Deutsche Post World Net (DPWN) Strategic Management
Introduction
Business administration and management characterizes the process of leading and directing the systems within an organization by exhausting available resources extensively so as to achieve the objectives of the business operation. It most of the time includes the conceptualization of business plans and monitoring its execution for assessment and evaluation of the efficiency and effectiveness of the business transactions. Strategic management is the process of identifying and enumerating the aims of the organizations in order to come up with sound business policies and plans from which the profit of the business organization will be fully maximized ( 1998).
The advances in technology and the fast modernization of the world, in general, opened new and very promising avenues of business opportunities not just in an individual’s locale but also abroad. A lot of business-minded individuals from different countries with different nationalities and cultural orientation have and continuously defied the geographic boundaries that exist between continents. This is evident in the growing number of internationally-operating business firms all over the world run by entrepreneurs of varying race and culture. The information man has successfully rebelled against intercontinental borders and the challenge that confronts him the most, deals with how to fit and blend in the new cultural environment in which their businesses are situated.
This paper presents critical analysis and discussions regarding the management strategies and options of the case of Deutsche Post World Net (DPWN) in line with the mail market liberalization in EU. As such, the business strategies of the company were examined along with the confounding variables that directly and indirectly affect the entire management and operations of the business enterprise.
SWOT Analysis
Strengths. Along with the mail market liberalization Deutsche Post was granted exclusive license for letters weighing up to 50 grams instead of the 100 grams allowance. This opened possibilities for a 5% increase in mail revenue of the company. Since the restructuring and the commercialization of the formerly state-owned business was made possible through legal changes on the overall structure of the local postal system and services, the changes that transpired within the company are supported by the law. The privatization of the company highlighted the improvements in the business aspect of the organization through modern technological infrastructure to modernize the company. These technologies make it possible for the business organization to function efficiently and serve the large customer-base who depends on the energy products and services of the general public as well as the commercial establishments in the region. Extensive investments in automation and standardization of the management improved the quality of the services offered and the value of customers being served. Acquisitions, mergers and different business contracts with global operations sped up the globalization initiatives of the company. Since the operations and projects initiated by the company are conducted and facilitated following the international standards, the products and services it offers are controlled and monitored with the aim to maintain quality and reliability through the certifications that the organization was able to earn.
Weaknesses. However, the mail market liberalization resulted to increased number of competitors in the domestic as well as in the international mail market as entry of new firms into some postal activities along with finance and telephony services emerged which are characterized with privatization and competition. The changes in technology and consumer needs allowed greater market segmentation in line with logistics and express developments. Moreover, the wide array of services that the company is engaged in makes the management of the whole enterprise cumbersome. The Press Distribution mail subdivision of the company was reported to lag in terms of earnings and productivity compared to the other mail subdivisions which include the mail communication, direct marketing, value added services, and mail international that illustrated contributions to increased operational efficiency and productivity of Deutsche Post. Furthermore, the Postal Act of Germany included the expiration term of the exclusive license enjoyed by Deutsche by the end of the year 2007.
Opportunities. With the mail market liberalization in EU, Deutsche Post was provided with opportunities for international mail market penetration across the entire European region. This means increased number of customers for better profitability and revenues not just in the financial, express, and logistics market of the company but more security on its mail division. The prospect of engaging and investing in various productive research initiatives and development endeavors will generate the company large return of investment. The company’s high asset value and economic worth may serve as a good compensation for development efforts of the organization to support and secure long-term plans and strategies. The success of these researches and development efforts will contribute to the business organization’s competitive advantage in the state energy industry. With the advances in technology, Deutsche Post can continue its investments on modernization to improve and broaden the available services as well as the customer satisfaction among the clientele through increased service quality and customer value. This could likely result to continuous increase of profit and revenues from the company’s mail subdivisions and the needed improvement for the Press Subdivision to earn competitiveness for the benefit of the entire business operation.
Threats. Existence of new market competitors addresses the possibility of better operations strategy from other companies in the mail industry as the major intimidation to Deutsche Post. This highly threatens the entire effectiveness of the operations utilized by the company in addressing the needs of their customers. As such, business relations among customers and suppliers demands strategic selection of business options. Moreover, the development efforts and research initiatives and projects that the company invest in order to maintain continuous operation and competitive position call for wise selection of business opportunities as well as skilled leadership and risk management skills among its decision-makers.
