History
FedEx was established in 1971 by Frederick Smith who was a former US Marine (Rushton & Walker, 2007, p. 183). At the very beginning, the company had only 14 planes and they could carry cargo only 25 cities in the United States (Rushton & Walker, 2007, p. 183). Originally, this business was located in Little Rock, but later its headquarters were moved to Memphis (Rushton & Walker, 2007, p. 183).
It should be noted that the company’s growth can in part be attributed to the deregulation of the airline industry that took place in the early seventies. For example, when the corroboration was allowed to use large planes, the managers of this organization were able to increase its profitability (Lucas, 2012, p. 169). Apart from that, FedEx was the first delivery company that enabled clients to know where their packages were (Birla, 2012, p. 8).
One should take into account that this corporation made several important acquisitions; for example, they purchased such a company as Flying Tigers in 1989; in this way, they were able to enter foreign markets, especially in Europe (Rushton & Walker, 2007, p. 183). Additionally, they acquired many logistics companies such as Caliber System Inc. These acquisitions helped FedEx become effective in supply chain management. At this point, FedEx is the largest airlines according to such a criterion as freight tons.
Moreover, the fleet of this corporation numbers more than 661 airplanes and it can deliver goods to more than 375 destinations. Apart from that, one should take into account that this corporation also specializes in truck delivery, especially if one is speaking about the United States. Thus, it is possible to argue that this organization was able to grow dramatically during the past 40 years.
Financial Performance
Although the global economy passed through a period of crisis, FedEx was able to remain sustainable and competitive. Despite numerous problems, the services of FedEx were enjoyed significant demand. In 2012, the gross profits of this corporation constituted $ 42.7 billion while their net revenues were 2,03 billion (FedEx 2013, p. 8).
Airline delivery of goods still remains a critical component for the profitability of this corporation. In particular, it comprises approximately 50 percent of their revenues. Apart from that, this organization was able to reduce the costs of by improving their supply chain. However, one should take into consideration that the cost of fuel poses a significant problem for this corporation (FedEx 2013, p. 14).
Furthermore, the company increased the expenses related to the compensations of their employees (FedEx 2013, p. 28). Nevertheless, these costs are justified because in this way, the company can gain the loyalty of workers. These are the main aspects of their financial performance. The main trend that one can identify is that the profitability of this corporation began to improve, especially in comparison with the previous years. These are the main points that can be made.
Operations
Overall, it is possible to say that FedEx offers a variety of services to their clients. One of them is the overnight delivery of goods (Pride & Ferrell, 2011, p. 228). This organization often works with customers who are pressured by time and it has been able to meet rigid timelines set by their customers (Pride & Ferrell, 2011, p. 228).
The growth of this company can be explained by their ability to deliver packages within 24 hours (Lussier & Achua, 2009, p. 318). As it has been said before, FedEx enabled clients to track the delivery of their goods (Lussier & Achua, 2009, p. 318). This is one of the reasons why they achieved competitive advantage over other firms (Lussier & Achua, 2009, p. 318). At present, this airline company delivers cargo to more than 375 destinations every day and one can argue that FedEx operates at an international level.
It should be taken into consideration that the success of their operations depends on their coordination between airline fleet and trucks that should act a single entity. At first, packages should be delivered from airports to sort-out facilities early in the morning (Alt, Fu, & Golden, 2006, p. 334). Later these goods are loaded on delivery trucks, and they are transported to customers before 10: 30 (Alt, Fu, & Golden, 2006, p. 334).
In this case, much attention should be paid to the efficiency of employees who work at these sort-out facilities because they should place packages into the right trucks (Frock, 2009). Researchers believe that the operations of FedEx can be regarded as a series of deliveries and pickups (Alt, Fu, & Golden, 2006, p. 334). It is possible to say that this organization offers other services to their clients.
For instance, one can speak about freight management, brokerage, customs clearance, warehousing, and so forth (Rushton & Walker, 2007, p. 183). This company works with corporate and individual clients. Overall, this organization support supply chain activities of many manufacturers and firms that are strongly dependent on FedEx. These are the main activities that this corporation is engaged in.
Personnel
The policies of FedEx place much emphasis on the effectiveness of their labor force (Jackson, Schuler, & Werner, 2011, p. 13). In particular, this organization focuses on such aspects as open-door policy, the use of surveys in order to receive employees’ feedbacks, and the adoption of performance appraisal systems that can better recognize the individual contribution of workers (Jackson, Schuler, & Werner, 2011, p. 13).
The senior management of FedEx views the company’s employee one of the main factor that contributes to the success of this organization. Their HR policies help this corporation increase workers’ commitment to organizational goals and their loyalty to the company.
At present, this corporation employs approximately 5000 pilots who are well-trained and experienced professionals (Holley, Jennings, & Wolters, 2011, p. 203). Their expertise is critical for the timely delivery of cargo. However, one should bear in mind this corporation also employs more than 100.000 package handlers, dispatchers, and truck drivers (Holley, Jennings, & Wolters, 2011, p. 203).
