1.

UPS AIR CARGO- provides Ireight Iorwarders direct, airport-to-airport

deliveries to over 150 strategically located airports around the world
2. UPS AVIATION TECHNOLOGIES- develops and produces award-winning
products Ior airlines, corporate operators, general aviation, and air traIIic co
ntrol.
3. UPS CAPITAL CORPORATION- is the supply-chain Iinancing arm oI UPS.
4. UPS CONSULTING- helps your to optimize your supply chain.
5. UPS MAIL INNOVATIONS- OIIer clients Iaster First Class mail service at a low
cost.
6. MAIL BOXES ETC., INC.- delivers convenient, personalized business solutions
through a worldwide network oI independently owned and operated business,
communication, and shipping centers.
7. UPS PROFESSIONAL SERVICES- delivers strategic business solutions by
leveraging innovative technologies, expert Iinancial analysis and time-proven
logistics know-how.
8. UPS in their
technologies have had a direct impact on their global distribution enabling them
to be
more eIIicient.
Financial Ratios :
DHL doesn`t publicize their Iinancial inIormation because they are a private
company. However, the Air Express Industry is proiected to grow at an annual rat
e oI
6.7 Ior the next couple oI years. DHL is the largest international carrier and th
eir sales
and annual revenues have increased to around 5 billion dollars. DHL also has 40
oI the
market and that should increase through the next couple oI years. SWOT Analysis
For
DHL
SWOT analvsis.
Strengths:
-Market Leader- Invented the Air Express Industry
-Number one in the International Air Express Industry
-They had a head start in the business, pioneers in virtually all oI
the
international countries.
-DHL owns a licensing customs broker
- This is an advantage Ior DHL because they don`t have to use other local
or
international customs agent.
-Can clear customs Iaster allowing shipments to avoid delays
-Name Recognition (When you have a package to deliver, people say DHLit)
25
-Operating Advantage: because they use Ilag carriers Ior international Il
ights
-Integrators-they oIIer shippers standardized, integrated, onestop servic
e
Irom pickup to delivery by using their own ground collection and delivery
vehicles, operating dedicated aircraIt Ileets using superhub airports away
Irom congested passenger hubs Ior consolidation and re-directing
shipments
Technology- First company to use the Internet and build a Global Network.
-First company to use a high speed TCP communication network.
-Invested heavily to give customers what they want
-Tracking available on web-site Ior customers to see where their package
s
are.

- Known as the pace setters because they open new Iacilities

Weakness
-DHL represents less than 2 oI the national market share.
-Maior competitors (FedEx) operate and run most oI the United States
-Growth demand- they cannot keep up.
Opportunities
-Build up the Stateside (national) to increase the market share.
-Expand into more countries
-Build more oIIices, hubs, and airports
-Buy more planes and trucks to deliver more packages Iaster
-Buy out some oI the smaller competitors to increase their market share
-Update and renovate hubs and airports
-Start delivering more heavy weight cargo
-Improve ground delivery with new vans and scanners
-Newer distribution and logistic services
-OIIer cheaper prices to keep customers Irom using competitors
-Joint Ventures with Continental- DHL owns air craIts bust DHL
leases them
to Continental
Threats
- Competitors- oIIer cheaper prices, Iaster travel time.
- Customers stop buying products and there would be a decrease in this
industry
-Gas Prices can rise and this could have an impact on the prices

26
United States Postal Service Case Analysis
External Environment
General Environment
Demographic:
Every person and business in the United States uses the US Postal Service. Mail
is a part oI everyone`s everyday liIe no matter what part oI America they are l
ocated in.
People oI all diIIerent ages, races, and economic classes use it.
Economic:
During economic Iluctuations in things such as inIlation rates, interes
t rates and
gross domestic product there is not much eIIect on the US postal service. The U
S Postal
Service is a necessity Ior most businesses and people. During recessions people
still need
to have their mail delivered and still need to send out mail.
Howe
ver, there may be a
small eIIect on the package delivery services part oI this industry d
uring a recession
because iI Iewer things are being purchased then Iewer things will need to be de
livered.
Political/Legal:
Considering that US Postal Service is a part oI the US Government there has not
been any signiIicant legal or political changes that have Iorced the US posta
l Service to
change the way it operates its business. However, a while back the Postal Reorg
anization

Act oI 1970 was 'designed to transIorm the Postal Service Irom a bureaucracy sub
sidized
with tax revenues into a businesslike entity supported by postage paid by users.
27
Socio-cultural:
Seventy-Iive percent oI all light duty vehicle acquisitions have to b
e alternative
Iuel vehicles as required by the Energy Policy Act oI 1992. The US P
ostal Service has
created many programs that recycle, reduce and reuse many oI the signiIicant res
ources.
Technological :
'Technological innovation is driving changes in postal markets and oper
ations.
Things like the Internet have presented other ways Ior people to pay bills an
d send mail
other than through the Postal Service.
Technological innovations help
the Postal
Service`s organization and can decrease the time it takes Ior delivery.
Global:
Mail and packages that cross borders into other countries may require
certain
inspections. Some countries may also have other regulations on international ma
il. Due
to recent terrorist attacks, the security oI packages and mail entering America
has become
a bigger issue.
Internal Analvsis
Organizational Culture and Leadership:
One extremely important part oI the US postal services culture is the Iocus on i
ts`
relationships with their customers and employees.
Listening to the vo
ices oI the
employees and customers the USPS has a much better idea oI the consu
mer demands
along with ideas oI better ways oI running the organization. One thing that the
y learned
Irom listening to the consumer is that consumers actually value reliability more
than they
do speed. The USPS also Ieels strongly that the employees should make a stro
ng eIIort
in the career development area.
They want the employees to work the
ir way up in the
28
company through hard work and dedication rather than staying at the same caree
r level.
Lastly, the USPS Iocuses a lot on technological innovations.
Internal
ly they make a
strong eIIort to stay updated with the latest technology in order to keep the op
erations oI
the organization eIIicient and quick.
Organizational structure :
The USPS is divided into three maior sections. First is the mail delivery servi
ce,
which Iocuses on getting mail delivered to and Irom people through ou
t the world.
Second is the shipping service, which Iocuses on getting packages, del
ivered to
consumers and businesses quickly and eIIiciently. The last and newest part oI t
he USPS

