Strategies seek to cohesively integrate an organization’s chief goals, policies, and action plans into one. If strategies are precisely formulated, they assist in organizing and allocating resources into a unique and viable level based on their relative internal strengths and weaknesses, future environmental changes, and competitors’ moves, globally (Hill & Jones, 2012). It is thus important for managers to formulate effective strategies that differentiate their firms from competitors to ensure they meet customer needs.
Federal Express is one such company that has continuously formulated strategies to improve its market share and its competitive position globally. Federal Express has created strategies which enable clients to receive their goods and components within their timeframe and matched such expectations through innovative activities, replication of its model and activities by competitors in countries it operates. The firm’s strategic competitiveness has been based on speedy and reliable delivery system to create value to clients on an overnight basis (Benson & Kinsella, 2001).
Moreover, Federal Express has over time created value by having customers to realize that they are short of major production process parts or items being demanded by their clients and thus have to turn to Federal Express complete that part for them (Porter, 2009). Further, the company has created value through effective coordination of all inbound and outbound logistics activities to mitigate the costs, such as inventory costs and adoption of supply chain management to reduce the volatility of the firm’s operations (Hitt, Ireland & Hoskisson, 2012). Management of the firm’s supply chain has led to value creation thus increasing its competitive advantage.
Besides, in a bid to create value, Federal Express has tried to exploit its strategic intent of becoming the industry leader in providing end-to-end supply-chain provider. To create value for client firms, FedEx has designed networks for clients to exchange information digitally, replacing the inefficient fax and telephone services, to boost product demand, ensure flexibility in production schedules, as well as avail raw materials on time (Hill & Jones, 2012). Moreover, the firm is working towards instituting a system that will eliminate clients’ warehouses for efficiency and effectiveness.
The firm has created a supply-chain management system that has created value to the clients by allowing companies to outsource supply-chain to a provider, hence concentrating on their key competencies for cost effectiveness. Innovations, such as the internet has also assisted Federal Express to create value by creating new direct-ordering systems and distribution capabilities. However, value creation has also come from competitors, such as UPS who keep Federal Express on its toes with new innovations and inventions (Porter, 2009). Moreover, the company’s future competitiveness will be exploited to create value for clients through managing customer supply chains effectively and efficiently.
Apparently, Federal Express lacks a competitive advantage in the generic building blocks of competitive advantage, which include; customer responsiveness, innovation, efficiency and quality (Benson & Kinsella, 2001). Therefore, in terms of efficiency, Federal Express should fully embrace wireless technology, since it was the first company in package delivery to introduce such technology, to enable employees to access company information on a 24-hour basis as well as scanning packages using bar codes and magic wands. This reduced the probability of making errors in package-tracking system, but have been unable to compete with UPS ground delivery system. They should strengthen the supply chain to ensure efficiency over their competitors.
In a bid to enhance quality, Federal Express should invest in new technologies to foster reliability in the delivery of their services to clients. Federal Express should enhance quality by introducing technologies that are innovative, for instance tracking of packages via global positioning service on satellite, installing address checkers to assist in mitigating delivery inaccuracies and lateness to retain clients and add new ones (Hill & Jones, 2012). Further, the company should build the competitive block by investing in new technologies to boost service delivery. The firm should utilize the technology institute it established to conduct research and development for future technologies to ensure they stay ahead of competitors.
The firm should persistently identify and satisfy the clients’ needs by employing the latest technology that can make it easier for the clients to rely on Federal Express for value creation to their services. This way the company will be in a position to differentiate itself from the competitors and thus attract more business. This can be done by reducing the drop-off time by more hours than the currently stipulated hours to ensure that clients have more time to make the due time. The firm should also incorporate partnerships with other companies to ensure that clients have more time and locations on where to drop their packages (Porter, 2009).
The company’s is able to differentiate its products at business level by exploiting its strengths in operations, logistics and technological innovations. This has enabled the firm to differentiate itself from competitors by generating a service level that competitors have been unable to match. The company is an innovator and should strive to maintain that in the eyes of its clients and differentiate and market itself as an innovator in the market who provides high level of service (Hamel & Prahalad, 2010). This will enable clients to realize that if they are asked to pay more for the services rendered then it will be worthy.
Product differentiation will thus establish a strong customer base with the understanding that the company strives to offer superior services as compared to its competitors in the market. Since all the competitors can make fast deliveries, Federal Express should strengthen its customer service and employ customer-oriented staff who listen to clients. Moreover, the firm should differentiate itself as the only company that offers client support on 24 hours, picking up packages from clients’ location, and offering a money-back guarantee to clients (Hill & Jones, 2012). This feat will ensure that the company has differentiated itself from competitors.