Situational Analysis and Strategic Options
PEST Analysis. In relation to the liberalization of the mail market across the member countries of the European Union, the political trends and characteristics illustrate a high probability of initiating the full implementation of the free market structure for the mail market. This is in line with the successful liberalization of other goods and services across Europe in order to eliminate economic frontiers between economies. The fulfillment of the mail liberalization initiative is expected to result to increase of real potential competition among business firms involved in the mail industry for the EU to experience (a) general decrease on the prices of the services offered, (b) greater quality of products and services variation, and (c) continuous innovation and development in product designs, services methods, as well as in production and distribution systems. As such the company could take advantage of its position as one of the leading most competitive mail companies in the region to increase efficiency and productivity as well as customer satisfaction.
The economic situation of the Union has long been characterized with highly active and dynamic exchange of goods and services through increased participation of business firms in line with the globalization trends. Contract management and outsourcing strategies have been the result of the complex and sophisticated demands of the market and the objectives of business companies to offer excellent customer value through quality products and services. Generally, the Union’s international market consist competitive and innovative businesses that are interconnected through partnerships and agreements. In this regard, Deutsche Post can develop further its diversification initiatives particularly in establishing chains of operations. Labor could be outsourced to cut expenditures and create opportunities for service innovation to strengthen the quality of the services offered
The economic description of the region is reflective of the present socio-cultural trends that characterize its people. As active consumers of products and clients of services, the market was provided with the continuous supply of products and services that meets the complex needs and ever-changing requirements and specifications of the public. With the technological infrastructure that characterizes the operations of Deutsche Post, service quality and customer value and satisfaction can be increased. The services of the company should be in synch with the sophisticated lifestyle of the people through creating means of more efficient service delivery and innovative logistics.
These market demands include quality, efficiency, and customer satisfaction. This further resulted to trends in technological advancement particularly on production and delivery of products and services to meet customer requirements and to increase the productivity and revenue of the businesses. Technological advancements in the form of effective tracking and monitoring equipment of the goods and services being delivered, heightened security efforts, and the utilization of the electronic media to transact highly demanded services online should be considered by the company to adapt with the modern social setting it operates in and meet the needs of the customers.
Five Forces Model. Every company that depends on the services and materials from key suppliers need to be sensitive on the variables that are highly important and considered by the suppliers. These include the suppliers’ concentration or their focus and core business interests, variety of products, design and services offered, and the alternative resources that are available. In this light, it is most appropriate to build win–win relationships with suppliers or arrange the use multiple suppliers in order to protect the interests of both ends. In the case of Deutsche Post, suppliers can be identified in the contracts and agreements made by the company with providers of materials and labor force. The outsourced services of the company which consist the technical support team and the customer services that are highly relevant in the effective business operation of the firm. As such, good relationship with companies that provides such service needs of Deutsche Post should be maintained.
The power of buyers describes the impact customers have on an industry. When buyer power is strong, the relationship to the producing industry becomes closer to market conditions wherein the buyer has the most influence in determining the price. As such the bargaining power of buyers increases when they have the ability to (a) make agreements with other companies providing similar products and services, (b) purchase a product that represents a significant fraction of the expenses incurred by the company, (c) purchase of a product that is undifferentiated, (d) incur low changes in costs when they change vendors, (e) be price sensitive by bearing in mind the options available, and (f) integration to purchase the goods of the suppliers. The power of buyers can be effectively illustrated using the Press Distribution subdivision of the company. The company’s contract magazine and newspaper providers directly influence the service offers of Deutsche Post in order to keep them as loyal customers of the company. As such, the management should be capable of maintaining the trust and confidence of this particular clientele for increase profit and revenue.
The possibility of new companies entering the industry influences the pace of the competition. Thus, the key is to evaluate the methods of entry and exit for a new player to the industry. Although any company should be able to enter and exit the sector, each industry presents different levels of difficulty influenced by economics. These unique characteristics of the each industry are referred to as barriers to entry which may come from different aspects of the business ranging from supplies to technology. They seek to reduce the rate of entry of new entrants which leads to maintenance of a level of profits for the existing players. Deutsche Post is highly competitive that serves as threat to other businesses that seek to venture in the mail industry. But the innovative drive and technological capability of new firms to set out in the industry could take some of the market share of the company. If put together, the number of existing competitors and new entrants that are equipped with aggressive business motivations can threaten the company.
Substitutes as the products and services available in other industries which meet identical or similar need for the end user. As more substitutes become available and affordable, the demand becomes more elastic since customers have more alternatives. The treat of substitutes often impacts price-based competition since substitute products may limit the ability of firms within an industry to raise prices and improve margins. Other concerns in assessing the threat of substitutes include the presence of new technologies that can contribute to competition though more diverse and economical substitute products and services. A segment is unattractive when there are actual or potential substitutes for a product. In the case of the mail industry, the electronic mail and the short messaging system through the Internet and the mobile communication technologies such as cellular phones serve as substitutes to the services offered by Deutsche Post. Even the distribution of periodicals and newspapers are highly accessible in the Internet at any time of the day. As such, counter measures should be conceptualized to maintain the existence of customers’ needs to avail the services offered by the company.