is its online services, which allow customers to setup such things as

deliveries and bill
payments over the Internet making liIe easier Ior the customer. Through out all
three oI
these sections there is a wide variety oI diIIerent categories oI workers such
as delivery
people, maintenance people, corporate employees, internal people, and te
mporary
employees. Each one oI these categories contains many diIIerent employees with
many
diIIerent iob titles and skills.
Financial Ratio Analysis 1999:
Total revenues 62,726,000,000
Net Income 363,000,000
Total assets 55,693,000,000
Total liabilities 56,120,000,000
Net Cash flow 2,912,000,000
Due to the Iact that the United States Postal Service is run and operated by the
US
government many oI the Iinancial ratios are not available Ior this organization
that are Ior
29
many oI the competitors.
However, inIormation that was attainable Iro
m the balance
sheet and income statement seemed to be extremely high.
It would pr
obably unIair to
compare these numbers to the other packaging and shipping competitors
since the US
postal service is part oI the government and they are including the mailing serv
ice, which
is not part oI any oI the other shipping companies.
Core Competencies and Value Chain Analysis:
One thing that really helps the US postal service add value is the
Iact that it
delivers all the mail throughout the United States. Pretty much everyone uses th
is service
provided by the US Postal Service giving him or her a competitive advantage over
other
packaging services. One thing that they believe really adds value to their busi
ness is their
reliability and consistency. The US postal service also Ieels that the consumer
values the
saIety and security it gets with the US postal service. Lastly, the new develop
ment oI the
online service part has beneIit to the organization too.
SWO1 Analvsis
Strengths
N Competes in the overnight package delivery business with its Express Mail next
day service, which guarantees delivery to the addressee the Iollowing day by 3:0
0
p.m
N Postal Service statistics show that 95 percent oI its shipments arrive on time
N USPS has used technology to transIorm mail sorting and delivery, provide new
services, and become a 'dot-com
N Good reputation Ior being secure and trustworthy with mail and/or packages
N External First-Class Mail delivery scores, as recorded by Pricewaterhouse
Coopers, showed that 94 percent oI First-Class Mail destined Ior next-day
delivery received overnight service

1
N Achieved best overall perIormance Ior on-time local First-Class Mail delivery
by
achieving national record average high oI nearly 94 in two quarters, with more
service areas included in the sample than ever beIore
1
N 479:30 magazine Iound the Postal Service to be one oI the 10 best workplaces
Ior minority employees
N Mail volume in 1999 Ior the Iirst time exceeded 200 billion pieces
1
N Fully 93 oI the nation's households at the end oI the year rated their overall
satisIaction with the Postal Service as excellent, very good, or good
1
N Delivery ConIirmation launched nationwide in March
N The Postal Service launched a new website in March 1999 to help businesses
enhance their sales and marketing results through direct mail at
www.uspsdirectmail.com
Weaknesses
N With the growth oI the Internet, where customers can send electronic mail and
conduct business online, the Postal Service has lost some oI the monopoly power
N Must diversiIy, meaning USPS must change signiIicantly to meet customer needs
in a cost-eIIective manner
N The growth rate in Standard Mail is expected to slow
N Security measures to prevent Iraud, waste, abuse, and mismanagement have to be
improved
Opportunities
N Worked more closely with customers to identiIy ways to better meet their needs
and expanded customer conveniences
N Continued support Ior rates reIlecting customer work-sharing Ieatures, many ti
ed
to automation, to give customers more Ilexibility
N Reduced the oIIicer corps by nearly one-halI, eliminated layers oI management
to
speed decision-making, and trimmed overhead positions by nearly one-quarter
which intensiIied its drive Ior competitiveness
N Introduced PC Postage nationwide, allowing digital postage that can be purchas
ed
and printed on personal computers
1
N Priority Mail Global Guaranteed
TM
service an alliance with DHL Worldwide
Express, Inc. launched in April, provides day-certain delivery guarantees to 65
countries around the world
1
Threats
N Had a near monopoly on delivering mail and merchandise, until other services
such as UPS and FedEx, had taken customers away Ior some oI the most

proIitable activities, like priority mail

N The rise oI Iax machines, electronic communications, and other technologies
oIIered alternatives Ior conveying bills, statements, and personal messages
2
N Entrepreneurs and publishing companies set up alternate delivery networks in a
n
attempt to hold down the costs oI delivering magazines and newspapers
2
N Many third-class mailers, Iinding their mailing budgets reduced and their post
age
rates increased higher than expected, began shiIting some oI their expenditures
to
other Iorms oI advertising, including cable television and telemarketing.
2
N Private companies continued to dominate the market Ior the urgent delivery oI
mail and packages
N Several Ioreign-mail delivery Iirms are petitioning Congress to allow them to
compete with USPS to deliver American mail
N The U.S. trade deIicit remains large, unemployment is extremely low, and
consumer spending continues to be extremely high. These and other recent
economic data indicate that there may be an increase in the inIlationary pressur
es
that have remained largely dormant in the economy during the recent expansion
oI the USPS
Ceneric Strategv
Competitive Advantage
Cost
Uniqueness
Broad Target
Competitive
Scope

