fedex case analysis

Federal Express is the world’s largest package delivery company today. They have been successful
mainly because of their technological advancements. Technology has allowed them to have superior
customer service and quality that was unparalleled by any company. No company was able to offer
overnight delivery of packages with the speed and precision that Federal Express did. Although Federal
Express remains ahead of its competition today, their advantages over other firms in the industry are
slowly diminishing.

FedEx’s modeling capability gave them a competitive advantage as they implemented new
methods and technology. They currently have a SuperHub with several regional hubs and packages are
managed and tracked by a system called COSMOS. This system allowed customers to know where their
packages were at all times and was later integrated for web use, allowing customers to track packages
over the Internet. Today, UPS also allows customers to track packages over the Internet and has
improved customer service. I would assume that they have developed a mainframe similar to that of
FedEx to decrease FedEx’s competitive advantage. The United States Postal Service, which has lower
rates, has also increased their customer service and quality. FedEx must find new technological
advancements to stay ahead of the competition in the package delivery industry.

However, expanding into different businesses seems to be one of the strategic directions of the
company. This direction is driven by increased competition in their current industry. New businesses,
such as logistics, will have wider margins for FedEx and help them to increase revenues and profits. Also,
FedEx should continue to expand and invest in the international market because it is growing at a rate
faster than that of the domestic market. FedEx spends a lot of money on improving their technology,
which has proven to be successful in the past, but their key to success today is expanding into new
businesses and the international market.

FedEx’s financial statements shows that its assets have not been utilized as well as other firms in
their industry, but their profitability is better than other industry firms. Still they must decrease selling
and administrative expenses while increasing sales. Although, many of their technological advancements
have been financed primarily with internal cash, which decreases long-term debt. Future assets possibly
and should be invested in the international market and new businesses, while still investing a decent
percentage for technological advancements. Today FedEx has a competitive advantage over other firms
and if they continue the practices that they have in the past, while also opening up to new ideas, FedEx
will remain a powerhouse in the package delivery industry and maybe become a leader in another.

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