Federal Express has been successful in differentiating itself from the competitors, especially globally. However, competitors, such as UPS are cheaper, Federal Express still hold the lead in competitiveness due to the supply chain the company has been able to establish particularly in its FedEx brand. FedEx has been able to deliver with speed, innovation, and technology (Benson & Kinsella, 2001). Moreover, the brand identity which differentiates it has been designed in orange and orange colors thus creating a brand line that clients can associate with. Through differentiation the company would be able to create a greater customer base and loyalty on its brands. Moreover, the firm will be able to charge premium prices for differentiated services as compared to competitors and clients would find value for their money (Porter, 2009).
The company has been able to create a business model that entrenches the distinctive competencies the company has strived to achieve since inception. Further, the company has ensured an edge in faster delivery of packages to clients around the globe on an expanded network. More next-day deliveries have been extended in more countries, especially in Asia. Federal Express has thus been able to employ the differentiation strategy to its advantage as the firm that offers faster delivery times as well as door-to-door pick-up and delivery services (Hitt et al., 2012). The company has been the first to venture into new markets thus acting as the market leader who tastes the waters for competitors to follow suit. This has rewarded Federal Express in building competencies in availing services that no rival can.
The company has further pursued the global strategy on a technological front by offering more automated and package tracking options than its rivals. Exploitation of technological advances, strong resources, and capabilities to operate in the shipping industry has also enabled the company gain efficiency in doing business and delivering competencies. Moreover, the company has incorporated building new global infrastructure to support competency building in the market. Such efficiency has been fostered by the rise of internet commerce that has linked the global market with consumers all over the world purchasing products and services via the internet (Porter, 2009)
Federal Express should use market segmentation to target different clients and thus improve its competitiveness, profitability, and better serve clients’ aircrafts, with a fleet of 638 aircrafts in their business to increase efficiency of serving clients thus differentiating itself from rivals, such as TNT. Meanwhile, the firm has ensured efficiency in its business model by utilizing firm-specific tangible and intangible resources, such as package handling systems.
Moreover, the company needs. Further, this would enable the company to operate independently yet collectively and hence differentiate itself from its rivals. The segments would each concentrate on its own market instead of the whole market. One segment would ensure that delivery of small packages is fast with a money-back guarantee on late delivery. Moreover, another segment would ensure that it caters for businesses only. This way each customer would be satisfied and would know where to raise concerns regarding their packages.
Hamel and Prahalad (2010) assert that global competition may impact the firm in that it may lack a competitive advantage in the long term if it does not apply innovation and ensure competitiveness. The strategies being taken up at Federal Express are enough to ensure a competitive advantage in future which would translate into huge profits. This would be possible through the international infrastructure that foster creation of a global competency for the market. Federal Express is the leader in global shipping network thus enabling the firm offer solutions around the world in a better way than its rivals.
The company employs product differentiation to build services that are unique within the industry as compared to what the rivals are offering. The package design, customer service, logistics, and brand image should be differentiated to attract customers with a unique offering to meet the clients’ needs better that rivals, such as UPS and DHL, which would enable the clients to pay a premium price for the service and at the same time derive value for their money. Moreover, differentiating its products and services, Federal Express will create brand loyalty never witnessed before thus creating a high profit margin. The prices should be set in a way as to compete with rivals who may tempt to undercut prices when venturing into the market segments created by Federal Express (Hitt et al., 2012).
To confront the global competition, the company should prepare to invest globally so as to grab the market attention in the package delivery business. This should be done by investing in new and competitive technologies, processes as well as value boosters that carry a price tag. This should be coupled with research and design to provide solutions to the marketplace. Moreover, the firm should go cross-functional by launching a coordinated effort in innovate thus gaining a competitive advantage over rivals and high returns thereafter (Hamel & Prahalad, 2010). Clients should thus be involved in the innovation process to provide feedback on whether the products are desirable and can make an impact in the market.
However, to confront the global competition, Federal Express should focus on serving each market segment throughout the world (Porter, 2009). This would enable the company to serve each specific market more efficiently that rivals on the basis of product differentiation and lower cost in some markets and premium prices in the others. Although focus on smaller segments of the entire market limits the firm’s market share, this is compensated by increased profitability realized from the premium markets. Moreover, the strategy of focus is not without risks as rivals try to imitate Federal Express and exploit the sub-markets within the strategic target market thus reducing the differences between the overall and target markets with high operations costs mitigating the overall advantage obtained from the differentiation in the market segments.
Consequently, the company should set strategies that match the market segments created in the global market. Moreover, the strategies must meet the internal capabilities and the situation regarding the external environment. Further, the strategy should be in a position of defensibility in the market to enable Federal Express to create competitiveness through profitability.