Case Study Description of FedEx Corp.: Structural Transformation Through e-Business
Set in 2000, the case provides a comprehensive analysis of transportation logistics and FedEx's internal integrated logistics applications. FedEx demonstrates the shift from "physical" to "information and value-added services" in an e-commerce environment. An excellent scenario to discuss whether companies should focus on core competencies or seek vertical and forward integration to provide integrated services. Also addresses issues that companies face when they wish to transform themselves from a conventional to an e-business model.
Swot Analysis of "FedEx Corp.: Structural Transformation Through e-Business" written by Ali F. Farhoomand, Pauline Ng includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Fedex Logistics facing as an external strategic factors. Some of the topics covered in FedEx Corp.: Structural Transformation Through e-Business case study are - Strategic Management Strategies, Competitive strategy, International business, Supply chain and Strategy & Execution.
Some of the macro environment factors that can be used to understand the FedEx Corp.: Structural Transformation Through e-Business casestudy better are - – digital marketing is dominated by two big players Facebook and Google, wage bills are increasing, increasing government debt because of Covid-19 spendings, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing transportation and logistics costs, geopolitical disruptions, increasing household debt because of falling income levels,
increasing commodity prices, increasing inequality as vast percentage of new income is going to the top 1%, etc
Introduction to SWOT Analysis of FedEx Corp.: Structural Transformation Through e-Business
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in FedEx Corp.: Structural Transformation Through e-Business case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Fedex Logistics, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Fedex Logistics operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of FedEx Corp.: Structural Transformation Through e-Business can be done for the following purposes –
1. Strategic planning using facts provided in FedEx Corp.: Structural Transformation Through e-Business case study
2. Improving business portfolio management of Fedex Logistics
3. Assessing feasibility of the new initiative in Strategy & Execution field.
4. Making a Strategy & Execution topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Fedex Logistics
Strengths FedEx Corp.: Structural Transformation Through e-Business | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Fedex Logistics in FedEx Corp.: Structural Transformation Through e-Business Harvard Business Review case study are -
Ability to recruit top talent
– Fedex Logistics is one of the leading recruiters in the industry. Managers in the FedEx Corp.: Structural Transformation Through e-Business are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Fedex Logistics digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Fedex Logistics has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Sustainable margins compare to other players in Strategy & Execution industry
– FedEx Corp.: Structural Transformation Through e-Business firm has clearly differentiated products in the market place. This has enabled Fedex Logistics to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Fedex Logistics to invest into research and development (R&D) and innovation.
Innovation driven organization
– Fedex Logistics is one of the most innovative firm in sector. Manager in FedEx Corp.: Structural Transformation Through e-Business Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Low bargaining power of suppliers
– Suppliers of Fedex Logistics in the sector have low bargaining power. FedEx Corp.: Structural Transformation Through e-Business has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Fedex Logistics to manage not only supply disruptions but also source products at highly competitive prices.
Effective Research and Development (R&D)
– Fedex Logistics has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study FedEx Corp.: Structural Transformation Through e-Business - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
High brand equity
– Fedex Logistics has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Fedex Logistics to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
High switching costs
– The high switching costs that Fedex Logistics has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Ability to lead change in Strategy & Execution field
– Fedex Logistics is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Fedex Logistics in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Learning organization
- Fedex Logistics is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Fedex Logistics is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in FedEx Corp.: Structural Transformation Through e-Business Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Superior customer experience
– The customer experience strategy of Fedex Logistics in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Cross disciplinary teams
– Horizontal connected teams at the Fedex Logistics are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Weaknesses FedEx Corp.: Structural Transformation Through e-Business | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of FedEx Corp.: Structural Transformation Through e-Business are -
High bargaining power of channel partners
– Because of the regulatory requirements, Ali F. Farhoomand, Pauline Ng suggests that, Fedex Logistics is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Aligning sales with marketing
– It come across in the case study FedEx Corp.: Structural Transformation Through e-Business that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case FedEx Corp.: Structural Transformation Through e-Business can leverage the sales team experience to cultivate customer relationships as Fedex Logistics is planning to shift buying processes online.
