Since the founding of the company, Federal Express, dabbed FedEx, has developed a value-adding strategy based on fast delivery and being a reliable company. The company has ensured that its employees are acquainted with this value adding strategy to ensure they uphold the required competencies. The company has always looked to continue with its traditional processes of developing a reliable and speedy delivery system.
The price of delivery is quite high compared to some of its competitors, but FedEx has the capability to receive urgent material and deliver it to the required clients overnight. This strategy has added value to the company’s services; hence, it has remained at the top of the competitive bar in the industry (The Internal Environment, 2005). FedEx has developed a comprehensive delivery system that is available for its customers all day and night.
The high price of its services is cushioned by the quality of the services and the quality of the delivery system. The company focuses on providing customer-oriented services, which are designed according to the requirements of its main clients. The management function in the company has focused on developing close relationships with its key customers to ensure the required reliability competencies are developed in the company.
FedEx has developed an efficient delivery system with quality services and customer responsiveness. The company needs to develop innovation as the final building block of competitive advantage (Amit & Zott, 2012). In the current state of competition, companies need to develop innovative ideas to improve their chances of staying at the top.
The company needs to keep up with the needs of the customers and the strategies used by its closest rivals. The company faces competition in the local and international markets; hence, it should develop a strategy that addresses both environments.
Capacity control and product differentiation
FedEx needs to continue increasing its profit margins to ensure it maintains a competitive advantage in the industry. The best approach to meet this is to differentiate its products and to control its capacity by venturing deeper into the global markets. European countries are particularly an enticing region for the company.
FedEx has the opportunity to use the contemporary growth in international trade to expand its international ventures (The Internal Environment, 2005). The company should invest in expanding its air and ship carrying capacities in Europe. The company has the opportunity to erect ground infrastructure in various nations across Europe, and this will increase its global market share. International shipments should account for a big percentage of its volume increase because the completion in the local market is fairly stiff.
Competing in the regional market will call for the company to reduce its prices and liabilities in the process of service delivery. The company has used the laying-off strategy in the past, and it cannot afford to use it again in the current status of the competition. The principal reason that should prompt the company to invest more in the international markets is that the globalization concept has led to the development of emerging markets.
The emerging markets around the world provide a unique opportunity for the company to harness larger market shares. The growth in technology should also see the company developing low-cost services for its high-value products. This will increase the demand for the products and ultimately translate to higher profit margins.
Expanding its shipping and air capacities should be the main aspect of capacity control, and the integration of the latest technology in communication should form the core of differentiating its products. Over the past several years, the company has been actively involved in supply chain development in the global healthcare system. An inter-organization supply chain approach in different industries would provide great opportunities for FedEx to increase its profit margins (Mellat-Prast, 2013).
The efficiency of Federal Express’s current business model
Federal Express has traditionally used a business model that focused on the requirement of its consumers. Its service system has always responded to the needs of the main consumers. This approach has seen the development of a line of services and products for the company. They are quite expensive, but they still fetch high demands. The company looks into the needs of the consumers before the customers recognize their needs.
On the company’s service model, FedEx has recently assumed a model that primarily focuses on air freight services. This is a different approach to limit its focus on competitive ground operations. Ground operations are flooded with giant competitors like DHL and United Parcel Service.
FedEx has always been in pursuit of a differentiation-based business strategy. All the companies in the industry have the capability of prompt deliveries, but FedEx strives to enhance the quality of its services. It offers the highest prices in the market, but the quality of the services is worthy of the high price.
Recommended a new business level strategy
Over the recent past, the industry has seen the entry of many local and international companies (Kashmanian, Wells & Keenan, 2011). They have mastered the business strategy used by FedEx, and they are fighting hard to dethrone the company from the lead in the competition.
FedEx needs to continue with its differentiation-based strategy, but it also needs to incorporate cheaper services in its product line. The high prices offered by the company are justified by the quality of the services, but the competitors have started offering similar services for cheaper prices. It has become very hard for the company to acquire customer loyalty; especially among the new companies in the local and international markets. FedEx needs to provide affordable prices that will enhance its competitiveness.
Impacts of the global competition on the new business strategy
By providing lower prices for the quality services offered by FedEx, the company will not only harness a larger market share of the local market but also in the global market. Most companies across the globe would opt for any company that provides services that attain parallelism with FedEx’s services if they were cheaper. FedEx needs to focus on maintaining its current market share while developing innovative ideas to lure more consumers into purchasing its services (Hill & Jones, 2013).
Overcoming the stiff competition on a global scale only requires FedEx, a renowned brand, to provide consumers with more affordable products. FedEx is in a better position to maintain its competitiveness because it has perfected the differentiation-based business strategy.
Most of its key clients are satisfied with its services, but the company needs to start focusing on developing other close relationships with some organizations in different industries. Federal Express can confront its global competition by adapting to the fast changes in the pricing process of the services offered by the industry.
Amit, R., & Zott, C. (2012). Creating value through business model innovation. MIT Sloan Management Review, 53(3), 41-49.
Hill, C., & Jones, G. R. (2013). Strategic management: An integrated approach (10th Ed.). Independence, KY: Cengage.
Kashmanian, R. M., Wells, R. P., & Keenan, C. (2011). Corporate environmental sustainability strategy. The Journal of Corporate Citizenship, 44, 107-130.
Mellat-Prast, M. (2013). Supply chain quality management: An inter-organizational learning perspective. International Journal of Quality & Reliability Management, 30(5), 511-529.
The Internal Environment: Resources, Capabilities, and Core Competencies. (2005). Retrieved from http://www.swlearning.com/management/hitt/sm6e/isc/focus/sf03_03.html