The values of Airborne Express focusses on customers, innovation, and loyalty.

Airborne Express
aims to provide services of high quality and low prices in the express mail industry to by delivering
outstanding customer experience and valuing its employees for their ideas and innovation making it
a great place to work.

Key Strengths and Weaknesses of Airborne Express and Federal Express in the Express mail
Industry
Porter’s Value Chain (Airborne): 1. Marketing and sales force: They did not take up advertising
or mass media marketing, Identified Logistics managers of major shippers and grabbed contracts of
B2B customers with customized services
2. Inbound logistics: Packages sent by customers, which are flown or driven to their destinations,
Packages flown into Wilmington Airport and majority of volume handled by contractors
3. Sorting operations: 900,000 packages shipped per day which are hand sorted in warehouses and
are tracked through FOCUS software system, Variable-cost approach to international operations
4. Package shipping: Express delivery of mail, Call center automation and personalized service
agents, Customized business offerings
5. Delivery services: Majority of volume handled by contractors, delivery of the packages from hub
to final destination,

VRIO Framework: Being a low cost provider, Airborne provides a generic strategic advantage.
Also, in the express mail industry, as Airborne Express provided lower overall costs than UPS and
Federal Express, it was able to attract specific large business customers. It was able to win the
business of acquiring price-sensitive service consumers. However, FedEx made use of core
strategies to win the battle of customer loyalty and offered differentiated features of products to bond
customers.

Financial analysis: It is noticed that Airborne (16.44%) has a better Compound Annual Growth rate
of Revenues than FedEx (14.85%). It can be inferred that Airborne is doing well and gaining market
share. However, CAGR of Net Income of FedEx (8.84%) is higher than that of Airborne (7.58%).
Airborne seems to make better efficient use of the investments as the Return on Equity for Airborne
(98.20%) is better than that of FedEx (94.30%). The Profitability of FedEx (3.00%) is higher than
that of Airborne (1.09%) for the year 1996. Generally, a firm that generates higher ROE is expected
to generate more cash internally and be more profitable. This indicates that Airborne has lower
earnings for every dollar of sales.

Some of the Strengths of Airborne Express are that it was third largest player and the fastest growing
company in the express mail industry for several years with the exhibit projecting the revenues for
the quarter increased by 29% over the previous year and net earnings had gone up by more than
500%. The proprietary communications increased the delivery speed and reliability. Airborne’s
target customers were the ones who regularly shipped a large volume of urgent items, with
requirements of specialization and hence provided them a variety of flexible delivery options and
products. Airborne owned their airport that served as the major hub, allowing the customisation of
the facility to their requirements and eliminated the cost of landing fees. Also, the warehouse space
that was built was leased to business customers. The Relationship with Roadway Package System
created a strong appeal as it was a combination of ground fleet and air transportation. highest
utilization rate of its resources among its competitors. Airborne flew its aircraft 80% full and 65% of
ground vehicles were outsourced to contractors costing less than 10%. Airborne’s labor cost
reduction was attributed to picking up and delivery of more parcels per stop and non-unionized labor
force.
While the Weaknesses of Airborne Express are that it is the often-overlooked company as they
rarely attracted notice. The margins have been fringy and low as high quality services are provided
with low prices. Though 97% of all Airborne’s shipments arrived on time, FedEx was 99% or
higher. The technological functions offered were not as equivalent to its competitors, UPS or FedEx
e.g. pick-up scheduling or online shipping paperwork. The sorting operations were less automated
than its competitors as it was manually done. Also, Airborne could not exist in the international
market as a dominant player. The strategies followed by Airborne was not sustainable competitive
advantage as it did not make efficient use of airport and the other assets, its proprietary
communication was not able to match with better technology in market and unlike its competitors,
Airborne couldn't match quality and reliability.

Strengths of FedEx are that it was a pioneer in the overnight shipping industry because their value
chain involved a standardized way of overnight delivery of any package. The value chain guaranteed
and measured the time by which a package was received. Brand image, largest market player in the
airborne industry, priority for customer service, best use and investment in technology viz., Digitally
Assisted Dispatch System (DADS) and tracking through COSMOS software, recognition for quality
improvement efforts, significance given to people through their Cross-training of employees and part
time workforce, communication throughout and compensation linked to customer satisfaction were
some of the many factors that leveraged FedEx.

However, the ground market share was significantly lower than that of its competitors. The software
technology was imitable by the other competitors and could not enjoy the first mover advantage. The
operating and net income of FedEx was lower than that of UPS. It is also noticed that the operating
profit margin has been reducing over the years. As the express mail industry is a competitive one,
the growth of market share of FedEx is limited. From the financial results, it is seen that the market
capitalization of FedEx is known to be half as that of UPS. FedEx seems to dependent on US Market
and incur losses in the international market.