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The Deutsche Post World Net’s Strategic Management Essay

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Updated: Oct 12th, 2021

The Deutsche Post World Net, also known as the DPWN, was a government monopoly since it was seen that the postal delivery services that are rendered by the same are too tedious to be run by an individual. Later on, this monopoly realized expansion in its scope of operations so that it presently takes to provide telephone and financial services. In order to realize international expansion, the DPWN has been urged to carry out the process of liberalization.

To this effect, success has been realized when after many years of negotiations with the postal stakeholders and the member states, this was agreed upon in 1997. More ameliorations came in; after that, the subsequently limited market openings that were being enhanced by the exaction of tariffs were quashed as a way of ratifying the much acclaimed and awaited harmonization measures.

More successful steps have been made in carrying out the international expansion of the DPWN. For instance, new rounds of proposals that were geared towards the continual market liberalization process were affected in May 2000. This was later made more feasible by the 2002 revision of the 2002/39/EC policy that saw the advancement of the postal market deregulation not only become a reality but a concept that could be realized at equal pace throughout the European Union (EU) (Vault Editors, 2007 pp. 187).

With the factoring and effecting in of the Second Postal Services Directives, the DPWN has been able to make the terms and conditions that make the liberalization of the DPWN postal services mandatory among the members of the EU market. At the moment, all the EU member states, with the exception of France, Poland, Greece, and Malta, have already fulfilled the global market requirements.

More efficiency is bound to set in, should the pending Directive that is set to be ratified on January 1, 2009, take effect. Though this provision has not yet been ratified, its provisions and underpinnings have already been defined so that it can realize the existence of a unified but global market in the postal sector. The only factor that may derail the actualization of the above Directive that is in the offing lies in the fact that the above date of its ratification is subject to review by the members, based on majority votes. Thus, the final and deciding decision that will ensure that there is the ratification of the aforementioned Directive may not come into force.

To curb the negative eventualities that come from the local competition, the DPWN has sought to provide an alternative chain of supply to the clients. For instance, the DPWN has taken to simplify the upstream face by introducing the computer-enhanced emailing system. This ensures that anyone can use the services of the DPWN are accessible in the global sense. This has ridden the clients the need to have a huge technical infrastructure so as to access the services of the DPWN. The DPWN services, at the same time, have their services being highly sought after, despite its rather slow operation, given the fact that its services are always accorded at fair prices (Dorrenbacher 2006 pp. 75).

The above strategy of international market expansion has been very instrumental in warding off the mass exodus of the clients to other postal and telephone services providers. To this end, the DPWN has intertwined the mail streams with the operations, which include IT, branding, and logistics.

Evaluations on the extent to which the DPWN differentiation strategy has been followed

In the first case, differentiation strategy occurs where there are two or slightly more companies that provide the same goods and/or services to an oligopolistic market. Because of the above situation, the companies are forced to come together to agree on the way in which they will be able to package their goods and/or services in a particular design so that the market is able to identify the difference between the two companies.

To this effect, the DPWN has been compelled by the circumstances to liaise with its prime competitors, the EP Euro post, the DBS, and the PIN AG. The liaison became inevitable after that these other competitors established nationwide services coverage together (without the DPWN). For instance, in this state of affairs, the large competitor Post offices and other newspaper delivery services organizations began in 1997 to bundle their network services together, with an overall intention of reaching the regional length so as to mainly have the capacity to address the direct mails.

The DPWN has to this effect, come together with the EP Euro post, the DBS, and the PIN AG so as to be able to analyze the present nature of the delivery of goods and services that are used to direct and distribute mail. However, coming up with different network designs that can help the clients distinguish between the services and the mode of delivery that is provided by the DPWN from those of the PIN AG, the EP Euro post, and the DBS has been a very difficult feat to achieve, given that all these bodies with the exception of the DPWN purchase the small scale delivery organizations which are then used as subcontractors to help in the establishing of the more comprehensive network (Kothari and Barone 2003 pp 135).

