FEDERAL EXPRESS


SWOT ANALYSIS


STRENGTHS. With more than three decades of experience in providing logistics services to individuals and fellow businesses, FedEx has the strength of dependable know-how in the delivery business. They changed the nature of delivery business by reconfiguring outbound logistics (a primary activity) and human resource management (a support activity) to originate the overnight delivery business, creating value in the process. Convinced that customers would value not only overnight deliveries but also the ability to track them, FedEx developed a proprietary computerised tracking system called Customer Oriented Services and Management Operating System, or COSMOS (Hitt, Ireland & Hoskisson 2003), which introduced computer technology to the shipping industry in previously unheard-of ways and permanently altered the nature of competition within it. With this highly controlled distribution system, they are able to get their current stand in market leadership. Over the years, the company had also invested heavily in IT systems, providing them with a powerful technical architecture that had the potential to pioneer in Internet commerce. They likewise spend considerable resources in advertising campaigns designed to make the firm more known than it already is. Their campaigns are aggressive enough to overcome the advertising efforts of UPS, their stiffest competitor. The company also has its own air service inside and outside of China, making them pretty independent from other carriers.


WEAKNESSES. With FedEx constantly redefining and increasing its scope of product and service offering, the company has globalised and has become remote to China, shown in their lack of strong personal relationships with the country’s clientele. Also, due to the need to fill their aircrafts with parcels, the company has been forced to take on deliveries with very low profit margins, causing FedEx little financial setbacks, which, when ignored, could blow up to proportions that would cause the organisation serious trouble. Weakness in the controls over the use of FedEx at the front end of FedEx use (i.e., when the agency employee prepares the air bill for shipment) or after the fact (supervisory review of FedEx usage) that would eliminate or minimize the opportunity for fraud, waste and abuse of this program is also observed.


OPPORTUNITIES. The firm’s main opportunity is to use cooperative strategies to create value for a customer that exceeds the cost of constructing value in other ways (Desarbo, Jedidi & Sinha 2001) and to establish a favourable position relative to competition. Living examples are the two that FedEx already engaged in. In an alliance between the firm and the U.S. Postal Service (USPS), the company roughly transports 3.5 million pounds of USPS packages daily on its planes and will earn FedEx more than billion – .3 billion in transportation charges and 0 million in drop box revenue in the seven-year deal with USPS (Ulfelder 2001). The second alliance was with worldwide professional services firm KPMG, which intent is to deliver total, end-to-end supply-chain solutions to large and mid-sized companies. Another opportunity seen for FedEx is the opportunity to take advantage of the recent developments in the globalisation arena, in terms of the increasingly boundless markets which would translate to bigger and a wider scope of market for the organisation.


THREATS. Their main competitor in their line of business is UPS, and the two companies compete directly against each other in several product categories. They are locked in fierce battles to dominate not only package delivery but e-commerce and logistics markets as well. Although competitive actions and competitive responses take to build or defend a firm’s competitive advantages and improve its market performance (Hitt, Ireland & Hoskisson 2003), the presence of competition, especially a tough one, is sometimes detrimental to the growth of the firm. In FedEx’s case, they were caught off guard by UPS when the latter usedits internally generated technology skills to offer e-tailers a multitude of shipping options and prices. Although both firms help customer better utilise information to track and ship inventory, UPS is pulling ahead of FedEx (Haddad & Ewing 2000). Rising fuel prices could also severely impact upon the company’s net income.


PESTLE ANALYSIS


POLITICAL. This aspect of the external environment affects the company in the same way that the legal aspect affects it. Laws and regulations effected within the transportation and logistics industry are dependent on the political environment which formulates such laws and regulations. The contemporary political environment is shown supportive of such technological advances in the industry under discussion to the extent that it has given impetus to the growth that the industry is experiencing now. Governmental policies and laws affect where and how companies may choose to compete, and deregulation and local government changes, such as those in the global transportation industry, affect not only the general competitive environment, but also the strategic decisions made by firms competing globally.


