Asia Pacific: Developing FedEx’s Presence in the

World’s Largest Air Freight Market

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Table of Contents
About the Team _______________________________________________________________________________________ 4
Executive Summary _________________________________________________________________________________ 6
About FedEx Corporation __________________________________________________________________________ 7
History ___________________________________________________________________________________________ 7

Mission Statement _____________________________________________________________________________ 7

Leadership ______________________________________________________________________________________ 8

Strategic Leadership___________________________________________________________________________ 9

Organizational Culture ________________________________________________________________________ 10

Social Responsibility __________________________________________________________________________ 10

Supply Chain and Logistics __________________________________________________________________ 10

Competetive Advantage ______________________________________________________________________ 11

Analysis ________________________________________________________________________________________________ 12
Internal Factor Analysis Summary __________________________________________________________ 12

External Factor Analysis Summary _________________________________________________________ 12

Strategy Formulation _______________________________________________________________________________ 13

TOWS: Possible Strategies __________________________________________________________________ 13

Asia-Pacific Strategy __________________________________________________________________________ 14

Implementation ______________________________________________________________________________________ 14
Evaluation _____________________________________________________________________________________________ 17
Pre-Launch ______________________________________________________________________________________ 17

Post-Launch (Immediate) _____________________________________________________________________ 19

Post-Launch (36 Months) _____________________________________________________________________ 21

Controls ________________________________________________________________________________________________ 22
Success/Failure ______________________________________________________________________________________ 23
What We Learned ___________________________________________________________________________________ 25
References ____________________________________________________________________________________________ 26
Appendix ______________________________________________________________________________________________ 28
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Table 1.1 _________________________________________________________________________________________ 28

Table 1.2 _________________________________________________________________________________________ 29

Table 1.3 _________________________________________________________________________________________ 30

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About the Team

Jackson Willingham
Born and raised in Eastern Washington, Jackson Willingham is a
Business Administration Major. Jackson is a former lifeguard and swim
teacher who is CPR and First Aid certified. He has also recently earned
his Emergency Medical Technician license. His passion is helping others
and his dream career is in Medical Administration. When he is not
studying for college, you can usually find him walking his Australian
Cattle dogs, Bentley and Lexus, or reading World War II history.

Jack Reiswig
Jack is a native of Coeur d’Alene and this is his second time around
attending college. He is married to his high school sweetheart and they
have two wonderful children ages 11 and 9. Jack will graduate this
Spring with a degree in General Business. With over 17 years in
banking, getting his degree will hopefully increase the ceiling for
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promotion and advancement. Jack hopes to advance his career with Wells Fargo and continue
to learn and grow with the bank.

Andrew O’Dell
Andrew was born in Seattle and moved to North Idaho when he was six.
After he graduated from High School, Andrew started working for a local
home improvement store. Since then, he has been in retail management
for over 15 years. Andrew will procure his bachelor’s degree in
Business Administration with an emphasis in Marketing in the Spring of
2018. When Andrew is not busy with work or school; he enjoys playing
sports, boating and fishing, and spending time with his wife and two children (ages 14 and 9).
After Andrew acquires his degree, he hopes to get into real estate appraisal or another aspect
of real estate.

Morgan Bueser:
Morgan is originally from the Seattle area, moving to the Coeur d’Alene
area with her family in 2005. After taking a few years off from college, she
decided to finish up her accounting degree at LCSC, beginning in the Fall
of 2016. She plans on graduating in the Spring of 2019 with enough credits
to sit for the CPA exams. She is currently interning at a small accounting
office, working on tax preparation and bookkeeping for clients. In her spare
time, she like to go on hikes and float the local rivers in the summertime
with her fiancé, who she plans on marrying in late July of this year.
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Executive Summary
Today’s marketplace is one without borders. To stay competitive, firms must find new
ways to compete on a global level. In order to capitalize on opportunities in foreign markets,
FedEx must expand its global operations and succeed in providing its customers with the most
valuable services.
FedEx, a corporation that focuses the majority of its operations within the United States,
has many opportunities to expand its global presence. The domestic US market accounts for
approximately 75% of FedEx’s total revenues, while the Asia-Pacific market accounts for almost
half of the total global air-freight market activity. It is imperative for FedEx to find ways to
compete with firms outside of the United States and capitalize on opportunities abroad. FedEx
has already made outstanding progress to achieve this objective. In the past five years, FedEx
has acquired TNT Express, a vast European delivery service provider headquartered in the
Netherlands. By coordinating its efforts within each of its functional departments, FedEx can
successfully expand in the Chinese market.
The Asia-Pacific strategy, as developed by North Idaho Consultants, provides a
comprehensive framework for FedEx’s expansion into China and is based on its unique
strategic position in the delivery market. The team conducted a SWOT analysis to determine
how FedEx can capitalize on its strengths and weaknesses while simultaneously responding to
external threats and opportunities. This
information was then used to arrive at
four strategic options. From these
options, a final strategy was chosen.
Next, plans for its implementation,
progress evaluations, and controls were
drafted.
FedEx has a responsibility to its
stakeholders to make decisions that are
financially sound. This must be done
while continuing to discover new ways to
create value for its customers. The firm
must also be mindful of how its operations impact each of its functional areas of business, which
include accounting and finance, human resources, and customer service. The Asia-Pacific
Strategy reflects each of these goals and provides a detailed plan for FedEx’s expansion in
China.
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About FedEx Corporation

