The battle for value: Federal Express Corporation versus
United Parcel Service of America, INC.
Introduction
In this paper I will discuss the case ‘The battle for value’. I will answer the next three questions:
1) What is the background of the industry and both companies FedEx and UPS? ... FedEx entered the market en was able to built a very efficient distribution system based on innovation, their ‘hub & spoke system’ (realised by buying airplanes in stead of using commercial flights) and quality meeting the changing demands of customers.
The market-circumstances changed and FedEx was able to make use of it. ... FedEx was the first company that was able to offer it on a large scale, thanks to new technology available and their innovation-capacity. FedEx also offered new services.
FedEx was profitable as of 1976. ... UPS was another one. They all were trying to copy (and improve) the model of FedEx.
UPS was the largest transportation company in the USA with a long tradition. ... UPS excelled in efficiency and thereby was known as a low cost provider and could built on a strong financial position (this reflected in AAA bond rating). Starting in the mid-eighties, UPS turned itself into a company which invested heavily in information technology, aircrafts, facilities to support service innovation, maintain quality and reduce costs. ... At the end of 1994 FedEx realised revenues of USD 8,5 billion in the air express segment (a 45 % market share). ...
Swot analysis
FedEx UPS
Strength Innovative Strong financial positionEfficiency: specific procedures and protocols for package deliveryBroad position: only 27% of revenues derived from air express
Weakness Depending on air express segment onlyFinancial position Bureaucracy Replicator, no innovator
Opportunities DeregulationGrowing demand for ‘just in time’ deliveryTechnology: moving information in stead of packages only
Threats Low cost of entry (copying of innovations by competitors) Changing world, changing demand at a speed that might be too high to compete with
Strategy
Strategies that would make sense are built on your strength, make use of opportunities, eliminate your weakness and prevent threads
FedEx
How does FedEx compete?
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