To that effect, the DPWN and the rest of the dealers in postage and telephone services providers agreed that the rest of these competitors come up with a different model of the business supply chain. On the other hand, the DPWN agreed with the aforementioned competitors that the method that is used by the DPWN, such as the use of the mailing generation that is computer-enhanced; having the simplified upstream phase, protection, and production services; are left under the use and ownership of the DPWN.

It suffices that it be mentioned that this approach left both sides of the divide with a win and a loose situation. The lucidity in the above observation lies in the fact that the DPWN was left with a system that is both relatively slow (but) and financially efficient. On the other hand, the EP Euro post, the DBS, and the PIN AG were left with a very fast variant of network services delivery design network, which is nevertheless costly.

According to Lynda (2005 pp 71), the above case means that the DBS, the PIN AG, and the EP Euro post have been able to provide services delivery at very fast rates, but at the same time, the same organizations have remained highly susceptible to high costs of operations, as opposed to the DPWN that gains from the low cost of productivity, due to the low rates of expenses that accompanies its systems design. The only problem that remains to bedevil the DPWN in its operations is the low output or the lower rate of production and provision of services. This is due to the slowness of the design of the system that is used by the DPWN.

Evaluations on the extent of the DPWN’s strategic management

At the moment, the strategic management that is carried out by the DPWN is seen to be useful in helping the organization stick to its goals. Herein, the principal goal of the DPWN is to carry out the process of effective liberalization of its services and the internationalization of its market and services. To this end, the DPWN ensures that there is the channeling of enough synergies being used so as to stage effective campaigns to prevail upon the European Commission to open up and give a laissez fair condition for the carrying out of the conventional or traditional way in which the monopoly activities such as the telecom and the transport are discharged.

According to Plunkett (2006 pp 34), in order to achieve these ends, the DPWN has ensured that it maintains a good performance record so as to earn a position that can persuade the stakeholders that the international market is the way to go. It is a plain truth that a record that exhibits poor performance will point out to the shareholders that the company is not well-grounded in the local sector, and this may, in turn, cause the stakeholders to postpone the dream of DPWN going global. At the same time, the DPWN success means that there will be sufficient resources that can be used for the carrying out of the expansion services (Rouzi and Anderloni, 2002 pp 212).

To achieve this aim, the DPWN ensures that every department has clearly set guidelines and roles that are to be achieved. These goals are not only production-specific but are time-specific as well. This ensures that each department can give account for the tasks done.

The method has been very instrumental in the extirpation of underperformance and dereliction of duties. The effectiveness of this performance strategy for the DPWN is pegged on the fact that all the employees are made answerable to the immediate authority under whose aegis and direction the employee works. This is carried out throughout the entire DPWN. This measure is enhanced by the dexterity in the keeping of records that are to be compiled regularly by the heads of the departments, who, at the other end, take to submit them to the senior managers of the DPWN (Traffic Services Corporation, 1999 pp 121).

In the same wavelength, the departments are furnished with the chance to draw out their budgetary proposals, which are then acted upon; after that, the senior management has taken to confirm that the proposed expenditure is in direct agreement with the operations of the DPWN.

In the same vein, the DPWN takes to ensures efficiency by taking to identify the source of raw materials that are procured for use by the DPWN. This ensures that any form of defective material that had been procured can be traced back to the source. At the same time, the exercise ensures that only those products and resources that are of a high standard have been purchased. The process is also bolstered by the adoption of the comprehensive keeping of inventory records of the materials procured within each department. The above measure totally eradicates both interdepartmental and intradepartmental pilferage of both financial and nonfinancial resources.

The DPWN ensures that the records are kept well and in places where the rank and file of the organization can see them regularly. However, the strict follow-up on these records is done by the senior management and the board of directors of the DPWN so that the goals, guidelines, and policies of the DPWN can be kept in focus.