History
FedEx was founded in 1971 in Little Rock, Arkansas by Frederick W. Smith. While in
college, Frederick realized that it was not economically sound to rely on passenger routes to
deliver packages that required faster delivery, which prompted him to purchase a small aviation
company that would allow him to fly his own routes for deliveries. Federal Express officially
began on April 17, 1973 with 389 team member and 14 aircraft. The company did not show a
profit until July of 1975, but by 1983 they were reporting $1 billion in revenue.
Federal Express began immersing themselves into international operations in 1984, with
limited service in Europe and Asia. In 1989, Federal Express acquired Tiger International,
making FedEx the largest full-service, all-cargo airline in the world. This acquisition added 21
new countries to its already expanding footprint. In 1994, the company adopted the name
“FedEx” as its official brand. The following year, through the acquisition of Evergreen
International Airlines, they gained access to start delivering to China. In 2007, FedEx acquired
Tianjin Datian W. Group as a joint venture with DTW International Priority Express, which
launched a domestic express in the Chinese market.
FedEx continued with its plan of growth through acquisition by purchasing companies
such as Caliber System, which included multiple subsidiaries. In the year 2000, FedEx changed
the names of its different lines of business to what we now know today as FedEx Express,
FedEx Ground, FedEx Custom Critical, FedEx Freight, FedEx Global Logistics, and the new
FedEx Corporate Services. FedEx purchased Kinko’s in 2004, which expanded its retail access
to all 1,200 Kinko’s locations.
In addition to the above-mentioned acquisitions, FedEx has also acquired ANC Holdings
in the U.K. In 2016, FedEx purchased TNT Express, one of the world’s largest express delivery
companies, causing FedEx’s presence in Europe, Asia, Africa, and the Americas to be
exponentially expanded. FedEx purchased a total of 13 companies between 2006 and 2016,
which has expanded them to over 220 countries served and over $60 billion in revenue.

Mission Statement
FedEx’s mission statement, according to the company website, is as follows:
“FedEx Corporation will produce superior financial returns for its
shareowners by providing high-value-added logistics, transportation, and related
business services through focused operating companies. Customer
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requirements will be met in the highest quality manner appropriate to each

market segment served. FedEx will strive to develop mutually rewarding
relationship with its team members, partners, and suppliers. Safety will be the
first consideration in all operations. Corporate activities will be conducted to the
highest ethical and professional standards.”

Leadership

Chairman and CEO

Frederick W. Smith is chairman and CEO of FedEx Corp., a $64
billion global transportation, business services, and logistics
company. Smith is responsible for providing strategic direction for all
FedEx Corp. and its operating companies, including FedEx Services,
FedEx Express, FedEx Ground, and FedEx Freight. Since founding
FedEx in 1971, he has been an active proponent of regulatory
reform, free trade, and “open skies agreements” for aviation around
the world. Most recently, he has advocated for vehicle energy-
efficiency standards and a national energy policy.

President and COO

FedEx Services Leadership: Co-President and Co-CEO
David J. Bronczek is president and chief operating officer of FedEx
Corp. Bronczek is responsible for marketing, sales, and all FedEx
operating companies. He is a member of the five-person Executive
Committee, which plans and executes the corporation’s strategic
business activities. Bronczek is also co-president and co-CEO of
FedEx Services, which provides sales, marketing, information
technology, communications, customer service, technical support,
billing, and collections services for U.S. customers of major FedEx business units and certain
back-office functions that support other FedEx companies. Previously, Bronczek was president
and CEO of Memphis-based FedEx Express, the world’s largest express transportation
company.
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Executive Vice President and CFO

Alan B. Graf Jr. is responsible for all aspects of the corporation’s
global financial functions, including financial planning, treasury, tax,
accounting and controls, internal audit, investor relations, and
corporate development. He is also a member of the five-person
Executive Committee, which plans and executes the corporation’s
strategic business activities.
He served as executive vice president and CFO of FedEx Express.
In addition to his involvement at FedEx, Graf also serves on the
boards of directors for Nike Inc., Mid-America Apartment Communities, Inc., and Methodist Le
Bonheur Healthcare.