The performance of these professionals is also critical for the effectiveness of FedEx, and its ability to meet the timelines set by their clients (Alsop, 2010). Thus, this organization focuses on their effectiveness and commitment of their workers. This is one of the main arguments that one can make. Yet, FedEx is often criticized for its labor relations because this corporation does not allow the workers to be unionized (Truitt, 2010, p. 211). This is how this company interacts with its workers.
Marketing efforts
It is possible to say that this corporation is also engaged in marketing activities that are supposed to attract and retain customers. First of all, one can speak about some of their advertising campaigns. The most recent one is called The World on Time (Thompson & Martin, 2010, p. 362).
Overall, it emphasizes the ability of the company to deliver the goods to every destination on time. Other advertising campaigns developed by this company also stressed the speed and effectiveness of their operations. Moreover, their customers have an opportunity to track the delivery of their cargo (Lussier & Achua, 2009, p. 318). Moreover, this company lowers prices for their long-term customers, especially corporate ones (Rothberg & Erickson, 2005, p. 220).
It is also possible to say that the marketing strategies of this corporation are very flexible. At the very beginning, FedEx focused on the delivery of documents, but the rapid development of Internet made their services unnecessary. This is why FedEx begin to attach more importance to the shipment of physical goods (Capon & Hulbert, 2007). These are the main elements of their marketing strategies. Overall, the services offered by FedEx continue to attract clients from different countries.
Recommendations to maintain or achieve profitability
It is possible to provide several recommendations that can benefit this organization. First of all, they should invest more into their Asian operations. In particular, they need to increase the number of flights and trucks that operate in such countries as China, Japan, South Korea, and Singapore because in the future, the economic activities within these states will only intensify. Secondly, this organization should pay more attention to the renovation of their fleet.
They should acquire aircrafts that are more fuel-efficient such as B777F or B757 (FedEx, 2012, p. 25). This issue is particular important because a great proportion of the company’s expenses can be attributed the consumption of fuel. Thirdly, the management of this organization should pay more attention to the corporate image of FedEx. Currently, they only allow pilots to be unionized, but one cannot say the same thing about truck drivers or dispatchers (Truitt, 2010, p. 211).
As a result, this corporation is often involved in many scandals (Truitt, 2010, p. 211). This is why this organization should establish partnership with national trade unions. In this way, they can avoid both public criticism and litigation. These are the main suggestions that one can make to the managers of this company.
International operations
Currently, the corporation operates in different regions and countries with different cultures, religions, and political systems. First of all, this organization operates in China, South Korea, Japan, and Singapore (Ferrell & Hartime, 2010, p. 533). These countries passed through a period of economic growth, and the services of FedEx were required by many businesses. Additionally, this company operates in European countries such as France, Germany, Italy, or the United Kingdom (Ferrell & Hartime, 2010, p. 533).
However, at this point, the European market is of lesser importance for FedEx, especially in comparison with the United States or Asian countries. Furthermore, FedEx entered the Russian market and very soon it became a leading airline delivery company in the country. Despite various challenges, this corporation was able to adjust itself to the international market. Moreover, it was able to meet the labor relations standards set by different states. These are the main aspect that should be kept in mind.
Reference List
Alsop, R. (2010). The 18 Immutable Laws of Corporate Reputation. Philadelphia: Simon and Schuster.
Alt, F., Fu, M., & Golden, B. (2006). Perspectives in Operations Research: Papers in Honor of Saul Gass’ 80th Birthday. Boston: Springer.
Birla, M. (2012).Innovating and Outperforming the Competition. Boston: John Wiley & Son.
Capon, N., & Hulbert, J. (2007). Managing Marketing in the Twenty-first Century. London: Wessex Publishing.
FedEx. (2013). 2012 annual report. Web.
Ferrell, O. & Hartime, M. (2010). Marketing Strategy. New York: Cengage Learning.
Frock, R. (2009). Changing How the World Does Business: Fedex’s Incredible Journey to Success – the Inside Story: Easyread Super Large. London: ReadHowYouWant.
Holley, W., Jennings, K., & Wolters, R. (2011). The Labor Relations Process. London: Cengage Learning.
Jackson, S., Schuler, R., & Werner, S. (2011). Managing Human Resources. New York. Cengage Learning.
Lucas, H. (2012). The Search for Survival: Lessons from Disruptive Technologies. New York: ABC-CLIO.
Lussier, R., & Achua, C. (2009). Leadership: Theory, Application, & Skill Development. New York: Cengage Learning.
Pride, W., & Ferrell, O. (2011). Marketing. New York: Cengage Learning.
Rothberg, H., & Erickson, G. (2005). From Knowledge to Intelligence: Creating Competitive Advantage in the Next Economy. London: Routledge.
Rushton, A., & Walker, S. (2007). International Logistics And Supply Chain Outsourcing: From Local to Global. Boston: Kogan Page Publishers.
Thompson, J., & Martin, F. (2010). Strategic Management: Awareness & Change. London: Cengage Learning EMEA.
Truitt, W. (2010). Power and Policy: Lessons for Leaders in Government and Business. Philadelphia: ABC-CLIO.