Firms strive to secure a competitive advantage over their rivals or competitors. The intensity of rivalry varies within each industry and these differences can be important in the development of strategy. Industries that are “concentrated,” versus “fragmented,” often display the highest level of rivalry. In pursuing an advantage over its rivals, a firm can choose from several competitive moves: (a) changing prices, (b) improving product differentiation, (c) creatively using channels of distribution, and (d) exploiting relationships with suppliers. Deutsche Post may consider these options to maintain its competitive edge in the European mail market.
Value Chain Management. Firms respond to conditions in their marketplaces by modifying their competencies such as internal capabilities and linkages with suppliers and associates and the ways in which they position themselves in relation to their competitors specifically their strategic direction (1999; 1990). Each of these components is intricately related and ultimately contributes to firm competitive advantage. Hence, understanding the value chains involved in producing these products and services is the best approach to building the value of the enterprise. Value-chain analysis looks at every step a business goes through, from raw materials to the eventual end-user. The goal is to deliver maximum value for the least possible total cost.
The value chain also is useful in outsourcing decisions. Understanding the linkages between activities can lead to more optimal make–or–buy decisions that can result in either a cost advantage or a differentiation advantage. The goal of these activities is to create value that exceeds the cost of providing the product or service, thus generating a profit (2000). In the case of Deutsche Post, the entire operation of the business should be examined and evaluated ion order to determine the service delivery processes that strengthen as well as weaken the business. This will result to managerial options to eliminate the liabilities that detract the business or the need to developed and intensify some aspects of the operations.
Corporate Level Strategies. (1996) believe that modern organizations passed by the guild structures and as organizations grew larger, skills become increasingly fragmented and specialized and positions become more functionally differentiated. Stakeholders are defined as the individuals or organizations which can either gain or lose from the success or failure of a system (2004). According to (2000) balance between enhanced company processes and renewed objectives should be critically appraised in order to ensure the success of the company. as such, stakeholder analysis reminds management that it is important to evaluate the interests of the individuals or organizations who can influence or can be affected by the activities of the company.
For Deutsche Post, the management should be able to take means of identifying of the stakeholders, the priorities of the stakeholders; understanding of the stakeholders’ perspectives and incorporating the stakeholders’ perspectives to the future plans of the company. Moreover, the company should cultivate growing consumer markets to promote growth and development of the business organization. This will address the expansion possibilities of the organization to serve not only the locale consumers but also provide services to a larger customer base. As such international relations and the overall business practices and trends all over the world should be investigated so as to make sound decisions that will realize the goals of the company.
Furthermore, the company should continue cultivating community relations and environmental efforts to increase market visibility and improve brand strength. These will be realized through community programs that will advertise the humanitarian causes of the company in the form of public releases. Charity and scholarship programs are good examples for the management to promote and improve community relation. Advertising messages that translates the environmental concerns that the company shares to the public is likewise advisable to take into account and undertake.
Business Level Strategies. Service delivery is an interactive and dynamic process that from the consumer’s point of view is much more than a passive exchange of money for a particular service. Characteristics of services (e.g., intangibility, heterogeneity, simultaneity, and perishability) often require customers to be actively involved in helping to create the service value — either by serving themselves or by cooperating and often working collaboratively with service personnel. In high-contact systems customers can influence the time of demand, the exact nature of the service, and the quality of service (1978; 1979). If consumers somehow become better customers — that is, more knowledgeable, participative, or productive — the quality of the service experience will likely be enhanced for the customer and the organization (1990). In this regard, the company needs to strengthen relationship with suppliers and increase market share. This effort will result to parallel business interests that will contribute to the company as well as the suppliers’ business objectives. Contract agreements and other business transactions should present advantages and benefits for both parties. Efficient delivery of products and services through premeditated and tactical supply chain management initiatives should be prioritized.
As the nature of financial management become more and more complex in this information and efficient communication era of international business, finance managers face a wide array of challenges, opportunities and options for him or her to enhance the investing and financing activities of the organization as well as the inherent risks and circumstances of the decisions that will be made. The challenge now for companies is to explore the options and take advantage of the opportunities while taking caution in managing the risks (1999). As such, the company needs to keep operational expenses within budget to be able to devote the necessary financial resources to both exploration and marketing activities of the company. Financial management decisions that will supply for the internal and external business operations of the corporation should be closely monitored to be able to control the flow of cash. Investing on profit-generating projects as well as training-specific programs for the human resources of the company will ensure extended success.