Narrow Target
Recommendations:
The U.S. Postal Service's mission is to deliver the mail Iairly and aIIordably t
o
every home in the country, and on a nondiscriminatory basis. "The Postal Servic
e shall
have as its basic Iunction the obligation to bind the Nation together through th
e personal,
educational, literary and business correspondence oI the people. It shall provid
e prompt,
reliable and eIIicient services to patrons in all areas and shall render postal
services to all
communities."
3
That mandate appears in the very Iirst section oI the United States Postal

Code. The USPS secrets oI success include: Keeping costs down to compete agains
t
competitors such as UPS, FedEx, DHL, and TNT. This includes quick turnover oI m
ail
Cost Leadership

DiIIerentiation
Focused Cost
Leadership

Focused
DiIIerentiation
Integrated Cost
Leadership/DiIIerent.
32
coming and going, and using the latest technology to increase the speed oI trans
actions.
Focusing on customers is always important, as keeping the customers happy will a
llow
Ior brand loyalty in not switching to other competitors. The United States Post
al Service
has to understand what it is going to take to be competitive, to meet the needs
oI the
marketplace, and then to try and exceed those and set tough targets. They shoul
d listen to
their customers and try to diversiIy in an area where competitors are close in o
perations.
TNT Case Analysis
External Assessment
General Environment
Economic:
The economic part oI the general environment includes high gas prices, rising
inIlation, and global competition. This is both a threat and an opportunity. T
he rising
inIlation and global competition gave rise to greater pressure in business to mi
nimize the
costs oI operations, which is an opportunity to the company. However, the risin
g in gas
prices along with rising inIlation also poses as a threat to the company.
Regulatory:
The regulatory and political aspect oI the environment includes the deregulation
oI the trucking and airline industry as well as the trade deregulation in the As
ia paciIic.
Technological:
For technology opportunities, the Internet is growing and provided Iaster and
improved technological skills. Also the InIormation Technology is rapidly impro
ving.
Another threat is competition, which is a global Iactor.

33
Competitive Environment
The competitive environment is made up oI the liIe cycle stage, competitors, key
success
Iactors, and Porters 5 Iorces. TNT is still in the growth stage oI the liIe cyc
le. There are
Iew competitors in the postal service and delivery industry. Some oI TNT`s comp
etitors
include FedEx, UPS, DHL, and the US Postal Service. Some oI TNT`s key Iactors I
or
success are its tracking system, on time guarantee, and online availability Ior
customers.
Using Porter`s 5 Iorces, we identiIied TNT`s competitive advantage. First, the
threat oI
new entrants is low because it is expensive to start up a maior shipping company
. Second
is the bargaining power oI suppliers. Like FedEx, the computer company used pla
ys a
maior role in the success oI the company. Without this company, TNT would not h
ave
its tracking system, which they are well known Ior. Next is the threat oI subst
itute
products, which would be a new competitor. But the chance oI this is low due to
the
amount oI money needed to create a new company. TNT is Iound mostly in European
countries. II another European shipping company were to start up, it would be m
ore oI a
threat then iI one started here in the US. Last, is rivalry among competition.
Internal Assessment
Nature oI the Firm:
TNT`s strategy is built onvalue-based management, a philosophy Ior managing
the business drivers that maximize total shareholders returns. Value-based manag
ement
emphasizes the alignment between management`s strategic targets and shareholders
`
requirements Ior superior sustainable perIormance. It Iocuses on improving the I
uture oI
perIormance oI TNT and emphasizes the importance oI proIitable decision-making
(www.tnt.com). The strategy consists oI a balanced portIolio oI strong business
strategies
34
in Mail, Express and Logistics. They strive to deliver signiIicant enhancement i
n
shareholder value and to strengthen their position as one oI the leading busines
s service
companies in their peer group.
Mail Strategv
TNT`s ambition is to become the leading provider oI business and consumer
services Ior communication, transactions and delivery. They want their mail oper
ations to
be recognized as the industry benchmark Ior quality, eIIiciency and customer ser
vice Ior
producing the best returns in the industry and Ior making optimal use oI new tec
hnologies
and European postal market liberalization (Grant 471).
Their strategy is based on three key elements (www.tnt.com):
4 In the Netherlands, their Iocus is on the retention oI their current margins
and proIit levels by implementing cost Ilexibility measures. This ensures

that they can match a potential reduction oI volumes with a corresponding

decrease oI cost.
4 Internationally, TNT continues to expand along three tracks:
4 Their European Mail Networks oIIer addressed, unaddressed and
segmented distribution solutions Ior direct mail, brochures, leaIlets and
samples with an excellent price/quality ratio.
4 They continue to strengthen their European position through alliances with
other organizations and postal operators.
4 Their ioint venture with Consignia and Singapore Post cross-border mail
services on a global scale.
4 In addition to out core Mail products, they continue to develop Data and
Document Management services, such as direct and interactive marketing
services and services Ior managing physical and electronic inIormation
Ilows, and to create an inIrastructure Ior business process outsourcing
around these services.
Express Strategv
TNT`s aspiration is to be the best and most successIul door-to-door express
delivery company. They are the leading player in the European market with a glob
al
reach. They strive to achieve their ambition by being the Iastest and most relia
ble
provider oI express delivery services.
The strategy is based on eight key elements (www.tnt.com):
4 Provide customers with a unique range oI same day, in night, over night
and Iastest by air or road business-to-business express delivery services.
4 Increase the number oI clients trading with the organization by selling nodiscount simpliIied contract rate agreements that oIIer value Ior money
and enable the organization to generate superior returns.
4 Equip employees with leading edge support technology and all other
necessary tools to Iully satisIy customer needs.
4 Improve line-haul connections to achieve Iaster and more reliable transit
times.
4 Strengthen the TNT brand and increase awareness oI the range oI ondemand round the clock express delivery services provided by the
company.
4 Integrate national and international express delivery services where
appropriate to secure the Iastest door-to-door transit times in the industry.
4 Work everywhere with the Investor in People standard and constantly
improve quality through use oI the European Foundation Ior Quality
Management excellence model on a worldwide scale.
4 Operate with a uniIorm set oI best practice processes that enable us to
provide consistent and continuously improving on-time delivery
perIormance by adopting right Iirst-time approaches in every part oI the
business.
Logistics Strategv
The ambition oI TNT is to be the recognized worldwide leader in targeted
industry sectors by designing, implementing and operating complex supply chain
solutions, exploiting inIormation technology to achieve integration and visibili
ty
throughout the process. The obiectives are to achieve operational excellence, gl
obal
coverage and leadership in targeted sectors.
Their strategy includes Iive key elements (www.tnt.com):
4 They continue to strengthen their position in targeted sectors by selective
acquisitions in order to Iill white spots in our global coverage.
4 They will diversiIy their customer base by growing the number oI
customer in the Iast-moving consumer goods and hi-tech electronics
sectors.