SWOT analysis on the DPWN’s strategies

SWOT analysis is a type of or a method that is used in strategizing a business organization or even a corporate entity. This methodology was introduced by Albert Humphrey of Stanford University during the 1960s and the 1970s. This came after numerous spates of researches had been conducted on and from the Fortune 500 Companies that are found in the US. When using the SWOT analysis, one takes into consideration the Strengths, the Weaknesses, the Opportunities, and the Threats that an organization is highly susceptible to succumb to or to experience.

The first two elements, the Strengths and the Weaknesses, refer mostly to the internal or the intrinsic characteristics of an organization that affects the rate at which and the extent to which this organization may realize its policies, whereas, on the other hand, the last two elements, the Opportunities, and the Threats almost always can be seen to refer usually to the extrinsic conditions that affect the rate, speed and the magnitude at which the goals and the policies of an organization may be realized.

As far as the Strengths of an organization are concerned, the DPWN is likely to realize growth, increased profitability, and productivity due to the fact that the DPWN mailing services are computer-enhanced. At the same time, these computers that are used in these services provided are simplified and therefore have the ability to support the upstream phase of the production services. This strategic change that the DPWN takes to use could also be bolstered by the fact that there are no requirements for the massive technological DPWN infrastructure that are needed to use the services thereof.

This state of affairs has a sense of duality as far as the profitability of the DPWN is concerned. First and foremost, this wards off unnecessary expenses for the DPWN. Secondly, the same state of affairs gives DPWN an edge over the others, and as such, enables the DPWN to handle competition from the outside, given the fact that other companies that take to provide the mailing services are not equipped with these technological provisions.

As touching on the weaknesses of the DPWN, there is an adverse condition that is likely to unsettle the prospects of the realization of the company’s goals, profitability, and expansion. This is because the DPWN is trying to come up with a One-Stop-Shop that is to help in the increasing of the sales of the DPWN services. However, it is important to note that the idea of taking to replicate the One-Stop Shop of the TNT does not seem to auger well with the objectives of the DPWN. This is because the idea lacks originality, given that other competitors such as EP Euro post had already come up with the idea and perfected it. This may make the DPWN lag behind its peers.

The opportunity that the DPWN has is that it has a monopoly over services that relate to mailing and telephony. This is seen in the fact that the DPWN at the moment is taking to provide mailing services for magazines and printing houses since the majority of these do not have their own mailing services. This leaves the printing houses with no other recourse save the outsourcing of their mailing efforts to the DPWN. This, for the latter, portends an increase in profitability and productivity.

At the same time, the DPWN stands for higher opportunities, given the fact that there are very few competitors in the mailing services and telephone sector. The only competitors that DPWN has to contend with include the PIN AG, the EP Euro post, and the DBS. These, compared to the growth and dynamism that DPWN has realized, can be considered fledglings.

Conversely, the threat that the DPWN might be facing is that it has gone global; it is rather finding it difficult to consolidate the strong local market base that it had before. For instance, the attempt that is being made by the DPWN to sustain the national markets’ competitive decision by keeping the quality of the services high and also by lowering the prices of its services, although not being at all a bad idea, yet underscores the above fact.

The competitive strength of the DPWN

According to Porter, the five chain analysis comprises analyzing the five stages of a business operation which are considered very important. These comprise inbound logistics, operations, outbound logistics, inter-firm cooperation, and governance. As touching outbound logistics, the DPWN runs a higher chance of realizing expansion, given the fact that it has had a wide geographical expansion since it has gone global. To this effect, the DPWN has already made incursions into over 87% of Europe.

On the inbound logistics, the DPWN still has a higher chance of succeeding in market competition. This is because the DPWN management is widely diversified, and at the same time, each secretariat exists to serve each and every DPWN subsidiary. This ensures effectiveness and transparency. The DPWN, at the same time, has systematic inter-firm cooperation and governance that are all pegged on the concept of democracy.