Moreover, Deutsche Post should enhance marketing campaigns and take advantage of company control over the European mail industry competition. The company should initiate efforts to come up with sound advertising and promotional strategies that will bring the people closer. These will include projects and programs that will highlight the humanitarian mission of the company. The use of all available marketing and communications materials particularly the different forms of mass communication technologies will be necessary to realize these plans.
Lastly, there is a need to improve technological innovations to increase efficiency as well as quality of the service. This will include investments on machineries and equipment that will necessitate the increased and efficient operation of the business organization’s management system. Financial assistance on human resources particularly to knowledgeable and skilled individuals should be accorded in order to improve the overall business operation as well as the engineering, monitoring, and control aspects of the business.
Recommendations on the Legal Environment of the Latest Outcome in the EU Mail Market
Because of the different laws of the countries based on the conducting of business within their soil, the regulations and the laws that the European Union enforces are part of the methods that the countries keep to ensure that each laws will be kept in each country, and will also be observed by the businesses. Private businesses are freer to quickly expand to other countries in hopes of wider chances of success, and expansion within Europe also helps these businesses in covering the continent with their presence and helping with the building of their corporation. As such, the European Union then protects these expansions within their continent, as much as also giving them the chance to find their own way when dealing with other companies. Such regulations will also be helpful for smaller companies as an insurance against services and products being monopolized by larger companies. At the same time, these will also be helpful for the larger companies in the event that they may wish to expand to other member states of Europe, or even around the globe (1987; 1998).
However, complicated and costly regulations are one of the main barriers to business growth, especially for smaller companies. The total cost of regulations introduced on British businesses since 1998 is 20.6bn euros – of which more than 40% originates from Europe. The benefits of regulation should be demonstrably greater than its cost. Yet it often seems to businesses that the cumulative burden is discounted, the dynamic effects on our competitiveness are ignored and the benefits claimed to justify the regulations are seldom quantified. As products flow more freely across national borders and regional markets grow, competition will be a key aspect of the post-1992 European market. With the pressure of new competition, some small agents and distributors may find it difficult to survive. Currently, legislation regulating the conduct of commercial agents and their principals exists in many member states. Some countries have comprehensive laws, while others depend on the contract agreed to by the parties for legal purposes. The directive addresses differences among member state laws by setting threshold requirements, which with some exceptions; member states must incorporate into their laws (1997).
Authority in the world has become an important factor for the outcome of the environment, which also serves as aids for the makings of peace in the country. Inter-country regulations are needed to ensure continued co-operation between these states; organizations or unions are then erected to ensure that peace will be kept and that certain regulations based on the countries will also be kept. The laws of the different countries must also be followed by the companies despite transferring; privatization of the companies may help with the increase of their profit and also with the trust and better services that the corporation will be able to offer for their clients. In an open market economy, effective competition is crucial. An open market economy increases rooms for technological innovation. For this to happen, fair play on the part of businesses and governments is essential. The European Commission has wide powers to make sure they stick to European Union rules on fair trade in goods and services. The main areas of competition policy are: antitrust and cartels, merger control, liberalization, state aids.
Comments on the Structure of the DPWN
DPWN is a group of companies belonging to the express and delivery industry. The Group is composed of four main divisions which include the Mail, the Express, the Logistics, and the Financial Services. The Mail Division operates under Deutsche Post, DHL for the Express and Logistics Divisions, and Postbank for the Financial Services Division. These services are managed by the assigned personnel of the Group in order to ensure that each aspect of the business is operating under the set objectives and goals of the entire business organization. These divisions characterize the entirety of the business enterprise that maintained local and international recognition through its strategic market positioning. The Groups does not only provide its customers with excellent mail, express and financial services as well as logistics solutions to its clientele but was also able to penetrate different markets around the world.
The range of services and the broad market base of the Group defined its success in the industries it caters to. The achievements of the entire business organization are made evident in its lead against the competitors of each respective division. This reflects that despite the varied types of services that the Group offers to the market, the management and staff are capable of efficiently and effectively delivering the public’s service needs. The differing cultural orientation and social setting to where the business operates did not serve as constraints to the company’s growth and development. The capability of the management to adapt to the economic, political, legal and social environments of the localities where it operates resulted to the company’s sensitiveness to the needs of socially and culturally diverse customer base which made possible further development of the companies under its name though strategic market initiatives and service innovations.
In this light, the Group can be considered as one of the few internationally renowned companies that were able effectively manage its operations despite the differing industries it is involved, the number of aggressive competitors in the said industries, the pressure to technological advancement, and the ever-increasing demands from the sophisticated clientele.
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