4 They have put in place speciIic proIit and growth programmes with a
Iocus on business development and operational excellence.
4 They plan to develop critical mass in distribution networks Ior targeted
sectors with Ireight Ilow capabilities in Asia and North America.
4 Their technology strategy aims to deliver true competitive advantage by
establishing competency centers that supply speciIic expertise across the
entire division.
Organization Structure:
The activities oI TNT Post Group operate in three divisions. The three divisio
ns
are Mail, Express and Logistics. There are seven business units and three operat
e in the
Mail division. The Express division has twelve, while there are nine in the Logi
stics
division.
The board oI management is made up oI Iive individuals. The CEO and chairman
is Peter Baker. He was appointed chairman and CEO as in November oI 2001. Jan Ha
ars
is CFO. He ioined the company in August oI 2002. When coming to the
company he
brought with him more than twenty-Iive years oI international business
experience.
Group Managing Director Express is Alan Jones. He is responsible Ior all TPG`s E
xpress
Activities. Harry Koorstra is Group Managing Director oI Mail. Roberto Rossi i
s Group
Managing Director Logistics. He is in charge oI all Logistics activities (www.tn
t.com).
To help make the organization better, TNT simpliIied its structure by Iocusing o
n
three core areas: international express delivery, domestic express delivery, and
TNT`s
contract business with maior manuIacturing Ior the delivery oI goods in certain
sectors.
Assets not Iitting into theses core areas became candidates Ior divestment. TNT
during
this time reached an agreement with rival Federal Express whereby it would subco
ntract
the delivery oI inbound FedEx packages to ten European countries (Grant 475).
38
Value Chain Analysis :
There are a number oI activities in the TNT`s operations that create value Ior
the
company. Some oI them include the Iollowing. They are the Iirst company to achie
ve
worldwide recognition as an investor in People organization. They also oIIer a u
nique
integrated pan-European and domestic Express delivery. There are the number one
logistics provider to the automotive industry in the world and key provider oI L
ogistics
services to the electronics and pharmaceutical sectors. There were also one oI t
he Iirst
adopters oI Internet based tracking and ordering systems (www.tnt.com).
(Back to FedEx )
Key Success Factors:
Key success Iactors in the parcel delivery industry are technology, marketing, a
nd
globalization. Technology is important because it allows the companies to compet
e and

be better than one another. It helps attract customers and helps to create the r
evenue Ior
the companies. FedEx competes in this area by having at racking system and is av
ailable
online Ior customers. Marketing also plays an impotent role in the industry. Mar
keting
need to portray the company as one they can trust. Plus the customers need to be
aware oI
the company name and the services they provide. To help build the brand name, Fe
dEx
oIIers an on time guarantee.
Porter`s 5 Forces:
Threat of New Entrants: The threat oI new entrants is low in the parcel industry
. It is low
because it is very expensive to get involved in the industry. Starts up costs ar
e high. It is
expensive to have the services that are equal to that oI FedEx and the other com
petitors.
39
Bargaining Power of Suppliers: The bargaining power oI suppliers is high. It is
high
because when looking at the items that the parcel industry use such as, planes,
computers,
and vehicles. II FedEx is not on good relations with these people, the costs can
increase
drastically.
Bargaining Power of Buvers: The buyers have a very strong bargaining power. They
have the ability to switch their user to one oI the other members oI the industr
y at any
time. It is the iob oI FedEx to make sure that the customer is always happy. It
comes as
no extra cost to the buyer to switch their parcel delivery company. The only los
e that is
really suIIered comes at the expense oI the company Ior losing a client.
Product Substitutes: It is very easy to substitute a delivery service. There are
not many
out there but the ones that are well established in the eyes oI the customer and
the
industry. It would not be a complex task to switch one company Ior another. Sinc
e this is
the case, FedEx has to maintain good customer relations with their clients.
Intensitv of Rivalrv: The parcel industry is an intense industry. There are Iive
main
players in the industry competing Ior market share. The Ieatures that they are c
ompeting
on are the speed oI delivery, the eIIiciency oI the delivery, and prices. II you
can create a
successIul mix oI the three oI those Iactors, you will hold the greatest market
share.
Internal Assessment
Culture and Leadership:
Fred Smith, the creative leader oI FedEx, instilled that wherever busi
ness is
conducted, the use oI FedEx`s core values is an important ingredient
to success. Under
Smith`s direction, FedEx has become a maior technology user.
The use
oI IT to its
business enabled FedEx to surpass the rest oI the industry and acknowledge F
red Smith

