Case Summary
This case discusses FedEx Corporation and the company’s strategic management. The case is divided into strategic business operation and strategic human resource management sections. The case begins with examining the origin of the FedEx Corporation. This part entails a brief overview of the company’s financing and the way the company managed to establish its human resource operations.
The first part of the case brings out issues of strategic business operation. This part discusses the strategic plan that was unveiled by the company in the year 2000. The plan was aimed at improving how business operations in the company are executed and generating more revenues. The plan also aimed at enhancing strategic business practices in the company.
Such practices include acquisition, marketing/advertising strategies, the orientation of delivery services, issues of competitiveness, and the financial position of the company. The second part of the paper focuses on issues of strategic management.
A discussion of performance management in the company is presented in this part. Management of technology, communication, employee retention, and the benefits scheme of the company has been explained in this section.
Issue exploration
It is vital to note that FedEx Corporation is a logistics company that deals with delivery of mails and goods. The company is based in the United States. There are a lot of dynamics in the logistical sector.
The dynamics entail the nature of goods and services that are delivered by the company, the change in the means of transport and communication to ensure efficiency in the delivery of goods, and the management of the customers and the employees at the same time. The changing costs of transportation come out as one of the critical issues in the management of business in the company.
The company made quick progress upon beginning its operations. However, profits flopped significantly a few years after its operations in the field of mail delivery had picked up. The flop was caused by the rise in the prices of crude oil in the international market, which caused a rise in costs of transportation. Competition has also been on the rise in terms of services and prices (Dawkins & Brockmann, n.d.).
The other critical issue facing the company as presented in the case concerns the segmentation of business operations and ensuring effective management of segmented business operations. The company was divided into two main segments: FedEx logistics, a segment that provides supply chain solutions to companies and individuals.
This is a complex section since it involves different operations like information, transportation, and physical logistical services. The other section is the FedEx Custom Critical, which deals with delivery of special types of goods under special shipment arrangements. This segment also deals with delivery of goods that are to be delivered within certain restricted timelines.
There is also the FedEx Trade Network and Viking. Meeting the specifications of customers is among the most challenging factors in shipping and delivery of goods in diverse locations. Managing a large set of customers is also a challenge going with the fact that the company has expanded its operational capacity, meaning that the number of customers has also gone high (Dawkins & Brockmann, n.d.).
Appropriate theories and or concepts relevant to the problems/issues identified
FedEx is a fairly recent company in the logistics industry of the United States. The competitiveness of the company is attributed to the operational strategies that have been applied in business advancement. However, there are a number of issues that are presented in the case that point to critical issues of management, which denote the application of several theories and models of strategic management (Dawkins & Brockmann, n.d.).
Several theories, as well as concepts of strategic management can be used to explore various strategic management issues in the case. Theories and models of organizational behaviour are highly applicable to this case. The issue of managing performance in FedEx implies the need to put into practice the theories of employee motivation.
Motivational theories have been applied in the management of employees through paying attention to their needs. Marketing theories are also fundamental in this case as the firm has been making efforts to position itself in the dynamic industry and the market.
Strategic positioning has been one of the crucial initiatives of the company since it began its operations in 1974. Models of strategic positioning through the deployment of practices like technology management and innovation, therefore, play out well in the case (Dawkins & Brockmann, n.d.).
Explanation and Elaboration of issues using key theories and concepts
Beginning with the dynamics in transportation, it has been observed that the company faced a problem of adjusting the cost of transportation. This is a strategic issue that needs the application of cost minimization strategies. One of the fundamental strategic areas of management entails planning for the finances of the company.
In the case, it comes out that the financial problem came out of the establishment of numerous operations by the company. FedEx broadened its operations in line with the opportunities that existed in the market. According to the theories of financial management, a rise in expenditure calls for a cut down in expenses in other operations.
The uncertainty that arises from fluctuation in the prices of fuel in the international market, therefore, needs flexibility in terms of other managerial operations other than pricing since pricing can easily result in the loss of customers (Dawkins & Brockmann, n.d.).
Competitive differentiation is another critical area of competitiveness in the operation of FedEx. There are several issues that are pointed out in the case concerning the competitive position of the company in the market. Companies often adopt different strategies that help them adapt to the market and set up a competitiveness scale that enables them attain a favourable competitive advantage.
Several strategies have been applied in the management of FedEx to help the company position itself in the market, in spite of the existing competition in the market. There are two main strategies that were widely applied in the cultivation of a competitive landscape in the company.
These are managing through acquisition and segmentation of business operations. Beginning with segmentation, FedEx divided the operations of the company into four main operating segments, with each segment denoting a given area of operation (Dawkins & Brockmann, n.d.).