Executive Vice President, FedEx Information Services, and

CIO
FedEx Services Leadership: Co-President and Co-CEO
Robert B. (Rob) Carter is executive vice president of FedEx
Information Services and chief information officer of FedEx Corp.
He is a member of the five-person Executive Committee, which
plans and executes the corporation’s strategic business activities.
Carter is also co-president and co-CEO of FedEx Services, which
provides sales, marketing, information technology, communications, customer service, technical
support, billing, and collections services for U.S. customers of major FedEx business units and
certain back-office functions that support other FedEx companies. Carter joined FedEx in 1993
and has over 35 years of systems development and implementation experience. Carter is
responsible for setting the technology direction of the FedEx applications, networks, and data
centers that provide around-the-clock and around-the-globe support for FedEx product
offerings.

Strategic Leadership
The founder of the company, Frederick W. Smith, is the Chairman and CEO of the
company. He is responsible for providing the strategic direction for all FedEx Corp. and its
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operating companies, including FedEx Services, Express, Ground, and Freight. He is currently
advocating for vehicle energy-efficiency standards and a national energy policy.

Organizational Culture
FedEx has a culture which is best explained by P-S-P, or People-Service-Profit. This
was started by the founder, Frederick Smith and still continues today. The philosophy means
that if you invest in your people, they will provide superior service which will in turn generate
profits. FedEx’s website describes this as a circular nature, the more invest in your people, the
better service they will provide, thereby increasing profits that will allow you to continue to invest
in your people.

Social Responsibility
Social Responsibility is important to FedEx, as evidenced by visiting its website. They
have a Code of Business Conduct and Ethics which sets the bar at a high standard for conduct
in the workplace, health, safety and environment, human rights, harassment and discrimination,
conflicts of interest, and gifts and entertainment. They also have an environmental policy
focusing on the long-term health of the company and planet. Earthsmart solutions helps
integrate sustainable practices into its business to keep the focus on the customer while being
environmentally conscious. When it comes to slavery and human trafficking, FedEx has a zero-
tolerance policy that includes its customers, suppliers and contractors. In addition, FedEx has a
Data Security and Privacy policy, as well as a Public Engagement Policy that encourages
transparency regarding political campaigns.

Supply Chain and Logistics

FedEx is the supply chain for thousands of business throughout the world. With its
stores, warehouses, ports, aircrafts, and other various transportation vehicles, FedEx strives to
deliver the world in a time effective way.
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Competitive Advantage
When a local FedEx manager, Brian Bippes, came to speak to our class in March, he
explained the reasoning why FedEx Ground employees are independent contractors. This is to
keep FedEx regulated as an airline rather than a transportation company, which is how UPS is
classified. Pertaining to cost effectiveness, by having FedEx Ground workers as contractors
instead of employees, it provides a competitive advantage for them since they do not need to
offer benefits to these employees. Benefits are a huge expense to any company; however,
when you have over 95,000 team members, as FedEx Ground does, those savings make a
substantial difference to FedEx.
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Analysis
The first step needed to develop an effective strategy for FedEx was to first analyze the
internal and external factors that FedEx faces. Upon determining what these were, our team
developed a detailed IFAS/EFAS table (See Table 1.1 in the Appendix) with each factor’s
weight, rating, and total weighted score, which we briefly overview in the next few paragraphs.

Internal Factor Analysis Summary

Strengths: An internal analysis of FedEx revealed that the company has many
strengths. Most notably, FedEx has the largest air fleet in the industry with over 650 aircraft.
FedEx also has a strong brand image that is recognizable on a global scale. Additionally, FedEx
uses innovative ways to serve its customers through its on-site locations and a mobile app that
allows for the management of deliveries. Through its SenseAware technology, the firm has
provided companies a highly secure and reliable means of shipping.

