Structural Transformation Through E- Business Ezgi Öztörün Onur Okut.

Structural Transformation Through E- Business

Ezgi ÖztörünOnur Okut

AgendaA) About FedEx

1. Information About Company Establishment

2. Industry Development- FedEx Innovations (timeline)

3. Competitor Analysis

B) Structural Transformation Through E- Business

4. FedEx Problem

5. Impacts of E-Business on the Industry

6. As of January 2000 Announcement - New Implemented Structure

C) Between 2000 - 2010 FedEx

7. Evaluation of 2000 Announcements

8. Post - Implementation Strategies

D) Final Comments & Questions and Answer Session

A) About FedEx

1) Information About Company Establishment

Began operation as a customs broker in Niagara Falls, N.Y. (1903) Frederick W. Smith - Federal Express in June 1971 Officially began operations on April 17th, 1973 - the modern air/ground

express industry was born

“Since its inception in 1973, Federal Express Corporation has transformed itself from an express company to a global logistics and supply-chain management company.”

A) About FedEx

2) Industry Development- FedEx Innovations

a) The Express Transportation and Logistics Industry

3 main trends:

The globalisation of businesses

Advances in information technology and the application of new technology to generate process efficiencies

The changing market demand for more value-added services

The breakthough for the industry!

A) About FedEx

With the advent of IT, express transportation became an aggregation of two main functions:

The physical delivery of parcels The management and utilization of the

flow of information pertaining to the physical delivery

A) About FedEx

2) Industry Development- FedEx Innovations

b) The FedEx Innovations (timeline)

1979 COSMOS (Customer Oriented Services and Management Operating System) 1984 PowerShip 1985 Bar-code Labelling 1994 FedEx Website 1996 FedEx interNetShip 1999 Partnership with NetScape

A) About FedEx

3) Competitor Analysis

To competitiveness of transportation companies depended upon 3 factors: Their global network of distribution centers Their ability to delivery wherever their customers conducted business Speed- in order to avoid from the effects of rising inflation and global

competition

The 4 leading companies - UPS,TNT,DHL and FedEx-

held more than %90 of the worldwide market

A) About FedEx

Strengths:

1) global scale

2) new technology

3) strong brand image

Weaknesses:

1) prices

2) labor disputes

Opportunities:

1) global expansion

2) joint-ventures

Threats:

1) relations with foreign countries

2) world economic and political conditions

SWOT Analysis

“Although FedEx pioneered the Web-based

package-tracking system such systems became the industry norm rather than a competitive

advantage”


1) FedEx Problem

After the acquisition of Calibar Systems Inc. in 1998 Compatibility problem between Caliber and FedEx’s logistics UPS’s competitive advantage FedEx- confused customers Effects of rising fuel prices in 1999 Pressure to re-think its business strategy and its supply-chain channels


2) Impacts of E-Business on the Industry

The effects of the internet on express transportation and logistics market was twofold:

Opportunities in logistics management -using the internet through engineer their supply chain.

(Integration with customer supply chains was the key) The express transportation needs presented enourmous opportunities for companies

such as FedEx.

(Growth in e-tailing and business to business (B2B) e-commerce)

By integrating these e-business trends, FedEx renovated its structure to get rid of duality problems in

supply–chain organizations


A new branding strategy-extending the FedEx brand to four of its subsidiary companies:

FedEx Express (formerly Federal Express) FedEx Ground (formerly RPS) FedEx Custom Critical (formerly Roberts Express) FedEx Logistics (formerly Caliber Logistics) Viking Freight (no change in 2000 however changed in

2002 and became FedEx Freight)

3) As of January 2000 Announcement - New Implemented Structure


FDX Corp.

Federal Express RPS FDX

Logistics

FDX Supply Chain Services

Caribbean Transportation

Viking Freight

Roberts Express

FedEx Corp.

FedEx Express

FedEx Ground

FedEx Home Delivery

FedEx Logistics

FedEx Logistics

Caribbean Transportation

Viking Freight

FedEx Custom Critical

FedEx Trade Networks

At the end of 1999

January 2000 Reorganization


Introduction of a new low-cost residential delivery service - FedEx Home Delivery Changes for B2B solutions Growth in consumer e-commerce (B2C e-tailing)

BEFORE

Multiple brands

Separate sales force

Multiple invoices/ accounts

Multiple automation

Separate customer service

AFTER

Single branding

Single sales force

Single invoice/account

Streamlined automation

Single customer service

Was the January restructuring going to bring the harvest?


1) Evaluation of 2000 Announcements

Did it provide the right ingredients to achieve the objectives of creating value for FedEx customers while at the same time improving profitability for FedEx?

Return on Sales Ratio

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

UPS

FedEx

Linear (FedEx)


1) Evaluation of 2000 Announcements

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

0

10000000

20000000

30000000

40000000

50000000

60000000

UPS

FDX

Sales Volume - Revenue

In short term, new transformation of e-business and January 2000 announcements did not have a great impact on the profitability.


2) Post - Implementation Strategies

Given the speed at which technology and the marketplace were changing, would the new organization structure be adaptable to the FedEx’s business?

Restructuring of some of the subsidiaries such as Viking Freight and Home Delivery Services via B2C e-commerce modal completed in 2002

After the restructuring process completed, the FedEx Corp. preferred to grow with the acquisitions.

D) Final Comments

The primary reason for the transformation in 2000 was the result of acquisition strategy. FedEx, however, grew after 2003 with acquisitions. We believed that this acquisition oriented strategy can create new compatibility problems again and affect FedEx’s performance negatively in long-run.

The adaptation problems of FedEx can easily be solved if our expectations will realize. FedEx implemented an integrated system(like FedEx Corp.) The acquisition strategy should always be complemented with integration strategy.

The problems in supply-chain of FedEx was solved with the support of internet technology. Since 2000 transformations, FedEx renovated itself with e-commerce applications such that B2C was a new idea for FedEx, unlike its competitor –UPS.

D) Questions and Answers In 2000, FedEx did not only combine its subsidiaries but also transform its supply

chain systems. What factors gave rise to the structural transformation of FedEx?

Fill in the blanks:

______became of significance to achieve competitiveness, not only for the transportation companies but also for their in ____________________industry.

True or False?

After the 2000 implementations, FedEx did not anticipate to meet needs of businesses specializing in B2C e-tailing.

Speed

The internet forced the company to consolidate its supply chain systems and solutions as customers demanded global solutions . Customers were confused because of decentralized structure of FedEx. Integration with customer supply chains was the key.

customersexpress transportation

False

THANKS FOR YOUR ATTENTION

Structural Transformation Through E- Business Ezgi Öztörün Onur Okut.

Documents

fedex problem

fedex website

fedex internetship

fedex strengths

netscape slide

logistics industry

physical delivery slide

competitive advantage