1998. This enabled FedEx to create a corporation which had the ability to meet most, if not all, of the logistic and transportation needs of companies. Furthermore, FedEx underwent a process of reorganization wherein certain subsidiaries were combined. Also, all newly structured business units had their names changed to carry the Federal Express name. Although such process meant that the clientele of each of the subsidiaries may not be given its due importance, such strategy led to a corporation whose business units all carried one name and had the expertise for the particular markets that it handled. The strategy that FedEx implemented at this stage effectively addressed the paradox of synergies and responsiveness. It was able to effectively identify how the company could become more responsive to market needs without sacrificing the synergy that it had established in the past.
FedEx Strategy at the Network Level At the network level, a firm needs to consider cooperation and competition with other firms, whether these are suppliers, customers, government agencies, or industry rivals. According to De Wit and Meyer, a firm must have the power to outdo its rivals and such power is wielded by its resources. Meaning, the firm who is the least dependent on others has the most power. FedEx’s strategy allows the company to have such power. By ensuring that it has most of the resources that it needs such as vehicles, systems, and warehouses, it has given resource independence which allows FedEx to assert itself in the industry. Although FedEx has made steps to ensure a high level of competition with other firms, it did not take for granted the value of forming mutually beneficial relationships with other firms. Its alliance with Netscape, for example, demonstrates how FedEx understands the value of such relationships. Also, FedEx has worked together with its big clients such as Dell in developing systems that will greatly benefit the client’s business. In doing so, FedEx is able to generate client loyalty and form relationships with clients that are valuable to ensuring the long-term commitment of both parties.
Analysis and Recommendations for FedEx in 2000 The downturn in FedEx performance in 1999 was basically a product of external forces. Primarily, the increase in oil prices, a significant element in the company’s operations, was the major cause of the poor performance. In fact, the transportation industry in general felt the severe effects of the rise in fuel prices (Batt et al, 2000). Improving the performance of FedEx requires a reevaluation of the company’s target markets. Between 1973 and 2000, much of FedEx’s strategy focused on improving its services to its large-scale business clients. In doing so, FedEx failed to give importance to small and medium scale clients as well as to consumers. In fact, these segments are dominated by its rival, UPS (Isidore, 1999). This is a market segment that FedEx should consider giving more focus on in order to improve its performance.

Reference
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