Weaknesses: In order to remain competitive in the delivery market, FedEx must also be
aware of its weaknesses. FedEx has work to do to improve its market share in ground deliveries
in the US market. UPS has a superior market share in the industry of 54.8% compared to
FedEx’s value of 23.2%. The firm’s on-site locations are also in need of improvement. FedEx’s
recent partnership with Walgreens has created a need for training and development among
Walgreens employees. FedEx is also extremely reliant on the United States market, which
accounts for 75.6% of its global revenues. This reliance on the domestic market has also
caused the firm to miss out on opportunities in international markets. The Asia-Pacific air freight
market, the largest in the world, represents an opportunity for FedEx that it has yet to capitalize
on.

External Factor Analysis Summary

Opportunities: There are several opportunities for FedEx both at home and abroad. In
the midst of an expanding e-commerce market, FedEx can find new and improved delivery
methods to decrease operating costs. The firm has recently begun an initiative to improve its
on-site locations that serve as a cost-effective method for customers to send and receive
packages. On a global scale, FedEx must improve its presence and market share. Specifically,
the Asia-Pacific market represents a prime opportunity for FedEx. On a domestic scale, FedEx
can improve its Less-Than-Truckload fleet to more effectively compete with UPS. Finally, e-
commerce represents a market with extreme profit potential for the firm. This is especially true
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with the presence of online retail giants such as Amazon, whose customers account for a high
volume of deliveries.

Threats: FedEx has threats within the delivery market that it must respond to in today’s
environment. Amazon, a firm that began by selling books, is now a vast organization involved in
multiple industries. Following an announcement from the firm will begin offering delivery
services, FedEx’s stock price decreased by 5%. FedEx is also competing with several other
firms within the delivery market, including DHL and UPS. Although FedEx ranks number one in
the United States air transportation market, it must be proactive in its response to these
competitive forces. Increasing fuel costs are also a threat to FedEx. Potential fluctuations in
crude oil prices can lower FedEx’s profit margins in the future. Finally, the threat of information
security means FedEx must strengthen its technological capabilities. This represents a highly
important issue that is crucial in maintaining customer trust and loyalty.

Strategy Formulation
TOWS: Possible Strategies for FedEx
By utilizing the information developed in the IFAS and EFAS, we were able to develop a
TOWS chart (See Table 1.2 in the Appendix) to assist us in creating an innovative strategy for
FedEx.

Strength-Opportunity Strategy: FedEx will need to continue to increase global

operations and presence. After the acquisition with TNT, FedEx had the blueprint on how to
have a successful acquisition, and it can reproduce that into other fruitful markets.

Strength-Threat Strategy: FedEx must find more cost-effective, innovative methods to

compete with competition. With over 650 aircraft, FedEx has the largest fleet in the delivery
industry. In addition, it has a highly established ground fleet in the United States. By leveraging
these assets and improving shipping methods, FedEx can reduce both costs for its customers
and the threat of competing firms such as UPS and Amazon.

Weakness-Threat Strategy: For this strategy, our team combined the underdeveloped
onsite location weakness with the information security threat. The strategy was to develop staff
at all FedEx off-site locations, such as Walgreens, and most recently Wal-Mart, to learn how to
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handle the massive amounts of customer information passing through its hands. Learning how
to safely handle and store customer information is vital to any major corporation in order to
protect its customers data and identity. If employees at Walgreens are given thorough training
regarding FedEx’s policies on safely handling customer data, this can help decrease the threat
of compromising customer information.

Weakness-Opportunity Strategy: FedEx has grown through business acquisitions in

the past, and it has thus far been a successful business strategy. The strategy we developed is
to grow its market share in the Asia-Pacific global market through business acquisition or
through increased marketing and expansion. The Asia-Pacific market accounts for 43.2% of the
total global market value of the air freight sector. For a comparison, the US market is only
13.1% and Europe is 25.9%. If FedEx can successfully expand into the Asia-Pacific market, it
could have a substantial impact on the company.

The Asia-Pacific Strategy

After much contemplation and evaluation, the North Idaho Consultants chose to expand
on the Asia-Pacific strategy. The Asia-Pacific market represents a significant opportunity for
FedEx. With approximately three-quarters of the firm’s revenues currently being generated in
the United States and almost half of the air-freight market value stemming from Asia-Pacific, this
market represents a prime opportunity for FedEx to expand its operations and serve new
customers. North Idaho Consultants will be offering FedEx their assistance as it enters a market
with a high potential for profit. The team will guide FedEx throughout its expansion into China
and be instrumental in assisting the firm realize its goals.