40
as 'the visionary who Iorced his and other companies to think outside
the proverbial
one.
1
Smith`s obiective was to outsmart his competitors and attempt to gain
a
competitive advantage.
He rationed that the company 'should acquire i
ts own
transportation Ileet while competitors were buying space on commercial airlines
and subcontracting their shipments to third parties.
Even though FedEx did no
t see any proIit
until 1976, it earned the reputation oI being 'absolutely, positively r
eliable on its
overnight delivery commitments, 'an image that has become Iundamental t
o FedEx`s
overall success.
2
The introduction oI new technology allowed FedEx to install more than 100,00
0
sets oI PC`s with its own soItware allowing customers to be linked and logged in
to their
ordering and tracking system in the early and mid 1980`s. The emergence oI PC`s
loaded
with FedEx soItware transIormed the customer base into an electronic network. T
his was
more important because computers were still uncommon and expensive, so the use o
I this
type oI program seemed radical. 'Smith`s vision, well beIore the commercial
launch oI
the Internet, was that the inIormation about the package is iust as
important as the
package itselI. 'InIormation enables corporate customers to tighten their
order-todelivery cycle, exercise iust-in-time (JIT) inventory management, and sy
nchronize
production levels to market demand.
2
Employee perIormance is something Smith Iirmly believes in and is se
t in
providing as much inIormation as necessary to all oI his employees Ior them t
o perIorm
their iobs in an eIIicient manner. 'FedEx`s quality oI service became synon
ymous with
the quality oI the inIormation provided to its workIorce.
The 'Peopl
e-Service-ProIit
41
philosophy was exactly what Smith wanted to portray to his employees,
the company,
and the competitors.
'FedEx was the Iirst transportation company to
install computer
terminals into all FedEx vehicles, and to issue hand-held barcode scanner s
ystems to its
drivers so that real-time inIormation on package status would be available to cu
stomers.
2

The application oI these changed the way FedEx employees processed and
gathered
inIormation.
Using the Internet was another stage that FedEx Ielt could increase t
heir
production and service.
In November 1994, FedEx launched a Website t
hat included
package-tracking capabilities. Jim Barksdale, Iormer CIO and COO oI Fed
Ex, and then
CEO oI Netscape, says, 'It was the Iirst outward and visible demonstration oI a
practical,
productive use oI the Internet by a real business Ior a real business purpose.
2
One oI the
most important contributions to the Internet`s Iormative years was Smith
`s appreciation
Ior technology.
The creation oI the Internet meant FedEx could build one-to-one relati
onships
with its customers.
The corporate culture oI FedEx was based on sup
erior customer
service and displayed an attitude oI 'doing whatever it takes to serve customers
Irom the
top to the bottom. The expansion oI the Internet, thereIore, was something FedE
x could
use to enhance its customer base and create a competitive service advantage. 'I
t allowed
FedEx to not only let its customers pull real time inIormation and data into the
ir internal
systems, but also to become more involved in the internal processes oI its custo
mers.
2
'Smith`s vision and leadership has been a maior contributing Iactor in
transIorming FedEx into an e-business.
Although there was no consciou
sly planned
strategy to build an e-business, the decisions that the company made
to align the
42
organization structure with systems and processes has carved out a model Ior
building a
successIul business Ior the twenty-Iirst century.
2
Under Smith`s leadership, the core oI
FedEx`s strategy has been to 'use IT to help customers take advantage
oI international
markets.
2
However, oI greater signiIicance is its 'inIormation super highway, wh
ich
lends support to transportation logistics eIIiciency as well as selling
and supply chain
logistics solutions management. Smith summarized what he exactly wanted to conv
ey in
James Wetherbe`s book, The World on Time. The Eleven Principles that made FedEx
an
Overnight Sensation. These eleven principles underlie FedEx`s unparallele
d success.

Below are listed the Eleven principles and a summary oI exactly what
each one was
trying to express:
1) You can never. ever. do enough for vour people
Smith put people Iirst, Irom the start, knowing that service and proIits would I
ollow. The
Ilat management structure minimizes the distance between leaders and Irontline w
orkers.
This has the eIIect oI empowering the employees and expanding their r
esponsibilities.
While there can be no honest unconditional commitments to a no lay-oI
I policy, what
FedEx has done is to make a commitment to reasonable employment secur
ity. This is
done by cross-training employees Ior more Ilexibility and allow Ior the redi
stribution oI
work during slow periods. During peak workloads, the hiring oI part-ti
me workers
reduces the need Ior lay-oIIs oI Iull-time workers in oII-peak times. FedEx m
ay provide
Ilexible work hours, leave-oI absence Ior Iamily emergencies, and perma
nent part-time
work. BeneIit packages are also structured to accommodate age, health, career pa
ths, and
other personal preIerences. FedEx has a policy oI promotion Irom within, a proce
dure Ior
resolving employee grievances, which can result in the problem ultimate
ly being
43
reviewed by the CEO, executive vice president, chieI personnel oIIicer,
and two senior
vice presidents. Open communication plays such an important part in Fe
dEx that they
have set up their own internal broadcasting company, FXTV, which reports on ever
ything
Irom inclement weather, company goals, the previous night`s service lev
els, what the
competition is up to, and candid call-in programs. This is their own internal CN
N.
3
2) Evervbodv pitches in.
While everyone has their own responsibilities, the Iences are kept low
between iobs. II
someone needs help, it is always there, someone pitches. Everyone Iocu
ses on the
customer. It is not unusual to Iind senior vice presidents or Fred S
mith himselI loading
and unloading packages at the hub during the holiday season. Top executives wil
l make
personal sales calls; everyone works hand in hand to achieve FedEx`s
all-important
guarantee. When problems arise, such as the high costs oI sorting, a team oI peo
ple, a sort
worker, an industrial engineer, an IS supervisor, a courier, a traIIic
clerk, and a quality
engineer, will contribute Irom their own perspective to arrive at a suitable sol
ution. There
are times at which the customers are consulted to arrive at the best solution.
3
3) Rewards are absolutelv. positivelv evervthing