ECONOMIC. The growth of the express transportation and logistics industry was brought about mainly by the globalisation of businesses. As businesses expanded beyond national boundaries and extended their global reach to take advantage of new markets and cheaper resources, so the movements of goods created new demands for the transportation and logistics industry. With this, the competitiveness of transportation companies depended upon their global network of distribution centres and their ability to deliver wherever their customers conducted business. Rising inflation and global competition gave rise to greater pressures on businesses to minimise the costs of operation, including implementation of just-in-time inventory management systems, etc., and also created demands for speed and accuracy in all aspects of business.


SOCIAL. The ever-changing market demand for value-added services affects FedEx’s corporate level strategies tremendously in that most of the business tactics that the firm employs centre on bringing about value-added services to their customers. After all, FedEx relies largely on their customers’ loyalty to sustain their leadership in the industry that they are in. As part of their corporate social responsibilities, FedEx is practising corporate philanthropy and employee volunteerism and is constantly developing relationships with charitable institutions that share the same values as FedEx.


TECHNOLOGICAL. The advances in IT and the application of new technology to generate process efficiencies also served as impetus for the growth of the express transportation and logistics industry. The ability to share information between operations/departments within a company and between organisations to generate operational efficiencies, reduce cost and improve customer service was a major breakthrough for the express transportation industry. However, of even greater significance was the way n which new technology redefined logistics. At a time when competition within the transportation industry was tough and transportation firms were seeking to achieve competitive advantages through value-added services, many of these companies expanded into logistics management services. Interconnectivity through the Internet and Intranets and the integration of systems enabled businesses to redefine themselves and re-engineer their selling and supply-chains. Information came to replace inventory. With the advent of It, express transportation became an aggregation of two main function: the physical delivery of parcels, and the management and utilisation of the flow of information pertaining to the physical delivery.


LEGAL. Throughout the more than three decades of existence of FedEx, their growth was attributable to a number of external factors that the firm was quick to capitalise on, which included: (1) government deregulation of the airline industry, which permitted the landing of larger freight planes, thus reducing operating costs for FedEx; (2) deregulation of the trucking industry, which allowed FedEx to establish a regional trucking system to lower costs further on short-haul trips. Also, trade deregulation in Asia Pacific opened new markets for FedEx and expanding globally became a FedEx priority.


ENVIRONMENTAL. The FedEx Corporation recognises that one of its most important corporate priorities is effective environmental management. In efforts to fulfil their responsibilities to the environment, the company is engaged in several projects which aim at protecting the environment at large. Emissions and fuel use has been a constant source of concern for the care of the environment. In line with this, the firm partnered with the Environmental Defence in 2000 to create a delivery truck that would dramatically decrease emissions and fuel use. Also, with respect to packaging and recycling, a continued evaluation of the environmental impact of their packages is on-going and the firm additionally makes sure that their packages are made from recycled materials that are equally recyclable.


STAKEHOLDER ANALYSIS


            The main stakeholders of the FedEx company are: (1) the company itself; (2) their clientele; (3) the community in which they operate and (4) businesses in which they extend their service to. The FedEx company is considered as one of the main stakeholders as they have a stake on what will happen to the firm, if it will continue succeeding or not, that is why they need to do everything within their power to make sure that FedEx stays on top of its game. Their clientele, obviously, is another group of stakeholders. Without them, FedEx will be a lost cause, and the firm has taken the right direction when it decided to focus on satisfying their customers through excellent service delivery. The community in which FedEx operates has a stake in the consequences of what the firm does because both exists in the same plane and has to complement with each other in order to subsist harmoniously.


CORUS GROUP


SWOT ANALYSIS


STRENGTHS. The change in management structure due to the privatisation of the British Steel company in 1999 (which created Corus as a result of the merger of British Steel and Hoogovens) led to strengthening the manufacturing company, which, prior to the merger, had suffered serious cumulative losses between 1975 and 1984. A combination of increased investment, reduced overheads, devolved decision-making and revolutionised working practices has become the foundation of making Corus into one of Europe’s largest manufacturing companies as of date. The company, spearheaded by Brian Moffat since 1993, used a range of different approaches to global development such as joint ventures (Western Europe and USA), overseas transplants (USA, Eastern Europe and possibly Asia and South America); and continued exports of high-added value products in order to further strengthen their international presence in the manufacturing business.


