Federal Express’s value creation frontier and building blocks for competitive advantage
According to the case, there was increased demand in the industry by the year 1982. This, however, did not stop competition from becoming more intense. Among the reasons why the intensity of competition increased was the entry of UPS into the overnight delivery market. This was the largest private company at the moment and had a great influence on the market. It led to price competition as it offered its services at relatively lower prices, and it was highly efficient in courier delivery. Federal Express needed to have building blocks on which to build its competitive advantage to cope with the increased competition.
First, innovation is one of the building blocks that can help the company gain a competitive advantage. Innovation has become a highly recommended strategy through which an organization can build its rivalry edge (Hill & Jones, 2013). Innovation can be defined as the implementation of improved ways through which the organization executes its activities. It improves the quality of services, as well as products to give customers maximum satisfaction (Betz, 2011). An innovative organization will always be competitive as its products and services will be cheap and be of high quality at the same time. Federal Express is an innovative organization, which gives it a competitive advantage.
The second building block is customer satisfaction. Every organization aims at satisfying its customers to the maximum. Customers will always opt for an organization that satisfies their needs. One way through which an organization will satisfy customers is by offering quality products and services. The second way would be ensuring that the prices are reasonably low and affordable. Efficiency also improves customer satisfaction (Betz, 2011). Federal Express needs to have a good infrastructure that will facilitate faster transportation to increase its efficiency. Its innovativeness would also improve customer satisfaction.
Efficiency would, therefore, be another building block that can give Federal Express a competitive edge over its rivals. Federal Express would efficiently deliver parcels and mails at the right place in a timely manner by remaining an efficient company. This would increase customer convenience and trust. The company would be highly reliable due to its high efficiency. This would, eventually, give it a competitive advantage as more customers would opt for its services due to efficiency (Hill & Jones, 2013).
Finally, Federal Express builds its competitive advantage on quality services. As mentioned earlier, customers will always prefer services that are of high quality (Kirchmer, 2011). Customers need to get value for their money. However, in offering quality, the company needs to apply technology to ensure that prices are at a low and affordable level. Federal Express offers quality services, which has been one of the reasons for its competitive advantage. It, however, needs to keep on improving the services.
The main aspect of product differentiation and capacity control that Federal Express could use in order to maintain an edge over its rivals
Firms can attain a competitive advantage by adopting the aspect of differentiating their products or services. This is where an organization produces products or offers services that are different from those in the market. The difference should make the products more satisfying and increase their quality (Betz, 2011). The shipping industry is a service industry, thus the differentiation should be on the quality of services offered by the various companies. Federal Express needs to ensure that it offers services that meet its customers’ needs. First, it should ensure efficiency as fast delivery of goods will be highly satisfactory to the customers. In order to achieve this, Federal Express needs to have various modes of transportation that can meet the various transport needs, such as urgency, among others.
Secondly, the company needs to offer services at a relatively low price. This will be possible through the incorporation of technology in the services offered. It should be noted that technology will not only help the organization lower its prices, but it will also boost innovation, which will further lead to differentiated services by the company and give it a competitive edge (Betz, 2011). Therefore, building a highly efficient infrastructure and lowering the prices will help Federal Express differentiate its services from those of competitor organizations. It will also help in building a brand image and increasing customer loyalty.
The efficiency of Federal Express’s current business model
Given the success of Federal Express over the years, it can be said that its business model has worked for it as the results yielded are positive. However, the company is less competitive compared to some of the market’s big players, such as the UPS. UPS is among the most competitive companies in the industry. The business model of Federal Express is based on innovation as the company aims at offering services that are highly innovative. It has delivery services that are efficient and fast as a result of its innovativeness. The model is also based on increasing the networks and, in turn, reaching as many customers as possible throughout the global market.
Recommendation of a new business-level strategy that gives the company a competitive advantage over its rivals
Federal Express stands to benefit by adopting novel business strategies to enhance its competitive edge. For instance, it can build its strategy on value chain improvement. The value chain is a model that will facilitate the efficiency of service delivery (Harper, 2010). A focus on improving the value chain will enhance the safe delivery of goods by ensuring timely delivery of letters and parcels. Improvement in the safety of the goods will increase confidence in customers.
The manner in which overall global competition may impact the new recommended business strategy
The current business world is highly competitive, especially in the global market. Competition is an external factor that affects the business strategies adopted by business organizations. In other words, organizations will always adjust their business strategies based on the competition situation in the market (Hill & Jones, 2013). Therefore, the global competition will dictate the manner and the frequency with which Federal Express will adjust its business strategy.
A significant way that Federal Express may confront its global competition
Federal Express should be in a position to confront the global competition to remain on top of the competition. This should be in consideration of the fact that there are many organizations in the market, all striving to gain a competitive advantage. The best way to confront global competition would be by being proactive. Federal Express needs to be proactive in its activities. This way, it will be able to prevent problems that might affect its business and will always be leading the way in terms of service provision and innovation. The company should be able to foresee the future of the market and formulate strategies to face the future successfully by edging out its rivals in the industry.
Betz, F. (2011). Managing technological innovation: Competitive advantage from change. Hoboken, NJ: Wiley.
Harper, M. (2010). Inclusive value chains: A pathway out of poverty. Singapore: World Scientific.
Hill, C. W., & Jones, G. R. (2013). Strategic management: An integrated approach (10th ed.). Independence, KY: Cengage.
Kirchmer, M. (2011). High performance through process excellence: From strategy to execution with business process management. Berlin, Germany: Springer.