High operating costs
– Compare to the competitors, firm in the HBR case study FedEx Corp.: Structural Transformation Through e-Business has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Fedex Logistics 's lucrative customers.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study FedEx Corp.: Structural Transformation Through e-Business, it seems that the employees of Fedex Logistics don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Workers concerns about automation
– As automation is fast increasing in the segment, Fedex Logistics needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Low market penetration in new markets
– Outside its home market of Fedex Logistics, firm in the HBR case study FedEx Corp.: Structural Transformation Through e-Business needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study FedEx Corp.: Structural Transformation Through e-Business, in the dynamic environment Fedex Logistics has struggled to respond to the nimble upstart competition. Fedex Logistics has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the FedEx Corp.: Structural Transformation Through e-Business HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Fedex Logistics has relatively successful track record of launching new products.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Fedex Logistics supply chain. Even after few cautionary changes mentioned in the HBR case study - FedEx Corp.: Structural Transformation Through e-Business, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Fedex Logistics vulnerable to further global disruptions in South East Asia.
Increasing silos among functional specialists
– The organizational structure of Fedex Logistics is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Fedex Logistics needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Fedex Logistics to focus more on services rather than just following the product oriented approach.
Lack of clear differentiation of Fedex Logistics products
– To increase the profitability and margins on the products, Fedex Logistics needs to provide more differentiated products than what it is currently offering in the marketplace.
Opportunities FedEx Corp.: Structural Transformation Through e-Business | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study FedEx Corp.: Structural Transformation Through e-Business are -
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Fedex Logistics in the consumer business. Now Fedex Logistics can target international markets with far fewer capital restrictions requirements than the existing system.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Strategy & Execution industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Fedex Logistics can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Fedex Logistics can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Fedex Logistics to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Fedex Logistics can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Building a culture of innovation
– managers at Fedex Logistics can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Strategy & Execution segment.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Fedex Logistics to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Fedex Logistics to hire the very best people irrespective of their geographical location.
Using analytics as competitive advantage
– Fedex Logistics has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study FedEx Corp.: Structural Transformation Through e-Business - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Fedex Logistics to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Fedex Logistics can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Fedex Logistics can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, FedEx Corp.: Structural Transformation Through e-Business, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Creating value in data economy
– The success of analytics program of Fedex Logistics has opened avenues for new revenue streams for the organization in the industry. This can help Fedex Logistics to build a more holistic ecosystem as suggested in the FedEx Corp.: Structural Transformation Through e-Business case study. Fedex Logistics can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Low interest rates
– Even though inflation is raising its head in most developed economies, Fedex Logistics can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Fedex Logistics can use these opportunities to build new business models that can help the communities that Fedex Logistics operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Buying journey improvements
– Fedex Logistics can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. FedEx Corp.: Structural Transformation Through e-Business suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Threats FedEx Corp.: Structural Transformation Through e-Business External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study FedEx Corp.: Structural Transformation Through e-Business are -
Stagnating economy with rate increase
– Fedex Logistics can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Fedex Logistics in the Strategy & Execution industry. The Strategy & Execution industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Environmental challenges
– Fedex Logistics needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Fedex Logistics can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Fedex Logistics can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study FedEx Corp.: Structural Transformation Through e-Business .
Consumer confidence and its impact on Fedex Logistics demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Fedex Logistics with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Fedex Logistics needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Regulatory challenges
– Fedex Logistics needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Strategy & Execution industry regulations.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Fedex Logistics business can come under increasing regulations regarding data privacy, data security, etc.
Technology acceleration in Forth Industrial Revolution
– Fedex Logistics has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Fedex Logistics needs to keep up with the evolution of technology in the Strategy & Execution sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Easy access to finance
– Easy access to finance in Strategy & Execution field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Fedex Logistics can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Weighted SWOT Analysis of FedEx Corp.: Structural Transformation Through e-Business Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study FedEx Corp.: Structural Transformation Through e-Business needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study FedEx Corp.: Structural Transformation Through e-Business is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study FedEx Corp.: Structural Transformation Through e-Business is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of FedEx Corp.: Structural Transformation Through e-Business is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Fedex Logistics needs to make to build a sustainable competitive advantage.