WEAKNESSES. In the crisis-filled years that Corus suffered, critics have commented that the company has a lack of long-term vision, evidenced by their concentration on small steel ventures in the US, when all the other competitors have been making giant alliance moves in order to give them stronger market positions in developing markets. It has not used its financial strength to spread its operations globally, in this day and time when going global is a key factor to success. Poor management prior to Moffat’s administration has also caused the firm a not-so-good image with employees, as in 2000, they were forced to reduce their workforce due to radical restructuring of its bulk steel operations.


OPPORTUNITIES. With the observed inability of Corus to spread operations globally, the opportunity therefore is to take advantage of the increasingly boundless global market in order to not only increase profits for the company, but also to gain market leadership, because it is believed that the manufacturing company has got what it takes to take on a worldwide scale. They also have the opportunity to further increase their production capacities through adoption of systems which technology nowadays offers, and also to prepare for the increased demand for their products once they decided to conquer the wider international markets. The steel prices that are likely to continue to rise in the future – partly as a result of the dynamic Chinese economy’s effect on world prices – should present an opportunity for Corus to utilise to the fullest so that they could realise their true company potentials. With Philippe Varin now in the helm after Moffat announced his resignation in 2003, opportunity offered by a new organisational structure is also evident.


THREATS. The strengthening of the pound against European currencies in the second half of the 1990s created a threat for the company, since by that time much of their sales were still in Europe. It is therefore a threat to the firm at this time, when the tug against who is the stronger currency still exists in the market. There is also the threat, not only for the Corus group, but for the whole steel industry as well, of the European rules with respect to opening the market of power generation, which would mean creating an unfair distortion of competition for the industry concerned.


PESTLE ANALYSIS


POLITICAL. The political arena is supportive of the steel industry in which Corus belongs. Public procurement policies and improvements in public infrastructures to enhance the delivery of manufactured products which benefit Corus are widely propped up by the government. the Additionally, the firm is known to adopt an open approach to dealing with external stakeholders, especially the government, through frequently updating the said stakeholder and discussing issues with national and devolved government, agencies and regulators.


ECONOMIC. The increased demand for steel products is a result of the global economic recovery witnessed by businesses. The Corus group benefited from the global recovery in steel prices, and together with the development in the manufacturing performance of the company, they have more than offset higher raw materials and energy costs which are part of the production process of their steel products.


SOCIAL. With its potential harm to the environment if resources are not utilised in a correct way, the steel industry is facing the wrath of the society as it is the one who will suffer the most if such problems in the environment occurs. It is the industry most faced with criticisms from a social aspect, and as such, the promise and fulfilment of corporate social responsibilities is one of paramount importance to the Corus Group. Through fulfilling their social obligations, the firm will be able to create a corporate image desirable to the community in which they are operating and thus establish a good illustration of what the Corus company is when it is not doing its normal take of business activities.


TECHNOLOGICAL. The different technological trajectories in Europe, US, Japan and other late industrializing countries led to varying competitive strengths of national industries. They also gave rise to new industrial governance structures for undertaking capitalist production. The restructuring of the steel industry is the link between institutions and their responses to technological change. The decision to adopt new technologies is based on firm and state strategy, which in turn is dependent on the institutional setting and the legacy of past decisions. In late industrializing countries the decision to adopt innovations was also based on strategy, but one which was significantly determined by institutional capability. For most developing countries, acquiring modern technologies has been difficult either because their markets could not support them or because the suppliers from the advanced capitalist countries have shied away from such markets.


LEGAL. There are various legal implications in the conduct of the steel business which has repercussions for the environment, society and the government. Due to the nature of the work that the steel business is in, there are potentially more hazards in the industry than in any other existing industry nowadays. There is the antidumping law in the US, which could be possibly implemented in Europe given the right government initiative, in response to the various versions of a protectionist trade policy that exists in various countries. Another issue which is highly applicable to the steel industry, not only for the Corus Group, is the Kyoto Protocol, which


ENVIRONMENTAL. Corus, in their attempt to fulfill their corporate social responsibilities, is committed to environmental protection through reducing the effects of its operations through adoption of sustainable practices as well as through continuous improvement in environmental performance and control. Also, the firm is also focused on the full life cycle of its products from ore to processing, through to use and recycling. This minimises raw material usage and consume less energy, in response to the government regulation regarding energy use and the Kyoto protocol on global warming. More importantly, Corus makes contributions to environmental agencies that maintain community causes, knowing that the manufacturing industry is often stereotyped as the industry who contributes the most pollution to the environment.