Business segmentation is a strategy of business management that aims at helping a company to serve its customers well by ensuring comprehensive operations in each service offering area.
The logistics industry is broadening and the changes in the industry present opportunities for the company, which can only be utilized through deployment of effective strategies such as segmenting operations to increase the scale of serving the needs of customers.
The other competitive strategy that has been applied by the company was managing through acquisition. This is a tactic that is often used in the contemporary management of companies. Customer management is an important factor of management because customers are the main targets of any business (Mello, 2011).
Managing customers can be a complex affair if the company does not plan on how to structure its human resource functions in a manner that gives preference to customers. Customer management entails two main activities that must be implemented together to achieve success. These are managing the needs and expectations of customers, as well as managing customer relationship.
There is a slight difference between the two. Customer relationship management is quite broad in scope. It entails the establishment and sustenance of relations with customers. On the other hand, customer needs and expectations’ management is quite specific since it links customers directly to the company through purchasing of the services of the company (Mello, 2011).
As mentioned earlier, customer management in FedEx was greatly improved by segmenting business operations. The different operational segments deal with a certain range of operations, an aspect that makes it easy for customers to get the services that they demand from the company.
The different business segments FedEx deals in when offering certain types of logistics services enhance efficiency in the management of the needs and the relations between customers and the company (Mello, 2011). This is one of the main operational strengths of the company. The diverse sets of customers in the seemingly competitive industry and market are also an operational strength.
Each operational segment specializes in certain services, a factor that enables each of the segments to perfect the operational issues revolving under services in that area of specialization. This improved the rate of response to the needs of customers in FedEx Corporation (Dawkins & Brockmann, n.d.).
Acquisitions have been crucial in the expansion of the company since it began its operations. Acquisitions reduce the costs of expansion by the company and increase the rate of adaptability in the market and the new business segment or the new market in which a company ventures into. What has come out in the case is that the company has been quite strategic when it comes to the choice of firms to partner with.
The choice of a strategic partner can either be a building or a barring factor to the performance of the company. Most of the acquisitions FedEx has had have turned out positive.
In making its acquisitions, the company targeted firms that had deep operations in certain business areas that FedEx was interested in venturing into. A number of the companies that were acquired by FedEx continued to operate as subsidiaries (Dawkins & Brockmann, n.d.).
According to Mello (2011), the strategic management of human resources is another critical exercise in the company. According to the theories of organizational behaviour, managing employees is a complex task, yet it is one of the most critical functions in as far as the performance of employees is concerned.
This emanates from the fact that managing employees entails the management of the needs, emotions, as well as the expectations of employees. This is what guarantees productivity of employees. Several tactics of strategic human resource management have been applied in the management of employees in FedEx. These tactics denote the embrace of total quality management principles.
Human resource development is replicated in the recruitment, training, and the retention strategies of FedEx. The company has a comprehensive benefit scheme, which denotes the deployment of the Maslow’s theory of hierarchy of needs (Dawkins & Brockmann, n.d.).
According to Jackson, Schuler and Werner (2012), managing through technology is an essential factor of competitiveness in the modern management environment. FedEx has developed a technological system that allows it to effectively manage its employees.
The company uses PRISM HRIS, which is a virtual system that is used in tracking all the employees of the company. Employees are able to monitor their performance through the system. This also applies to the management, which is able to monitor the track record of performance of employees (Dawkins & Brockmann, n.d.).
According to Mello (2011), communication is a critical factor in the management of employees in FedEx. There are different models of communication that are adopted by the organization. The level of precision in communication depends on the model of communication that is used by the organization.
Most organizations are de-bureaucratizing their operations. Adoption of horizontal communication is, therefore, highly desired in the management of employees. Updating employees with all the required organizational information ups their morale.
Several programs have been developed by the company to ensure that employees get all vital information, besides being able to give their response to the organizational management. The company also embraces cross-functional communication. This ensures effective feedback between the employees and the customers (Mello, 2011).
Learning Outcomes
This case presents several comprehensive aspects of strategic management. From this case, several lessons in strategic management can be derived:
- Strategic management is a dual process that entails crafting of business strategies, as well as human resource strategies. Human resource management strategies help in implementing strategic business operations in the company.
- A company has to be efficient in its operations to be successful in a dynamic market. The company should be in a position to single out opportunities and challenges to emerge successful in the industry.
- Strategy is a critical factor in the attainment of a competitive position in the market.
References
Dawkins, M., & Brockmann, E. (n.d.). FedEx Corporation. pp. 688-707
Jackson, S. E., Schuler, R. S., & Werner, S. (2012). Managing human resources. Mason, OH: South-Western Cengage Learning.
Mello, J. A. (2011). Strategic management of human resources. Australia: South-Western/Cengage Learning.