22 Jul EXPLAIN WHY THE LONGER TERM OUTLOOK FOR PROFITABILITY FOR FEDERAL EXPRESS
Consider the attached Case Study entitled The Evolution of the Small Package Express Delivery Industry 1973-2010
Assignment Task
1. Identify and explain the initial business level strategy of Federal Express at the time it
sought to commence operations in 1973.
? Your answer should include identification of the competitive advantage sought
by Federal Express and how it intended to realise this competitive advantage.
2. Identify and explain the various strategies (or strategic responses) adopted by Federal
Express as it responded to the challenges and opportunities that arose in the Small
Package Express Delivery industry in the period 1973 to 2010. Furthermore as part
of your answer you must explain why the strategic response in each case was an
appropriate response.
In summary format the major challenges and opportunities you need to consider are:
? deregulation of the US air cargo industry in 1977
? the entry of major new competitors in the period 1979 to 1982 including
Emery Worldwide Airborne Express and UPS
? the slowing in the growth of demand for air express delivery services in the
late 1980s
(Note: As part of your answer you need to identify why there was a slowing in
the growth of demand for these services in the US through this period)
? the 1990-91 recession
? innovation in product offering by both major competitors and by Federal
Express itself particularly through the late 1980s including:
* second day delivery
* premium services
* logistics services
* information systems
* bundling
? the growth of a global market for the express delivery of small packages
through the second half of the 1980s and into the 1990s
? the 2001 recession and the Global Financial Crisis (which began in 2008/09
onwards)
BUSN3055 BUSN9032 Assignment Page 2
(Note: As part of your answer you need to recognize that the strategic
response of Federal Express was different on these occasions than it had been
to the 1990-91 recession. You need to identify and explain why it was
different.)
? the significant expansion of ground networks by all the major carriers in the
late 1990s and early 2000s
(Why did this occur? That is what was the strategic reason for the expansion
of ground services?)
? the entry of DHL into the US market
? the various shifts in demand patterns throughout the 1990s and the 2000s due
to changes in technology and management practices
3. Explain why the longer term outlook for profitability for Federal Express (now called
FedEx) and the other major firms in the US Small Parcel Express Delivery industry
was better at the end of 2010 than it had been through much of the 1980s and 1990s.
You should apply Porters Five Forces model in attempting to answer this question.
More on the Assignment Task
There are a number of things to note about undertaking this assignment task:
i. While the case study considers the evolution of the overall small package express
delivery industry the assignment questions are focused on identifying and
understanding the strategies of one particular firm in the industry namely Federal
Express (now known as FedEx).
ii. The assignment questions are also focused primarily on the U.S.A. small package
express delivery service industry rather than the global industry. (Although this is
not to say that one doesnt affect the other.)
iii. The assignment is an exercise in analysis and in applying the concepts studied in this
topic. Particularly relevant in properly analyzing the case study and in correctly
answering the assignment questions are an appreciation of the dynamic nature of
industry competition and a good understanding of Porters Five Forces Model.
Comment A Challenging Assignment!
This is a challenging assignment. Do not leave it until the last minute to attempt it. All of the
concepts and principles that you will need to have an understanding of to be able to properly
attempt this assignment will have been discussed in lectures prior to the mid-semester break.
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