STAKEHOLDER ANALYSIS


            Stakeholders for the Corus group would be pretty much the same as Federal Express, but emphasis should be given to the community in which the manufacturing company operates. As mentioned above, due to the higher risks in the environment and human health associated with the production of steel, the community is largely concerned even with the existence of such industries in their locality. The problem for the firm is on how to gain the community’s support in order to continue its operations. Having the steel industry is a necessary ‘evil’, as most would put it, in the development of what the world has now. The community therefore, must be made to realise that, coupled with efforts to put their concerns to rest that having such industries within the area is detrimental to their environment and health.


COMPARISON AND CONTRAST OF STRATEGIES


            As seen in the analyses, FedEx and Corus both have very different approaches to business growth. When FedEx goes for aggressive global expansion to support its market leadership, Corus opts to focus on small industries and builds on them to maintain their competitive edge. FedEx can be seen with excellent management directions, whereas Corus has a record of poor administration which resulted to under-average company performance. Corus, however, places great importance in fulfilling their corporate social responsibilities, different from how Federal Express accomplishes them. This is largely due to the difference in the nature of industry that these two companies are engaged in. Also, as Corus has to deal with more legal technicalities than the FedEx firm, they are more careful in the performance of their daily business activities, to spare the company from being sued over legal matters and to maintain the law-abiding public image of the firm. Changes in the economy is likewise more felt by the Corus Group, reason for their ever-changing tactics on dealing with situations which involve economic changes. Although FedEx is also affected by the rise of fuel prices, its effect to Corus cannot be overemphasised, the factor being a part of every step of the production process of the company.


CONCLUSION / RECOMMENDATION


After analysis of the two companies, the need to continue to focus on further expansion of the two businesses was seen fit for a recommendation. Outlining the benefits of using FedEx for intra-business shipping can be used by the company in order to give the logistics firm a bird’s eye view of what opportunities are ahead of them so that they can take advantage of it. Calling on other businesses to build relationships should be also on top of the list for FedEx, through sending representatives in countries in order to build them, as it has been seen as one of the organization’s weakness. Expanding to these businesses is essential to support the investment that they are planning in line with further expansion. With FedEx’s service guarantee as a shining example of what is possible and what customers can demand, it would not be hard to achieve. As for the Corus Group, the rapid industrialization and industrial maturity comes at a price, such as rising labour costs, due to productivity-led wage increases, and an ageing workforce, all factors which must be taken into consideration by the firm if they would want to continue what standing the manufacturing company has now, and if possible, make it better. Entrepreneurialism and innovations in the steel industry are alive and well in new and often unexpected places. In a capitalist world where industrial production is driven by commercial motives, it can only be assume that industrial expansion is a good thing and technology is a key determinant of industrial production, which the Corus Group should likewise wisely utilise, coupled with more aggressive global expansion.


REFERENCES/BIBLIOGRAPHY


Corus Website, accesses January 04, 2007, from <http://www.corusgroup.com/en/>.


D’costa, A 1999, The Global Restructuring of the Steel Industry: Innovations, Institutions, and Industrial Change, Routledge, London.


Desarbo, W, Jedidi, K & Sinha, I 2001, Customer Value in Heterogeneous Market, Strategic Management Journal, vol. 22, pp. 854-857.


Fedex Website, accessed January 03, 2007, from <http://www.federalexpress.com/us/about/today/history/?link=4#2>.


Haddad, C & Ewing, J 2000, Ground Wars: UPS ascent leaves FedEx scrambling, Business Week, May 21, pp. 64-68.


Hasegawa, H 1996, The Steel Industry in Japan: A Comparison with Britain, Routledge, New York.


Hitt, M, Ireland, R & Hoskisson, R 2003, Strategic Management, 5th edn, South-Western, Singapore.


Treacy, M & Wiersema, F 1997, The Discipline of Market Leaders: Choose Your Customers, Narrow Your Focus, Dominate Your Market, Perseus Publishing, Reading, Massachusetts.


Ulfelder, S 2001, Partners in Profit, accessed January 03, 2007, from <http://www.computerworld.com>.



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