Implementation

FedEx has a history of entering into

international markets. In 2016, FedEx acquired
TNT Express, a European courier delivery
services corporation. This acquisition was of
gigantic proportion. It allowed FedEx to gain
massive market share in the second most
concentrated air freight market globally. However,
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FedEx has endured some “growing pains” due to the acquisition, such as the computer hack on
TNT in 2017. This created a complication in its plan to integrate systems and accelerated its
plan faster than FedEx expected. FedEx has learned from this acquisition that information
security cannot be overlooked, and this will help with further acquisitions down the road.
As stated previously, the Asia-Pacific
market accounts for over 43.2% of the total
global air freight market, which is the largest air
market on earth. The Asia-Pacific marketplace is
a difficult territory for American companies, and
many have not been successful in their
respective industries. With the recent acquisition in Europe, FedEx does not have an
abundance of money to acquire an Air Freight company that already has a strong brand
presence in China. Coupled with the barriers to entry, we propose that FedEx partner with a
local freight company, with both companies helping each other fulfill their goals in the Asia-
Pacific market. FedEx will utilize its financial and IT departments to research and choose the
best company to partner with, even if it might be a privately held company.
Our top choice for a partnering
company is UC Express. UC Express
was founded in 2009 and has since
grown rapidly. UC Express is currently
headquartered in Shanghai, China.
This would make UC Express a great
candidate to partner with because they
will have another port access point for
deliveries to complement FedEx’s
existing hub in Guangzhou, expanding
access to the nearly 24 million residents of Shanghai. FedEx already has an advantage in this
already competitive market because they have an existing hub in Guangzhou, and its Asia
Pacific headquarters is located in Hong Kong, which helps cover the eastern ports of China.
Along with the headquarters and hub, FedEx also has a current estimated 17,500 employees
and contractors in the market, which would assist in the growth and integration with UC
Express.
The UC Express partnership plan will be scheduled for a 36-month transition. FedEx will
start with the metro area of Shanghai, with possible expansion after the completion of this
 16

project. This joint partnership will involve blending the best parts of both companies, which will
take time. UC Express has the local knowledge and connections, while FedEx has the size,
financial strength, and logistics to grow its market share.
Members of management will engage in an extensive course of Chinese culture to be
facilitated by the FedEx Human Resource Department. Courses will include, but will not be
limited to: Sensitivity Training, Cultural Awareness, Values and Attitudes, Communication
Styles, Language Barriers, and Tips for Business Success. Every team member that relocates
to China will undergo an extensive course of Chinese culture and sensitivity training. Next,
FedEx will begin hiring for open positions and begin training. Next FedEx will assist UC
Express’s HRM team in finding local, contracted employees, and subsequently integrate the
company and employees into the joint culture and People-Service-Profit philosophy.
FedEx will then collaborate with UC Express by agreeing on mission and vision. The
new joint venture aims to produce superior financial returns by providing high-value-added
logistics, transportation, and related business services. Customer requirements will be met in
the highest quality manner appropriate to the Asia-Pacific market segment.
One of the priorities will be the due diligence on UC Express’ facilities, equipment and
technology, and updating as needed. One priority will be merging and integrating IT software
and tracking. Learning from the merger with TNT, FedEx will begin integrating software
systems as soon as possible within the IT departments. Keeping clients’ information protected
is of the highest priority and utmost importance to FedEx. UC Express will reformat its website
for a more user-friendly interface for tracking and shipping items. While the existing website has
an option to translate to English, the joint venture will make sure that the interface is user
friendly in multiple languages. FedEx will also transfer 5-15 Boeing 737’s from FedEx’s existing
fleet and evaluate the need to adjust the amount of aircraft throughout the first 36 months and
beyond. The amount of aircraft will be determined by the availability of existing fleet.
Next FedEx and UC Express will develop a partnership marketing campaign. Because it
is extremely important to respect the local cultural, the joint venture will partner with a Chinese
marketing firm to make sure that it can present the joint message in the best way possible. UC
Express already has some brand recognition in China; both companies will want to incorporate
its names into the new joint venture at first, similar to FedEx’s purchase of Kinkos.
Going forward, FedEx will evaluate the progress at 6-month intervals and make
decisions and adjustments as needed. FedEx expects to have full integration within the first 24
months and at the end of the 36-month implementation FedEx will do a full evaluation of the
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outcomes and progress to decide

whether the partnership has worked
as planned. Table 1.3 in the
appendix outlines the complete 36-
month implemental plan.