FedEx continually invites employee and customer assessment oI its opera

tion and
personnel. FedEx rewards success. On the spot recognition is more the
norm than an
exception Ior a iob well done. DiIIerent contributions win diIIerent a
wards. The Bravo
Zulu award is 'visible recognition Ior beyond perIormance. This comes I
rom the U.S.
Navy Ilags Bravo and Zulu, which means 'well done. These discretionary awards can
be
cash, theater tickets, and dinner with or without the boss, or any other reward
that stresses
recognition Ior a iob well done. Finders Keepers awards cash to couri
ers, customer
44
service reps, or anyone else who brings in new customers. There are
people who have
added as much as $1,300 to their monthly pay. Best Practice Pays is a team ca
sh award
Ior exceeding company set goals. The Golden Falcon award is Ior emplo
yees whom
customers and management have nominated Ior recognition. Five Star Awar
ds Ior
Leadership is recognition Ior individuals whose contribution helps make
signiIicant
progress towards company goals and obiectives. Star/Superstar awards are
Ior the
organizations best perIormers. This is worth 2 to 3 percent oI their
salary. All oI these
bonuses and awards are tied directly to perIormance and supporting the
company`s
obiectives. The rewards are based on what is valuable to the recipient and are n
ot tied to
any speciIic time interval. Spontaneous random timed rewards create an
air oI
unexpectation. This keeps the moment more memorable.
3
4) A winning culture has manv cultures
FedEx is Iamous Ior and known Ior its absolute dependability and its attent
ion to detail.
This is something that its customers have come to expect and are not disappointe
d. FedEx
accomplishes this by not being a mass oI bodies moving in one direct
ion but rather by
being the several parts that compose it and working together. It is
liken to an aircraIt
carrier with its many subdivisions, the pilots, the couriers, the sorters, c
ustomer service,
accounting, engineering, and management. All oI these have diIIerent subcultures
, in the
Iield, the culture is the customer, on the superhub Iloor, time is t
he culture, and in the
logistics and soItware development lab, innovation and ideas are the culture. Ea
ch microculture has something to contribute, consider support rather than suppression.
3
5) An ounce of inspiration is worth a pound of control.
45
At FedEx, they strive Ior transIormational leadership rather than transactional

leadership.
FedEx`s manager`s guide relates the Iollowing,
'A transIormational lea
der raises
subordinates` awareness about issues oI consequence, shiIts them to hig
her level needs,
inIluences them to transcend their own selI-interests Ior the good oI
the group oI
company, and inspires them to work harder than they had originally ex
pected they
would.
3
Leaders must be loyal to their employees, seek partnership rather tha
n impose
patriarchy. They must have a well-honed sense oI duty and be bearers
oI change, while
being able to take criticism as well as give it. 'Anyone who enters a FedEx mana
gement
position attends the Leadership Institute. The Institute challenges lead
ers to think
critically and deeply about issues that do not have easy answers, spe
ciIically as they
relate to leading people. This type oI education addresses the need Ior strong
leadership
that builds trust based on the dignity and respect oI every person w
orking at or with
FedEx.
4
6) The first rule is changing the rules
The U.S. Postal Service used zone and volume pricing; FedEx on the other hand
started
Iixed pricing thus simpliIying the process much to the delight oI their custome
rs. Smith
lobbied Congress to deregulate the airIreight industry, competitors shar
ed the beneIits,
and the industry grew ten-Iold. Let your competitors Iollow your lead.
3
7) Problems have positive aspects. too.
FedEx, like all other innovators, regards every problem as an opportunity. All i
nnovators
transIorm problems into opportunities. FedEx welcomes customer`s problems
as well.
Handling customer`s problems only opens the door Ior FedEx to oIIer t
he use oI their
other services while improving on their existing service.
3
46
8) Software equals savings. service. and sales.
Fred Smith has shown that inIormation is the liIeblood oI a service
company such as
FedEx. FedEx`s soItware which allows it and it`s customers to track s
hipments, has
leveraged the strengths oI its inIormation systems into a vastly proIi
table logistics
consulting business.
3
9) He who hesitates is lost (but. remember. look before vou leap).
FedEx pioneered next day service. Smith`s closest advisors thought that
it would
cannibalize their existing services. Smith argued that it would generat

e cash and
eliminate the down time between the standard overnight service and the
economical
aIternoon service. Smith`s hunch paid oII, the next day and two-day service have
grown
ever since. Do your homework, but Iollow your intuition.
3
10) Letting go is hard to do.
Sometimes intuition and spreadsheet models are wrong. Some things no matter how
good
they seem iust do not work out. Know when to cut your losses and d
o not pray Ior
miracles to save your proiect. It is like the lottery, somebody is g
oing to win it but not
you.
3
11) The image is the realitv (if vou work at it).
FedEx`s guaranteed on-time service and complete satisIaction is uncondit
ional.
Customers equate FedEx with that promise. The image the company has so meticulou
sly
cultivated helps maintain and extend its market share. The image is r
eality iI you make
it.
3
Fred Smith, through those eleven principles, has made FedEx into an excellen
t leader in
the overnight package industry. Smith leads the industry and Iollows no one. He
inspires
47
his workers by doing and providing an example by which they can Ioll
ow. FedEx
continues out in the IoreIront into the 21st century.
Organization Structure:
FedEx Corp.
FedEx
Express
FedEx
Ground
FedEx
Logistics
Viking
Freight
FedEx
Custom
Critical
FedEx
Logistics
Caribbean
Transportation
FedEx
Home
Delivery
FedEx Trade
Networks
FedEx