For instance, the style of leadership that is observed by the DPWN ensures that every rank and file within it is answerable to a higher power. These wards off cases of corruption, the one man or the big man syndrome, ineptitude, the making and the ratification of poor policies and/ or choices. Strong inter-firm cooperation at the same time ensures that the DPWN staff is thoroughly endowed with the spirit of teamwork. All the above factors place the DPWN ahead of its peers in staging the international competition.

DPWN company history

DPWN has undergone a lot of evolution from a loss-incurring government-controlled entity to a company that has the reputation of being an international player that has in its possession logistics or logistics and financial services that are highly diversified. This started in 1980.

How DPWN has managed to change from being a government monopoly to being a private firm

DPWN has managed to undergo this change from a government monopoly to a privately owned organization when it first in 1980 restructured and commercialized the Deutsche Bundespost. This allowed the facilitation of the same process, courtesy of the abrogation of laws that allowed for the changing of the leadership and regional structures of the organizations that were taking part in the provision of postal and telephone services. The second development came into effect when the 19995 Deutsche Post AG was formed as another step towards the postal reforms and privatization (Geddes and Morris 2004 pp 45).

Finally, the entire process was brought into consummation when through modernization, the company was allowed to own the state of the art logistic equipment or technology privately as part of its extensive investments. The whole process was supported by the adoption of a high rate of automation and standardization of equipment.

This state of affairs helped the DPWN provide the clients’ base with serviced characterized which had a higher level of efficiency. It is this state of affairs that has enabled the DPWN to stay on top of its competitors as a privately owned organization. This is because it is only through the provision of quality services that an organization can have the edge over other competitors in the market.

How product and investment standardization has strengthened the market position of the DPWN

DPWN has ratified strategies as a way of strengthening itself in the face of formidable international market competition. This exercise has been carried out through acquisitions and sealing of partnering agreements that are supported by the integration of services and investments. Acquisitions normally take place when a company has to be dissolved so that it becomes under the management of another larger firm.

This usually takes place on a mutual agreement basis, as opposed to the takeovers, which are usually forceful. As far as investments and acquisitions are concerned, the DPWN heightened the pace of realizing new partnership and acquisitions with other European postal companies (Ibid, pp 67) as partnership; the Deutsche Post AG increased its record of success when it ventured into this partnership program with another successful IPO. This development saw the two firms working under the brand name Deutsche Post World Net.

The above enabled the DPWN to realize a bigger business platform that gave Deutsche Post World Net a bigger base for high sales of its express and postal parcel services. This also accelerated the process of the DPWN going global. The very same acquisitions assisted the DPWN bolster local ability that enabled the DPWN to build a strong distribution network in entire Europe.

Comments on the Competitive strength of the DPWN based on the Value Chain Analysis

The Value Chain Analysis is also known as the Five-Step Analysis due to the fact that it analyzes the prospects of a business in relation to its profitability. It is at most times viewed as complementary to the sub-sector analysis, as it takes to provide both the additional and analytical elements that are used to ameliorate the program’s design. The importance of the Value Chain Analysis cannot also be ignored because it is very instrumental in the building of the framework of the sub-sector analysis.

The Value Chain Analysis achieves this feat by first selecting an economic sector and then secondly, taking to analyze the sector that the business wants to venture into. Afterward, the third step that the business can assume is to identify the solutions that can be used to realize a way out of a potential problem. Fourthly, a business organization may take to assess the possible market solutions that can be adopted into use to help the business realize the way out of a possible problem. As the fifth step and the last undertaking of Value Chain Analysis, the business analysts can take to identify the programs that can be used as a possible form of intervention.

