FedEx Marketing Dissertation

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Executive Summary

Being novice in the CEP business, I focused my research through internet and found very interesting information on what actually is a very challenging business in a highly competitive environment. Though there are mainly four big global players: UPS, FedEx, DHL and TNT, two American and two European companies, these are challenged by many regional and local players.

This industry is also on the move from a B2B concept to B2C because of the internet bubble with all implications and challenges, with high capex and also headcounts needs to change from a pure logistics business to a strategic partner in key industries.

 I also noticed during my research that FedEx, the Nr 2 player in this industry, is trying to adjust its strategy to gain more market shares in Europe and made an offer recently to take over TNT, the Nr 4 in this business segment facing big pressure from an extremely challenging environment in the last years. I have therefore focused my paper on trying to analyze and understand the reasons for this strategy, its implications, risks and also challenges, as the ECC still has to approve the deal.

Contents Page:

Executive Summary                                                                          p 1

Introduction                                                                                  p 3

Development

1. The CEP industry and business environment                                  p 4

1. General Presentation of the CEP market                  
2. Division within the CEP industry                                  

1. Assessment of FedEx’s assets and resources                                  p 7

1. Analysis of FedEx’s assets                                          
2. SWOT Analysis                                                  

1. International Courier segmentation and FedEx’s targeted segments                                                                         p 9

1. Segmentation of the International Courier sector    

1. Destination
2. Types of customers
3. Time sensitivity

1. The targeted segments of FedEx                                

1. Discussion on FedEx’s performance                                         p 10

1. Porter’s Five Force Analysis                                

1. Competitive Rivalry
2. Bargaining power of Supplier
3. Bargaining power of Buyer
4. Threat of new entrants
5. Threat of substitutes                        

Conclusion                                                                                         p 12

Reference List                                                                                 p 13

Appendices                                                                                          p 16

Introduction

International courier companies have long existed but over the last years, the Courier Express Parcel (CEP) industry has been evolving and had to adapt to its client needs by finding new solutions to meet the ever increasing speed requirements and scale of business. Though four major players, UPS, FedEx, DHL and TNT lead the industry, it is in fact a very fragmented with many regional and local players making competitiveness and speed but also reliability the key for driving their business.  Internet with all new challenges in terms of online trade is starting to impact the industry through B2C supplies and hence the strategic orientation of these global players.

In this paper we will review the overall CEP market situation and its challenges, analyze then the business model and platform of FedEx, an American company, with global operations, and describe its strengths and weaknesses as well as strategy to expand in this important business segment with a clear focus on Europe for the coming years.

1. The industry and business environment:

1. General presentation of the CEP market:

The main activity of the courier industry was fundamentally to provide customer with a personalized mail service.  It developed to cover the lack of the ordinary mail services (mainly public offices) to assure a fast and secure mail delivery.  It charged their customers a higher price than the common mail service and was therefore a service mainly aimed at businesses.

As businesses developed into a more and more globalized economy, the demand for an international mail service grew as well. The scale of operations of the courier businesses expanded then from a local, regional, national scene to a global one.

        The nature of goods transported has also changed; courier companies ship single document as well as industrial goods. The CEP industry has developed and today in various companies are an integrated part of their supply-chain, let’s think of the Pharmaceutical or the Car industry as examples. It implies a high reliability ratio, because any delays would mean huge compensations.  As a consequence, global CEP providers had also to invest heavily in aircrafts, vehicles and personnel to sustain the growth of that specific activity.

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