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Analyzing the Business Environment and its Effect on the Management of the Organization FedEx SWOT Federal Express was founded in 1971 by W. Smith in Little Rock, Arkansas but it moved its headquarters to Memphis, Tennessee in 1973. It was the first air cargo company in American history to provide one-day delivery service to its customers in 25 cities nationwide. The innovative delivery methods, used by the company, have led to its rapid growth since the time of its founding.
When FedEx became operative in 1973 its fleet consisted of only 14 Dassault Falcons airplanes. By now, the number of its planes has grown to 373. Strengths: As it was being mentioned earlier, the FedEx is the largest express transportation company not just in U. S. but also in the whole world. It is estimated that FedEx average package volume reaches up to 3. 5 million packages every day.
This points out to the fact that FedEx enjoys popularity among great many people. In another words it has established a secular brand name. Another Fed Exs strength is that its market share in airborne services accounts for 70 % in continental U. S. , which allows this company to obtain certain financial and competitive dividends that, are usually associated with commercial monopoly. This increases companys financial stability by guaranteeing the steady flow of investments. FedEx uses a sophisticated web system to track parcels that are in transit.
Companys competitors have only begun providing similar service to the customers in recent years, while FedEx had established WWW tracking as early as 1997. This allowed FedEx to gain valuable experience in this field. This system makes losing packages along the way practically impossible. Weaknesses: We can also mention a few weaknesses, which undermine companys overall effectiveness. The most important of them, in my opinion, is the fact that Fed Exs ability to correspond to the market dynamics is being reduced, due to its sheer size. The autocratic managing style, practiced by the companys top executives, makes it harder for the local managers to adjust functioning of their branches to the specifics of the areas where they operate.
One of other major Fed Exs weaknesses is that its ground market share accounts for only 13 %. As practice showed, FedEx expectations of more and more people giving preference to the express air transportation proved to be a mistake. Quite contrary, the ground express transportation becomes more popular, because there are many new regulations are being introduced recently to make air traffic safer, yet they often result in flight delays. This also makes air cargo services more expensive. Opportunities: FedEx can exploit a few opportunities in the future. Giving its size, it can try investing in filling bigger potion of the ground market without any considerable risk.
At the same time, Company needs to invest into expansion of its net in Asia as it will allow FedEx as much as 100 % of growth in the next few years. In order for FedEx to beat the competition, which will inevitably come, because of economy's global trends, it needs to move into potential markets well ahead of time. In my opinion, FedEx will need to change its essence from the express transportation company into global supply provider. The profit that can be gained from becoming a transportation sub-contractor is much more considerable comparing to what can be earned by operating independently. FedEx needs to strive to become a monopolist on its market, it has a potential to accomplish this.
Threats: Presently UPS has adopted an aggressive air market share gaining policy, which directly threatens FedEx dominance there. If this remains unchallenged, FedEx is likely to lose a considerable portion of its yearly income, since UPS offers competitive prices on its air transportation services. It is very likely that prices for jet fuel will continue to rise steadily, forcing FedEx to increase tariffs on its products and services. In the long run, it can result in FedEx having no other choice but to disband the portion of its air fleet and to lay off many employees.
The rising of new broadband services will diminish peoples need in courier deliveries. In my opinion, this is the gravest threat to FedEx, since it has no way of influencing current trends in internet technology. PESTLE 1. Since the beginning of FedEx expansion on international market, the various political factors affect companys strategic planning in much higher degree than they used to.
While operating abroad, FedEx branches remain the subjects of local laws. In its turn, this makes it harder for the company to achieve a true unification of its products and services, throughout the world. Nevertheless, the process of globalization will inevitably offer a new prospective for the FedEx. 2. In case of FedEx, the most important economic factor that affects its operating more than anything else is peoples willingness to spend money, in order to receive services, provided by the company. It is defined by the current technical progress and socio-political reality. FedEx services cannot be considered as such that are essential for peoples well being.
Therefore, Companys ability to generate income is directly dependent on the level of economic prosperity among people. In other words FedEx can only remain profitable, while its functioning is protected from becoming affected by the economic instability. This is why Company only expands its operation into the countries where inflation level is being brought to the minimum. 3. Social aspects of FedEx commercial activity cannot be underestimated. This is because we cannot think of this Company out of socio-political context. Nowadays, the employment policies are supposed to correspond to the notion of affirmative action.
In order to appease the hawks of political correctness, FedEx will have no option but to hire a large portion of useless employees. Their real task will be to promote FedEx public image as progressive Company. Yet, such practice will inevitably undermine FedEx commercial efficiency. 4. As it was being said earlier, the development of informational technology could only temporarily benefit FedEx.