Corporate
Services
FedEx Express (Iormerly Federal Express) is the world leader in global
express
distribution, oIIering 24-48 hours delivery to 210 countries that comprises 90 p
er cent oI
the world`s GDP.
FedEx Ground (Iormerly RPS) operates in North America and provides bus
iness-tobusiness ground small-package delivery in one to three days.
In Janu
ary 2000, FedEx
Home Delivery was launched as a new business undertaking within FedEx
Ground to
address the growing e-tailing market.
Jiking Freight is a less-than-truckload Ireight carrier in the western
United States.
The
company employs 5,000 people, manages a Ileet oI 7,660 vehicles and 64 service c
enters
and ships 13,000 packages per day.
FedEx Custom Critical (Iormerly Roberts Express) is a surIace-expedited
carrier Ior
nonstop, time-critical and special handling shipments.
The service oII
ered has been
48
likened to a limousine service Ior Ireight.
Urgent shipments can be
loaded onto trucks
within 90 minutes oI a call and shipments would arrive within 15 min
utes oI the
promised time 96 per cent oI the time.
FedEx Logistics (Iormerly Caliber Logistics) provides customized, integrat
ed logistics
and warehousing solutions worldwide.
FedEx Logistics (the brand name)
is the parent
company oI FedEx Logistics and Caribbean Transportation.
FedEx Trade Networks was Iormed in February 2000 to provide customs b
rokerage,
consulting and trade Iacilitation solutions.
FedEx Corporate Services was Iormed in January 2000 to bring together
the sales,
customer services, public relations and IT resources.
2
'On January 19, 2000, FedEx announced a new branding strategy that in
volved
changing the company`s name to 'FedEx Corporation, and extending the 'FedEx brand
to Iour oI its Iive subsidiary companies. The intention was to take advantage o
I one oI its
greatest assets, the FedEx brand name; the name that customers can co
unt on Ior
'absolutely, positively reliable service and cutting-edge innovation.
2
Providing
customers with an integrated set oI business solutions was the pivotal
reason Ior the
renaming oI the company as FedEx Corporation. Customers wanted to deal
with one
company to meet their transportation and logistics needs.
Besides the new name branding, there were also maior reorganizations t

hat now
provide a single point access to sales, customer services, billing and automatio
n systems.
The announcement oI the Iormation oI a seventh subsidiary called FedEx
Corporate
Services was created to pool together the marketing, sales, customer services, i
nIormation
technology and electronic commerce resources oI the group.
Each FedEx
subsidiary
49
continues to operate independently, but collectively will provide a wide range o
I business
solutions. Independently, the subsidiaries can retain Iocus on meeting customer
s` needs.
The competitive advantage oI the company in the Iuture is the collect
iveness oI the
subsidiaries and the way in which they operate one way but as a team
create a synergy
unlike any other business. FedEx believes that the easier it is Ior customers to
do business
with them, the more beneIicial it will be Ior the company.
'There
is one toll-Iree
telephone number, one Website, one invoice and account number, one sal
es team, one
customer service team and a streamlined customer automation platIorm to
handle
electronic transactions Ior small and large businesses.
2
'The new organization is aimed
at helping businesses oI all sizes to achieve their shipping, logistics, supplychain and ebusiness obiectives.
More importantly, the reorganization serves to al
ign the
organization structure with the systems inIrastructure and integrated processes
that FedEx
has established. In so doing, FedEx aims to leverage its cross-company synergie
s and its
inIormation and logistics inIrastructure to create better e-business sol
utions Ior its
customers.
2
Financial Ratio Analysis:
FedEx
99
FedEx
98
Annual Report Info.
(dollar amt. in millions)
Total Revenue 16,773 15,873
Net Income 631 503
Total Assets 10,648 9,686
Total Liabilities 5,985 5,725
Net Cash Flow 1,772 1,706
Financial Ratios
Return on Equity 15.94 16.98
Return on Assets 7.27 7.77
50

Asset Turnover 1.58 1.69

Inventory Turnover 13.70 12.91
Quick Ratio .89 .78
Current Ratio 1.13 1.03
Common Stock Info.
Stock Price 54.81 64.12
Common shares
outstanding
298
mill.
295 mill
Earnings Per Share 2.10 1.67
Price Earnings Ratio 26.1 38.39
Dividend 0 0
From looking at the Iinancial inIormation oI FedEx the outlook Ior this compan
y
seems positive. FedEx showed improvements in most areas in 1999 Irom the year b
eIore.
The annual report (took place on May 31 Ior both years) showed an i
ncrease in both
revenue and net income, which means the company, is still growing. The liquidit
y ratios
like the current and quick ratio also both showed improvements going into 199
9, which
means that they have increased their ability to pay oII current liabilities.
FedEx`s stock
price did decrease slightly however this is probably not a bad sign
considering the Iact
that the earnings per share did have a signiIicant increase.
FedEx`s
lack oI a dividend
most likely means that they are spending all oI their retained earnings internal
ly in hopes
oI more growth in the organization and share price in the Iuture. The only real
negative
here Iinancially is in the asset management area. FedEx`s ROA and asset tur
nover both
decrease Irom 1998 to 1999. II these both continue to decrease, in the Iuture F
edEx may
need to make some changes in this area.

51
Value Chain Analysis and IdentiIication oI Core Competencies:
Inbound
Logistics
Operations Outbound
logistics
Marketing
and Sales
Service
!74.:702039 Global
Inventory
Visibility
System
(GIVS)
Iacilitates
purchasing