As far as the DPWN’s Value Chain Analysis is concerned, the selection of an economic sector that has been singled out by the DPWN still augers well with the prospects of its profitability. The countries that had been targeted are the United Kingdom (UK), Italy, Germany, and Spain, among others. Those that are being targeted, like France, are also potential breeding grounds for profitability. At the moment, France being one of the targets promises a very large market given that it has a substantial per capita volume of mails that hits the 55% mark of its total population (Crew and Ray 2003 pp 123).

In analyzing the business sector that the DPWN wants to venture into, the DPWN has also planned prudently. The plan to increase its scope of the business sector by supporting the printing of newspapers and magazines and then taking to distribute them has been considered as an effort bound to usher in more profits, given that at present, there are no postal companies that undertake to provide these services. At the same time, the rather fledgling magazines and newspaper companies are in dire need of a company that will take to provide distribution services for them, as they do not have the facilities to do so themselves.

The solutions that have been set in place so as to bring about a certain panacea out of a problem are very useful and have been very profitable to the DPWN. The step to increase the market base so as to deal with the competitive nature of the postal services industry is good and, at the same time, feasible. The feasibility of this undertaking is made evident by the fact that the concept of European Economic Integration is a feat that is presently being stressed.

The move on the fourth step to come about with the market solution by the DPWN has been branded a smart move, following the differentiation strategy that it adopted in liaison with its competitors. The usefulness in this is based on the fact that this will help the customers differentiate the brands of services that are offered by each company. The possible forms of intervention that have been set in place are the identification of the chief competitors and their domestic market. This again has helped the DPWN create distinguishable brands of services that have increased the sales of the DPWN.

The Five Forces Analysis for the DPWN: Discussions on the major strategic issues that face the company

The Five Forces Analysis is a framework that is used for industrial analysis and for laying down the procedures for carrying out the development of the business strategies. This model of analysis was developed by the Harvard School of Business Lecturer, Michael Porter. In the first case, the Five Forces Analysis looks at the possible threat that is likely to beset the company as a result of the existence and the circulation of the substitute products. These substitute products or services allow the clients to switch on to the alternative services providers, especially if the company concerned increases the prices of the services or goods.

In the above situation, the DPWN does not find itself in an advantaged position, following the fact that there are three chief competitors in the market to which the clients can switch, should there be any need- the DBS, the PIN AG, and the EP Euro post by names. In this case, the DPWN has to ensure that: there are no whimsical switching of prices; there is a clear perception of product differentiation by the clients; and that there is an overall quality performance for the DPWN over the substitutes. Failure to satiate the above measures is likely to trigger a mass exodus of customers from the DPWN to any of the aforementioned postal services companies.

In the second case, the DPWN has to analyze the threat that may come in as a result of new competitors entering the market. In this situation, the DPWN has to ensure that it performs well since the firm that gives out the highest returns has the ability to draw other firms. The situation is not likely to auger well with the already existing firms, given that the entrance of a new dealer effectively leads to the mitigation of the profitability for the incumbent firms.

The mater also is likely to usher in a downward trend as the profits are bound to fall from a competitive level. In this type of situation, the DPWN is not advantaged, given the entrance of the TNT that has come about with radical profiteering methodology such as the One Stop Shop. This One-Stop Shop discharges all the postal services based on the value proposition.

The third force involves the analysis of the magnitude of the competition in the market. Herein, the DPWN is not in a bad position because the number of rivals in the market is relatively low- not more than four. The fourth force that is looked at when analyzing the strength of a business is by looking at the bargaining power that the clients possess. At the moment, the DPWN enjoys this since the buyers are known to have a lot of information on the services that are being provided by the DPWN.

Conversely, the fifth force that must be factored in a while considering the strengths and weakness of the DPWN business entails looking at the suppliers’ bargaining power, a factor that is also known as the market input. Although the substitute inputs may falter the marketability of the DPWN yet, the DPWN still stands a huge chance of making it, given that DPWN has a very high rate of inputs differentiation. At the same time, the advantage that DPWN has over its three main peers is that, unlike its peers, it has a relatively lower cost of inputs compared to the selling price of the DPWN services.