This is because the spread of such technology makes it possible for any particular product to be made locally, which will decrease the demand for FedEx services. 5. At present time, there is an ongoing labor dispute, within FedEx. This will inevitably result in legal consequences. Only 10 years ago, FedEx pilots were allowed to unionize, on the condition that they will never use strikes as a method of dealing with FedEx labor policies. Right after this, the other personnel also began to demand better wages through organizing itself into the unions. Since 70 % of FedEx employees are experts in their fields, boosting the team spirit, hiring illegal workers and other tricks cannot be used to help the situation. 6.
FedEx large air fleet is the subject to the environmental regulations, which become stricter from year to year. Company is actively using many planes that are older than 20 years. It is well known that some airports in U. S. and Europe apply restrictions, in regards to such planes, because of environmental considerations. This is why the environmental factor affects FedEx commercial activity in much larger degree than one might think.
Porters Five Forces According to Michael Porter, the competitive rivalry within the industry is defined by the dynamics of customers and suppliers bargaining power. It is also affected by the threat of new entrants and by the threat of substitute products. Let us apply this theory to evaluate the FedEx from commercial prospective. It is impossible to deny the fact that the customers bargaining power has considerably increased in the last years, in regards to FedEx services. This comes as the direct result of rivalry, on the part of UPS, DHL and USPS.
The bargaining power of suppliers can be considered as such that remained the same. Even though that McDonald Douglas became part of Boeing, the recent commercial successes of Airbus Corporation does not allow Boeing to charge monopolistic prices for the delivery of new planes. The threat of new entrants has too many independent variables, which prevents us from calculating its probability. However, it is most likely to increase, since many large corporations show tendency to expand to previously unexplored markets.
Despite this, the successful new entrants are traditionally associated with the technological breakthroughs. This is very unlikely to happen in the field of transporting parcels. Therefore, we will describe the threats of new entrants as moderate. The threat of substitute products, in case of FedEx, can be thought of as low. After all, we do not talk here about producing DVD players. The only alternative to FedEx, which can be described as a substitute, is services of U.
S. Mail. Nevertheless, the overwhelming difference in quality of FedEx and U. S. Mail services does not allow us to compare them.
After having taken into the account what has been said in this analysis, we can suggest that overall competitive rivalry, within FedEx market is moderate. Corus SWOT Corus is one of Europe's largest manufactures of steel. If was being founded in 1999, after the merge of British Steel and Hoogovens. In 2002 its total production output consisted of 16. 8 million tons. Companys main markets consist of aerospace, automotive, construction, consumer products, defense and security, energy and shipbuilding. In 2001, it was employing 22. 000 workers.
This number was reduced to 20. 000 in 2003 and ever since, it remains the same. Strengths: Corus has a considerable financial means to remain competitive in the field of producing steel. In 2003, Company managed to come up with revenue of 7. 953 million Euros. In the list of top steel manufactures, Corus ranked sixth. Even though that Companys commercial efficiency has been severely undermined in years 1999 - 2002, due to the increasing level of competition from Eastern Europe, the economic boom in China resulted in substantial upsurge of demand for steel in 2003. Ever since, Corus is doing much better.
Weaknesses: Being much smaller than its main rivals are, Corus cannot offer a competitive edge, which would be related to the quality of its products. This is the main reason why this company is likely to loose competition and become the part of larger corporations. Corus former top officials proved themselves as being economically incompetent. The lack of vision, on their part, resulted in situation when large steel factories in Eastern Europe were being privatized by Corus rivals, even though that the Company had a chance to do it first. Opportunities: Corus most important opportunity lies in expansion to Eastern Europe, as well as in supplying the needs of Chinese steel market.
In addition, it appears that such countries as Malaysia, Thailand and Korea will increase their imports of steel. This will enable Corus to improve its revenue rates, if Companys managers will not miss this opportunity, as it happened before. Threats: Corus is commercially threatened by LNM Corporation, which pursues an aggressive acquisition policy, in order to become a monopolist on European steel market. It has already tried to buy Corus, so far unsuccessfully. However, one does not have to be prophet to understand that Corus simply does not have a chance of withstanding competition with LNM, just like the boxer from lightweight category has no chance of winning in fight with heavyweight fighter.
PESTLE 1. Corus commercial efficiency is undermined by U. S. high taxes, imposed on the steel, which is coming from Europe. Thus, the current political situation is what defines Corus financial standing and the level of its competitiveness. 2.