3 Year Budget:

Evaluation

Pre-Launch (0 - 1 year)

Human Resources
To work with its Human Resource Department and train employees to effectively
operate within China, a series of training programs will be implemented. These will consist of
formal training events, online training modules, and continuous development. In order to
respond to the language barrier, translators will be hired who are native of China. These
employees will assist FedEx as it begins its operations in the market. Translators will also be
there to ensure no cultural misunderstandings due to language barriers. Translators will have to
 18

be able to speak the seven major language groups of China, with Mandarin and Cantonese
being the most common in the areas FedEx will be targeting. This will maintain FedEx’s goodwill
within China and help ensure its success in the region.
During the pre-launch phase, FedEx will host employee development events on
company property. Employees directly involved in the China integration process will attend
lectures on the nation’s culture and complete interactive course work. FedEx should strive for a
100% participation rate among its employees in order for each to gain a firm understanding of
the Chinese marketplace and culture.

Logistics
With UC Express’ headquarters in Shanghai, FedEx’s hub in Guangzhou, and the
FedEx Asia Pacific headquarters in Hong Kong, the FedEx will have great access to the major
ports along Eastern China. FedEx will need to coordinate amongst the hubs in order to
maximize efficiency.
A priority for the pre-launch stage will be to start integrating the software immediately.
Keeping customers information safe is a top priority at FedEx. The FedEx IT departments will
start assessing hardware, software, and tracking systems to maximize security and accuracy.
Once FedEx has the “needs list” from the IT department, it can start putting plans in place for
upgrading equipment and software.
As mentioned previously, FedEx will transport 5-15 Boeing 737’s to China, with joint
branding, to help manage the additional workload for the joint venture. The first aircraft will be
the starting point but will be closely managed throughout the process. Additional aircraft will be
added as needed from the existing fleet, or through joint financing with UC Express.

Marketing
Though FedEx has been in mainland China since 1984, it is viewed as a “newcomer” in
the market. China has different regions that have very different preferences and habits, which
makes it a collection of regional markets. FedEx will work closely with UC Express to make
sure the partnership branding is consistent and culturally appropriate for the target market. One
direction that the companies might take is to promote “bridging the gap” between the US and
China. This campaign would showcase the two companies coming together for a common
good. The advertising campaign would start off slow and then it would increase the amount of
advertisements right before the project goes live. The companies would utilize television, radio,
as well as internet and social media sites. The partnership will utilize Youku Tudou (the
 19

YouTube of China), Sina Weibo (the Twitter of China) and WeChat (which is a blend between
Facebook, Instagram, and Skype for China) to hit its target market, which would be people ages
18 to 50, business people, and companies that need express deliveries.

Post Launch (Immediate)

Human Resources
During the post-launch phase, FedEx employees will participate in seven-hour online
training modules designed to reinforce the concepts learned during formal training events.
These programs can be completed on employees’ own time and will provide an in-depth
education on the Chinese business environment and a detailed analysis of cultural norms. By
completing these modules, employees will be rewarded with ten paid hours a month. FedEx
should strive for a 95% completion rate of assigned modules among its employees.
Human Resources will provide employees local to the Chinese area with access to five-
hour long modules designed to immerse them in the FedEx culture. These programs will be in
their native language and can be completed on employees’ own time. The modules will provide
a brief history of the firm, its operations, and end with a series of quizzes that will test their
knowledge. The modules will strongly reinforce FedEx’s motto of “People, Service, Profit.” This
foundational aspect of FedEx’s culture will be a recurring theme throughout the lessons. At the
end of the modules, employees will be familiar with FedEx and its goals. FedEx should strive for
a 95% completion rate for its China-based employees.
To give its China-based employees opportunities to interact and build camaraderie,
FedEx will host seminars in the region. These seminars will be educational on FedEx values
and allow employees the opportunity to participate in team-building exercises. FedEx should
strive for an 85% attendance rate among its China-based employees.

Financial
Considering the financial costs to FedEx, we estimate that the training and development
pertaining to Human Resources will cost roughly $4,000 per employee. If FedEx has an
estimated 500 expatriates working in China, this will be an approximate $2,000,000 additional
expense within the first year purely for cultural training and development. If possible, hiring
locally would decrease the necessity for cultural training; though the local hires would need to
be able to communicate effectively with FedEx corporate leaders. Requiring the employees in
 20

management positions to be bilingual in English and the local Chinese dialect could help reduce
translation miscommunications. This could save time and monetary resources.
As mentioned previously, FedEx acquired TNT Express in 2016. This investment cost
the company €4.4 billion, or $5.41 billion USD. From 2016-2017, FedEx saw a $7.4 billion
increase in revenue from TNT. Within that first year of operations, TNT produced a return on
investment of 38%, as shown in the graphic to the right. Our goal for FedEx is for them to have
at least a 20% return on investment within the first year of expansion in China. Because FedEx
is not acquiring a company, but rather partnering with one, it is expected that the ROI will be
less than the TNT acquistion.

