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124278340 Ups Vs Fedex Final 1 Essay

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Describe the competition in the overnight package delivery industry and the strategies by which these two firms are meeting the competition.

FedEx:
Innovation
Broke into air freight market through purchase of own fleet of planes Competitors typically used space available on commercial flights Implemented hub-and-spoke distribution pattern (key innovation) Operational leader (Malcolm Baldridge National Quality Award) “Absolutely, Positively Overnight”

Company philosophy – People-Service-Profit
Emphasis on customer service
Total quality management
Employee participation
Reputation as good place to work, helped keep out unions
High capital investment to expand operations and services
Technological innovation – Greater monitoring and control of customer ordering, package tracking and process

UPS
Dominant firm in industry until entry by FedEx
Expanded capabilities to be able to deliver to any address in the world Emphasis on efficiency – route monitoring and control
Went public in 1982 to raise capital to compete in the overnight delivery market Large scale acquisitions of planes, trucks to expand capabiltiies Expanded through acquisition
Purchased freight carrier to expand into Latin America
Purchased MBE to expand into retail packaging/shipping/mail services market High emphasis on being low cost provider
Invested in IT, aircraft and facilities to support innovations, maintain quality and reduce costs

What are the enabling and inhibiting factors facing the two firms as they pursue their goals? Enabling Factors:
FedEx:
Deregulation – Enabled FedEx to enter market
Size – Large enough to take advantage of economies of scale Innovation – Hub & Spoke, maintaining own plane fleet
Technology – Tracking, monitoring
Operations – “Absolutely Positively Overnight”, Awards Employees – Non-union, employees involved in process
Large portion of costs are fixed, so increases in revenue go directly to bottom line

UPS:
Size – Dominant firm in express package industry, economies of scale, existing worldwide presence Technology – Leader in logistics, route management
Finance – AAA credit rating, ability to raise large amount of capital quickly Efficiency – Low cost leader, ability to compete on price

Inhibiting Factors:
FedEx:
Financial – BBB credit rating, lower ability to raise capital Market – Domestic market reached maturity, must expand overseas Market – Unable to compete in Europe
Concentration – Primarily competes in air shipment/overnight market segment Lack of skilled workforce in China
Overall Chinese business environment (Exh 11)

UPS:
Deregulation – Opened market to competitors
Complacency – Older, established company, used to controlling market Employees – Unionized
Size – Slower to respond, shift focus
Lack of skilled workforce in China
Overall Chinese business environment (Exh ...

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