Discussions on the aspirations of the DPWN’s key shareholders and how these aspirations affect the strategies of the DPWN

The aspirations of the DPWN principal shareholders have been to realize a minimum of 10% of the units of shares that had been bought. This is, however, as far as the preference share is concerned (the preference shares are fixed both in terms of time and the rate at which the shares are to be calculated). On the other hand, it is the common shares that are not fixed in terms of both the time in which the shareholders are to be reimbursed and the rate at which the dividends are to be calculated.

While there are no limitations that have been placed on the rate at which the dividends of the common shares are to be returned, the common shares still have more bearing on the adoption and implementation of the business strategies of any business (Lucks 2007 pp 78).

In the first case, the shareholders, having plowed in their money in return for an anticipated profit, generally and automatically put a lot of pressure on the managers and the directors of the DPWN to work with a spirit of dexterity so that this postal services providing company can realize more profit. The realization of profit for the DPWN or any business entity is a matter of pivotal importance, given that it is this profit that will enable the management of the DPWN to pay back the shareholders.

The gravity of the matter can be seen in the fact that failure to pay back the shareholders leads to the liquidation of any business entity. The liquidation of a firm entails the selling of the assets of the firm so as to pay off the shareholders (Vincente 2006 pp. 98).

At the same time, there is a more direct way in which the shareholders and their expectations affect the strategies of any business entity or the DPWN for this matter. According to Ashby et al. (2002 pp 91), This is due to the fact that the common shareholders have the right to vote so as to support the implementation of the dispatching of any business entity or the DPWN.

Thus, any business strategy that the DPWN ratifies is a result of thorough consultation and the subsequent passing on of the business strategy bills by the common shareholders through a plebiscite. This ensures that only top-quality, effective, feasible, and comprehensive strategies are passed through, ratified, and adopted by the DPWN Company. The whole provision is an artifice to ensure that the DPWN realizes profit and at the same time, operates within the legal framework of the company (DPWN).

In the same wavelength, the shareholders have the capacity to check against the excesses that may be carried out by the top-ranking management or the DPWN’s board of directors. This, the shareholders take to achieve by periodically and regularly referring to the DPWN company’s records of accounts, against the profits and the activities that are undertaken by the company (Geddes and Morris 2004 pp 100). At the same time, the management remains individually liable and answerable to the shareholders. The shareholders’ strength and authority are also pegged on the fact that the board of shareholders has the authority to ensure that the management and the board of directors, in their scope of operations, stick to the legal framework and policy guidelines of the DPWN.

References

Ashby, D. M. et al., Top leaders on corporate strategies, Ohio, Macmillan, 2002.

Crew, M. and P. Ray, Postal delivery systems on competition, Michigan, Michigan University Press, 2003.

Dorrenbacher, C., The reorganization of the corporate sector, New York, Buttersworth Press, 2006.

Geddes, R. and D. E. Morris., Postal Services Company and the anticompetitive behavior, Ontario, John Wiley and Sons, 2004.

Kothari, J. and E. Barone, An international approach to financial accounting, Michigan, Michigan University Press, 2003.

Lucks, K., Mergers and Acquisitions: the opportunities and pitfalls, New York, McGraw Hill, 2007.

Lynda M., Postal services business: The needed strategies, New York, John Wiley and Sons, 2005.

Plunkett, J.W., The supply chain logistics and transportation, US, Plunkett Publishing, 2006.

Rouzi, R. and L. Anderloni, Postal systems: modernization and privatization, New York, Prentice-Hall, 2002.

Traffic Services Corporation, Business analysis: an independent transportation system for magazines, Harvard, Harvard University Press, 1999.

Vault Editors, Laying down the business management strategies, US, Vault Editors, 2007.

Vincente F., Business strategies and international businesses, New York, Buttersworth Press, 2006.

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