Marketing
After the launch, FedEx will
evaluate the marketing aspect of the
strategy, making sure the partnership
continues to promote “togetherness”
and “bridging China and the US cultures
together”. The advertisements will use
the marketing 4 P’s of “Product, Price,
Place, and Promotion”. It will also
continue to advertise with the same
media outlets, portraying the product as a solution to the target market’s shipping needs. FedEx
will continue to promote price as a value and continue to promote China’s cultural values as its
own.

Customer Service
As part of the partnership between FedEx and UC Express, offering competitive shipping
times and rates will be a high priority to both companies. With UC Express’s expertise in e-
commerce shipping, and FedEx’s unmatched air freight business, the partnership of these two
companies will benefit its Chinese customers with both value and shipping times.
Part of the partnership strategy is to reduce UC Express’s existing lost and damaged
shipments by 10%. By utilizing FedEx’s state of the art shipment tracking software and facilities,
lost shipments will be reduced. The facilities will also help reduce damaging products by
updating equipment that will be gentler on the packages.
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Post-Launch (36 Months)

Human Resources
To keep employees current on the business environment in China, a monthly newsletter
will be distributed. These newsletters will feature delivery statistics showcasing FedEx’s impact
within the Chinese market. These newsletters will also feature a “PSP Star of the Month” article
to recognize outstanding performance among FedEx employees. In this way, the monthly
newsletter will highlight FedEx’s motto of “People, Service, Profit.” Employees will be given the
opportunity to realize their impact in meeting FedEx’s goals in a way that is consistent with the
firm’s values.

Financial
Following implementation of the China partnership strategy, finances will be monitored
closely. A detailed budget with allotted monthly allowances for each department in the China
locations will be distributed to the respective management heads. Each location will keep track
and report on changes in package quantities processed and delivered, including the amount of
time taken to process and deliver packages on average.

Customer Service
Upon reaching 36 months following implementation, FedEx will evaluate how the
strategy has had a positive impact on its customer base. FedEx will use data from each
location, such as customer reviews, average time taken to process and deliver packages, to
determine how effective the strategy has been on the customer service aspect of business
operations. An increase in sales will imply an increase in satisfied customers who use
FedEx/UC Express services. Also, FedEx will evaluate data showing the number of lost or
damaged packages while in FedEx’s care, and determine if that number has reduced by more
than 10% since the strategy launch. If so, FedEx will continue on its course to provide the
highest quality of service at FedEx/UC Express; if not, FedEx will have to determine what
controls can be established to reduce those numbers.
 22

Controls
Customer Service Controls
To ensure success of the various components of our strategy, FedEx will continuously
monitor data recorded by each location within China. One of the strategy’s goals was to reduce
the number of lost or damaged packages by 10%. While packages are in FedEx’s care, it is
important to make sure that controls are in place to help reduce these instances from
happening. One way is through proper and effective training of staff in the subject of package
handling. Making sure employees are effectively, yet safely, transporting packages will help
ensure the reduction of lost or damaged packages while in FedEx’s care. Another control that
will be in place is quarterly reports from each location with data regarding lost, stolen, and
damaged packages. If this statistic has not decreased within 36 months, FedEx will have to
determine what can be done to reduce those numbers. Some controls to be established that
may assist in this goal could be to monitor employees with cameras and to reinforce, through
team meetings and trainings, the importance of safe package handling and tracking. Monitoring
is a key aspect because the more employees are monitored, the more likely they are to be
careful with how they handle and monitor packages.

Human Resource Controls

FedEx must be knowledgeable and proactive while responding to cultural differences
within the Chinese market. To achieve this end, human resource controls will be administered to
ensure employees are being trained effectively.
First, if the 95% training module completion rate is not attained by expatriate employees,
a memo will be delivered to the managers involved with the China expansion. The memo will
provide a detailed tutorial on how to complete the assigned modules. Additionally, these memos
will reinforce the benefits that may be obtained from completing them.
Second, if the 95% training module completion rate is not attained by China-based
FedEx employees, the following two actions will be taken: (1) An in-depth assessment of the
modules will be conducted by Information Technology staff to ensure that they are functioning
properly. (2) A survey conducted by FedEx HR staff will determine if those who completed the
modules found them effective or scored a 90% or higher on the included quizzes. (3) More
frequent training seminars will be organized to provide employees with alternative educational
opportunities.
 23

Financial Controls
To ensure FedEx is profitable and provides value for its stakeholders, key financial
controls will be administered to track success and make changes as needed.
If ROI falls below 17% at any time, actions will be taken in order to stop FedEx from
losing money in the China market. If the strategy is showing progress, with a higher ROI than
expected, FedEx can evaluate what the next steps will be to continue profitable expansion in
China.
If expenses exceed $2,000,000 for expatriate cultural training and development*, FedEx
will make an increased effort to hire workers local to the China region in order to reduce cultural
training costs.
*Refer to the budget in the Implementation section on page 17.

