Rodrigo Loya

1
Welcome to

• Rodrigo Loya
• Maria A. Silva
• Colin Green
• Sandra Vargas
• Melanie Rivera
• Jhael De Alba

2
History

• Founded in 1971 by Frederick W. Smith.
• First Investment
• 1980s
• FedEx reached its maturing stage.
• First US company to reach 1 billion in
• revenues.
• FedEx handles 3.3 million packages

3
General Environment

• Global Provider of
• - Transportation
• - e-commerce
• - supply chain management
• FedEx an Innovator company
• - Overnight package and letter
  delivery
• - 1030 am next day delivery
• - Saturday delivery service

4

• Cost effective.
• Alternative for small packages.
• Distance and time are wider.
• When customers need it now.
• 24hrs. 7 days a week, including nights, weekends
  and holidays.

• Most familiar service.
• Handles millions of shipments.
• Delivers in 1 to 2 business days.
• Heavy weight shipments.
• Less than truck load (LTL) freight.
• 600 miles next day delivery.
• 1,600 miles second day delivery.
• Custom brokerage.

5
External Environment

• Household name
• Competitive environment
• Global Presence
• IT advances
• Strong market position in air freight

6
Competitive Environment

• World wide presence
• Dominates ground services domestically
• High market share in the US
• Acquired full ownership of Mail Boxes, etc.
• Intense competition with FedEx

7
Competitive Environment

• Recent acquire of ground services
• Specialize in air freight deliveries
• Global presence
• Other mergers, the effects.

8
Competitive Environment

• Largest customer, but strong competitor
• Attempt injunction against the alliance

9
Internal Evaluation

• Management
• Uses strategic management in planning and meeting
  goals
• Strong in its corporate structure with low
  absenteeism and low turn over rates at the
  corporate level, by paying well and showing
  respect
• 2002 hours were reduced, with wages and benefits
  increasing but with profit and incentive sharing
  plans reduced

• Marketing
• Major advantage by being a household name
• Able to respond to a changing consumer
  environment by operating independently completely
  and collectively

10
Internal Evaluation

• Finance/Accounting
• Fairly strong financial position
• Year 2002 Highlights include large free positive
  cash flows, 22 increased net income and a .05
  dividend declared on common stock.
• Fairly weak in leveraging incurred large
  amounts of debt for an expansion project.

• Production/Operations
• Industry leaders in Air Express
• Handles well over 3 million packages daily.
• Excellent ground crew pilots
• 24 hour customer service

11
Internal Evaluation

• Research Development
• Very innovative RD team.
• Six year expansion plan
• Estimated cost of over 1.8 Billion
• Doubling package volume capacity
• 10 new distribution hubs 23 expanded hubs
• Relocation or expansion of up to 300 existing
  facilities
• Expected completion in 2009

• CIS
• Highly innovative software user and designer.
• Very aware of competitors programs and systems.
• Constant and up to date system employee training.

12
SWOT Analysis

• Strengths
• Household name
• Product quality
• Global expansion
• Abreast in technology
• Air fleet

• Weaknesses
• Employee racial discrimination
• Lack of ground transportation force
• Costly technology innovations
• Judgment for late deliveries
• Increased debt

13
SWOT Analysis

• Opportunities
• Global business growth
• Online consumer services
• Increase demand in logistics
• Alliance with USPS

• Threats
• Foreign competition entry into home
• Economic standing
• Online competitive advantages of rivals
• Gain in competition service costs

14
Strategy Formulation

• Strategy 1
• Online subsidiary with a consumer retailer
• Creating a collaborative union utilizing
  technological strengths and online consumer
  industry growth to provide full consumer
  opportunities through the convenience of
  e-commerce
• Multiple strengths, opportunities and positive
  industry strength
• (SWOT Analysis, Space Matrix)

15
Strategy Formulation

• Strategy 2
• Last minute discount air travel tickets available
  to the public in order to gain additional profits
  from the already existing and operating
  transportation system in use
• Major positive strength and opportunity
• (SWOT Analysis, Space Matrix)

Travel
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Strategy Formulation

• Strategy 3
• Enhancing and providing existing postal services
  formally provided by USPS
• Strong opportunity and high competitive advantage
• (SWOT Analysis, Space Matrix)

Mail
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Evaluation of Alternatives

• Forward Integration
• Online Subsidiary With Consumer Retailer
• Larger companies become more profitable
• Ex Wal-Mart, Target
• Company is equipped and able to expand in this
  area
• Leadership, technology, and equipment
• Use strengths and opportunities as mentioned in
  analysis
• Online consumer growth is expanding
• Company is abreast in technology

18
Evaluation of Alternatives

• Horizontal Diversification
• Currently operates one of the largest airlines in
  the world
• Has fleet of over 380 jets
• Jets have state of the art instrumentation
• Already employs more than 4200 skilled pilots
• Has some of the best air travel technology and
  equipment
• Highly capable to execute

Travel
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Evaluation of Alternatives

• Concentric Diversification/Horizontal Integration
• Opportunity from SWOT analysis
• Existing contract with USPS
• Future services to be rendered to private outside
  provider
• Capable of providing additional USPS services

Mail
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Evaluation of Alternatives

• Counteracting competitive strategic moves
• USPS recognition of lack of resources

Mail
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Strategy Implementation

• Strategy 3
• Concentric Diversification/Horizontal Integration
• Additional personnel
• Insurance
• Training
• employee evaluations

Mail
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Strategy Implementation

• Service sites by way of franchise
• UPS and Mail Boxes, etc.
• Ample resources to accommodate USPS needs
• Expansion project can handle additional/new
  inflows
• Extra packages and mail

Mail
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Strategy Implementation

• Advertising
• TV
• Internet
• Sporting events/arenas
• New labeling on boxes

Mail
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Pop Quiz

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Mail
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