Company is affected by the current economic trends. Ever since the decline of Industrialism in the West, demand for steel has been steadily declining. Recently, such demand began to pick up. This has to do with the growth of Asian economies, which in globalized world are going to play the role of industrial appendage. 3.
Nowadays, steel industry is associated with heavy physical jobs, which younger generations in Western countries despise. This is why Corus employees turnover is high. It appears that Company will be much better off it moves its production lines to China. 4. Corus heavily invests in development of steel producing technology. This can be thought of as positive.
Nevertheless, the focus is being put on reducing the cost of production rather then on achieving technological breakthroughs 5. The story about Companys former officials being forbidden, by the decision of the court, from selling Corus aluminum division, proves that the legal aspects of Companys functioning are far from being perfect. Apparently, Corus suffers from the absence of clarity, regarding the executive powers, on the part of its officials. 6. Corus efficiency, as commercial enterprise, is undermined by governmental rules and regulations, which meant to protect the environments from the harmful effects of steel production.
Even though that company undergoes financial recovery, it still cannot afford to invest into finding the new ways of how to reduce environmental pollution. Porters Five Forces In Corus case, we can say that the customers bargaining power is high. This is because on steel market supply exceeds the demand. Suppliers bargaining power is also high, because there are only so many iron core mines in the world. The threat of new entrants is negligible, because steel marked is defined by the strong competition, between manufactures. The governments in most countries maintain tight control over nations natural resources; therefore, being able to enter steel market is the matter of having political connections, rather than securing investments.
Still, Corus biggest problem is that the composite materials, such as plastic, are successfully replacing steel. Kevan Scholes says in the case study: For example, the steel intensity in many products (e. g. motorcars) had declined remarkably with average steel thickness (for the same performance) reducing from 2 mm to 0. 8 mm.
In the reverse direction, improvements in metallurgical properties and reductions in cost were allowing steel beams to make major inroads into the construction market at the expense of concrete (Scholes). To conclude the analysis we need to say that the overall competitive rivalry, within the industry is very intense, therefore, Corus managers will have to apply extra effort, in order for the Company to remain profitable. Comparison It is a challenging task to compare FedEx and Corus, since these companies operate within the framework of completely different industries. Nevertheless, they are both commercial enterprises, focused on making profit, as their main objective. Therefore, certain elements of their marketing strategies can be compared. FedEx commercial success can be explained by the fact that Companys top managers never hesitated to implement technological innovations, even when it was being considered as very risky.
Contrary to that, Corus officials inability to undertake risk resulted in this corporation losing its competitive edge. It seems that those who run Corus simply lack the ambition to make their Company appealing to the potential investors. Even Corus web site design does not look representative. The main similarity between Corus and FedEx is that they both are transnational corporations.
Both companies have branches in foreign countries. Because of this, we can conclude that the economic globalization is considered to be beneficial by both companies. FedEx and Corus are public companies; therefore, their financial stability relies on the ability of their managers to attract investments. So far, FedEx has done much better done much better job, in this respect. While the history of FedEx is the story of commercial success in making, up until recently, the story of Corus has been a story of a failure. Even in its most difficult years, FedEx was continually expanding the range of its business activity, while Corus could not find better way to maintain its annual revenue than selling some of its divisions.
Of course, this was largely the result of economical realities of the time. Still, the lack of commercial flexibility, on the part of Corus top officials, can be considered as one of the most important factors, which brought this company to the brink of bankruptcy in 2001. To conclude this paper we need to say that the examples of FedEx and Corus prove once again that the competitive rivalry, on the level of translational corporations, does not tolerate stagnant stability. The company is whether strives to expand, while trying to gain a monopoly or it is being pushed out of competition by its rivalries. As practice shows, in the corporate world, companys commercial efficiency is not as important as its sheer size. Bibliography: Gillies, Andrew FedEx's Stamp Act.
March 18, 2002. Forbes. Com. January 16, 2007 web FedEx Announces FedEx Tracking Plus. May 22, 2002. Denounce Newswire.
January 16, 2006. web Scholes, Kevan Corus. 2006. Case Study. Pearson Education Product Support Team. January 16, 2007. web petra 7 / 0, 9855, 1709610 -, 00.
htm. Scholes, Kevan Federal Express- Delivering the Goods. Case study. 2006. Pearson Education Product Support Team. January 16, 2007. web petra 7 / 0, 9855, 1709610 -, 00.
htm. Shook, Derek FedEx Keeps Delivering. April 26, 2002. Business Week Online. January 16, 2007 web Welcome to Corus. 2006. Corus Group Site.
January 16. 2007. web
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