Fedex Swot Analysis Essay Example

strong, highlighted by their 1990 award of the Malcolm Baldrige National Quality Award in the service category. Four years later, in 1994, Federal Express became the first global express transportation company to achieve system-wide ISO 9001 certification in international quality standards. Furthermore, the company has developed a quality system that meets their customers' standards.

Federal Express has weaknesses and resource deficiencies in two areas. The first is in rising prices - their prices are higher than their competitors'. This may be detrimental if customers don't see a difference between Federal Express and its competitors. The second area is labor disputes with their pilots. The Fedex Pilots Association was formed by pilots who demanded changes in their salaries, retirement benefits and that Federal Express stop outsourcing some foreign flights instead of giving their own pilots the job.

On their website, the pilots share news and discuss their feelings. In 1998, during the busy holiday season, there was a threat of a strike. While a tentative agreement has been reached between Federal Express and the Fedex Pilots Association, it is published on the pilots' website and they do not feel it meets their expectations. This internal dispute is a weakness for Federal Express, as they employ 3,500 pilots and any strikes would impact their operations.

When the UPS workers went on strike in 1997, Federal Express stepped in to handle the additional 800,000 daily shipments. If a strike were to take place among Federal Express employees, it could give their rivals a competitive edge. FDX has deliberately opted to keep their subsidiaries distinct. In the 1998 Annual Report of FDX, CEO Frederick Smith explains that combining the particular resources

and operational demands of a time-sensitive, international express delivery network with a small package ground network of indefinite time frame would surely lessen the quality of service and boost expenses.

Operating under the FDX umbrella, we will utilize our combined strengths while maintaining independent delivery networks, with each prioritizing their respective markets. Despite this being untested, Frederick Smith is optimistic it will prove advantageous. Potential opportunities for the company include global expansion, both for Federal Express and other FDX companies, as well as continued internal expansion through acquisition of additional companies and entry into new technologies or industry areas.

To maximize profits, FDX could consider consolidating their subsidiaries to improve efficiency and reduce costs. Additionally, forming partnerships with large corporations that can enhance their services with cost savings or value-added benefits can help maintain their position as an industry leader. Joint ventures, like those with Netscape and American Express, can allow for the integration of customer bases and growth. Furthermore, Federal Express already has a significant presence in the online shipping industry and could further expand into e-commerce.

To benefit from the current rapid growth of e-commerce, it is recommended that Federal Express looks for internet companies to contract for their product delivery. This kind of expansion can lead to increased profits and better recognition of the brand name. However, there are threats that should be considered such as the Y2K problem that could result in lost shipments, customers and profits if the communication and tracking systems are not Year 2000 ready. This is a universal threat but can affect global companies on a larger scale. In addition, Federal Express has a community responsibility within the United States.

Federal

Express may face opposition from the local community in their plans to expand within the United States, specifically in building a second super-hub in Greensboro, NC. While the airport is in favor of the idea, citizens in the area are not. As a result, Federal Express must determine whether prioritizing community support or center construction is more crucial. Additionally, as Federal Express continues to expand globally, they must abide by the laws and regulations of all foreign countries.

There is a possibility of significant issues in this particular domain, which may impede expansion and escalate expenses. Federal Express is currently unable to utilize their planes for transportation in Great Britain, as they are not permitted to do so. As a result, they must either employ British aircraft or land transportation, which is highly ineffective for them. Nonetheless, this prevents British Aviation firms from competing with Federal Express. As a result, Federal Express is frequently confronted with restrictive laws or inefficiencies whenever they operate in any location.

Federal Express is vulnerable to global economic and political factors that impact fuel prices, supply availability, customer service demands, and relationships with foreign nations. These risks are greater than those domestic companies face due to the company’s global reach. The organization is currently facing multiple issues with significant ramifications for profits and brand reputation. These include pilot contention regarding compensation, retirement benefits, and foreign outsourcing of flights. Table 1 on Page 2 of the Appendix illuminates the pilots’ salary grievances.

Despite the industry average of 14.81%, Federal Express only allocates 13.17% of their total operating expenses to labor expenses. Nevertheless, their rivals allocate a significantly higher percentage, with values ranging

from 20% to 24%.

The pilots are expressing their objections and calling for modifications due to several reasons. Firstly, Federal Express has increased prices and formed agreements with oil providers to compensate for fuel price fluctuations and supply instability. Additionally, the proposed establishment of a super-hub in North Carolina lacks community backing. Lastly, FDX has partnered with Netscape to streamline e-commerce. As part of the collaboration, FDX will provide delivery services on Netscape's internet portal platform.

The partnership between Federal Express and American Express enables the two companies to reach their business goals that would not have been attainable otherwise. With American Express as an ally, Federal Express now grants a 10 to 20 percent markdown on various shipping services for clients utilizing an American Express Small Business Corporate Card. Federal Express boasts an array of worldwide delivery services, which highlights its strong suits and potential areas for growth. Nonetheless, prevailing issues and limitations also require attention from Federal Express.