Success/Failure
FedEx has a history of expanding its market share through acquisition and joint ventures
which leads the North Idaho Consultants to believe that this joint venture would be a success.
Partnering with UC Express would give FedEx a headquarters and instant additional market
share in Shanghai. This joint venture would cost much less than purchasing a company, and
FedEx will gain the knowledge and infrastructure of an already existing company in China. The
average worker in China’s salary is much less than many of the developed countries where
FedEx does business, which could save millions in salaries and benefits. Since cities like
Shanghai are so congested, many of the couriers deliver by bicycle or other small vehicles,
which would save on fuel expenses. FedEx has been in China since 1984 and, according to its
website, FedEx already has 17,500 team members in the Asia-Pacific market. This will simply
be an expansion of its existing footprint in the Asia-Pacific market.
As for failures, there are many ways that this partnership might not come to fruition. To
start off, the two companies may simply not work well together. If one company is adamant
about a moral issue while the other is not, the partnership could potentially be dissolved.
Another issue could be one of the companies not completing its terms of the partnership. If one
of the companies puts more effort and finances into the partnership, while the other does not,
this could upset one, or both, of the companies. Lastly, roles and communication can be a deal
maker or a deal breaker. If there is not clear, concise communication, the partnership can be
moving two different directions, increasing the likeliness of failure. Communication is often
overlooked, but it is vital component when trying to steer a company's mission and values.
 24

Also, the roles need to be clearly defined in the way they are communicated. If one of the
companies is unsure of the role that they play in the partnership, its buy-in to the partnership
might be less than the other company.
Overall, the probability of this partnership being a success and blossoming into a main
competitor in the China air freight market seems likely. FedEx has partnered with other
companies in China in the past, and this would be no different. With market share as the goal,
both companies will continue to increase its presence, benefiting its consumers immensely.
The initial focus will be in Shanghai and the local international airport is more than sufficient to
cover the additional 5-15 aircraft for the launch.
 25

What We Learned

Jackson Willingham:
By using the strategic management process, my group and I have proposed a strategy
for FedEx to compete on a global level. To effectively enter the Asia-Pacific, the coordination of
each functional branch of the firm is crucial to success. By following a common vision and
strategy, the functional areas of accounting, human resources, marketing, and logistics worked
together to accomplish the Asia-Pacific strategy. The team of North Idaho Consultants worked
together in a similar way. Each member clearly understood their roles in completing this project
and pushed one another to do their best.

Jack Reiswig:
I learned that breaking down large projects into multiple steps makes it much more
manageable. Using tools like the IFAS, EFAS and TOWS help get your ideas on paper in a
clear and organized process. Working as a group is very enjoyable when everyone does their
part and helps each other. I felt that everyone in our group did their share, and we help each
other when needed.

Andrew O’Dell:
What I took away from this project is that there are a lot of moving parts when it comes
to a plan. By being able to utilize tools like a balanced scorecard, TOWS analysis, and a
Strategic management process, it really helps to create a start point at different steps of the
process. If you were to just jump in, the probable success rate of the opportunity would be low.
By using the tools provided, the group was able to navigate through and it helped bring all the
components together. This project was very satisfying, and I am proud of our group’s efforts.

Morgan Bueser:
Developing a strategy is quite the process; however, by breaking down each sector of
developing the strategy, it becomes much more manageable. Using the IFAS and EFAS
analysis and TOWS matrix was an eye-opening experience on how companies develop
business strategies. Prior to utilizing these tools, strategy development for a company was
somewhat unclear to me. In addition, creating and deciding on a strategy within a team dynamic
brought together various perspectives that ultimately created an innovative strategy I would not
have thought of on my own. Going through the strategic management process step-by-step will
become a useful skill to utilize in future business endeavors that some of our team members
may someday encounter.
 26

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Kalyani, D. (2017). IBISWorld Industry Report 49222. Couriers & Local Delivery in the US.
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Appendix:
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Table 1.1
 29

Table 1.2
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Table 1.3