COSMOS
system
keeps track
oI all
packages
handled by
the company
Main Iocus oI
organization is
on time
deliveries
Technological
Development
Systems
such as the
GOC have
been
developed to
track
weather, the
movement
oI FedEx
vehicles,
and traIIic
Technological
breakthroughs
have promoted
signiIicant
advances in
package
tracking and
process
monitoring
Use oI internet
has helped
increase sales
Internet as
made it easier
Ior customer to
track their
packages.
HR Management
FedEx
Iirmly
believes that
empowerme
nt oI
employees
has
increased
productivity
FedEx assures
that all its
employees
understand the
importance oI
quality oI
service
Firm
Infrastructure
The

acquisition oI
Caliber
Systems, Inc.
helped FedEx
develop
expertise in
moving raw
materials, and
managing
work in
progress.
In 1998, 4
separate
subsidiary
companies
were Iormed
but managed
separately
New low cost
residential
delivery
service was
launched in the
U.S. is planned
to be launched
in 2000
Reorganization
plan Ior FedEx
in 2000 where
customer
service, billing
systems &
sales would all
be at one point
oI access
FedEx has many ways in which it adds value to the organization.
Fi
rst oI all a
good line oI communication with the customer adds value because it allows FedEx
to see
what the customers` needs and desires are. In addition, all oI FedEx`s computer
systems
and programs really add value. They keep the company more organized by maki
ng the
52
tracking oI the packages easier along with Iacilitating FedEx`s Iocus
oI on time
deliveries.
Technological development has always been a maior way Ior
FedEx to add
value since it can cut costs along with creating new ways oI Iinding
competitive
advantages. Lastly, FedEx`s improving and changing oI the organizational struct
ure over
the last Iew years has added value.
By developing diIIerent subsidia
ries all operating
under the FedEx brand name has organized the company along with impro
ving the
communication inside the company Irom one division to another.
Managerial Implications
FedEx has enhanced inIormation management in terms oI being able to identiIy the

critical Iactors involved with success oI an e-business. It has successIully tra

nsIormed
Irom a conventional business into an advanced e-business in its network economy.
FedEx
has succeeded in several areas including: visionary leadership in the applicatio
n oI new
technologies, deIining the inIormation inIrastructure, integrating internal proc
esses, and
aligning the organizational structure Ior maximum beneIits.
FedEx`s key strategy was customer service and Ior its customers to adapt into it
s new
inIormation technology. FedEx harnessed its new technologies and extended the
electronic business to all oI its customers. FedEx has developed this technology
and made
it possible Ior its customers to connect with them in any way the customer choos
es.
The restructuring oI FedEx addressed many processes but in particular the integr
ation oI
logistics as well as supply chain management proved to be most successIul. The e
nabled
FedEx to cut inventory levels, reduce costs as well as shortening order-cycle ti
me. This
was key Ior FedEx to improve the quality oI service they provided to their custo
mers.
53
FedEx has laid out a vast matrix oI transportation and inIormation ne
tworks that will
provide them with a huge competitive advantage Ior some time. To Iunc
tion as an ebusiness companies will need to become increasingly customer/solutions I
ocused. All
processes must be integrated to ensure a uniIied customer centered Iro
nt that provides
services throughout the value chain, logistics, and parcel carrier busi
ness. FedEx`s new
restructuring will serve their customers and apply new technologies con
stantly to
improve their response time and the value oI the inIormation they pro
vide. FedEx will
continue to build, innovate, and exploit technologies Irom the successIul bas
e they have
created and will be on top oI the industry Ior a long time to come.
54
. FedEx Corporation 2000 Annual Report
interactive.wsi.com/inap-bin/bb?sym5FDX&page 54
4. Denton, 'keeping Employees: The Federal Express Approach.
5. FedEx`s Commitment to Training, Managing Training and Development, September
2000
6. Businessweek online: January 31, 2000 Issue
FedEx: Going Nowhere Fast in Cyberspace
TechWeb: FedEx Woos E-tailers with Cheaper Service
www.Iedex.com
www.techweb.com/wire/story/TWB20000119S0017
www.tnt.com
www.UPS.com
3/34908
1
1999 U.S. Postal Service Annual Report http://www.usps.com/history/anrpt99/

2
History oI the U.S. Postal Service 1775-1993 http://www.usps.com/history/his35.
htm
3
USPS History and Mission http://www.postalIacts.com/history.htm
#010703.08
1999 U.S. Postal Service Annual Report. http://www.usps.com/history/anrpt99/
'Balanced Measures Study, USPS.
http://govinIo.library.unt.edu/npr/library/papers/bkgrd/usps.htm
DHL Home Page. http://www.dhl.com.hk/news/19990429100377.html
History oI the U.S. Postal Service 1775-1993. http://www.usps.com/history/his35.
htm
Insights and Solutions: Endowment Ior the Business oI Government
http://endowment.pwcglobal.com/radio/nolanart.asp
PostalFacts.com. Legislation Needed for Efficiencv. http://www.postalIacts.com/l
egchange.htm
United States Postal Service Annual Financials, Hoovers Online
http://www.hoovers.com/annuals/7/0,2168,40507,00.html
United States Postal Service Home Page. http://www.usps.com
http://analytics.thomsonib.com/pw/?ExpressCodemaristbasic
www.Iedex.com
Strategic management Cases, case 15, pages 205-219
http://users.snip.net/~gbooker/SYS205/readings/3-Building_eBusiness_at_FedEx.doc.
3/34908
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Joachim, D., 'FedEx Delivers on CEO`s IT Vision, Internetweek,
http://www.inIoxpress.com/reviewtracker/reprints
2
'Building an e-business at FedEx Corporation.
http://216.239.51.100/search?qcache:Y9CEMZAvWIwC:users.snip.nett
3
Wetherbe, James C. The World on Time. The Eleven Principles that made FedEx an
Overnight Sensation. Santa Monica: Knowledge Exchange, 1996.
4
Franklin Covey Home Page.
http://www.Iranklincovey.com/about/investor/stories/Iedexcs.html
#010703.0$0.943
Basch, Michael. Customer Culture: How FedEx and Other Great Companies Put the
Customer First Everv Dav. Financial Times: 2002.
http://vig.pearsoned.com/store/product/1,3498,store-562isbn-0130353310typeALLeditmode-1,00.html
'Building an e-business at FedEx Corporation.
http://216.239.51.100/search?qcache:Y9CEMZAvWIwC:users.snip.nett
Federal Express Home Page.
http://customcritical.Iedex.com/us/careers/overview/culture.shtml
Franklin Covey Home Page.
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