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 - – there is backlash against globalization, geopolitical disruptions, increasing inequality as vast percentage of new income is going to the top 1%, talent flight as more people leaving formal jobs, increasing commodity prices, increasing transportation and logistics costs, technology disruption,
banking and financial system is disrupted by Bitcoin and other crypto currencies, digital marketing is dominated by two big players Facebook and Google, 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 -
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.
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.
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.
Highly skilled collaborators
– Fedex Logistics has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in FedEx Corp.: Structural Transformation Through e-Business HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
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.
Training and development
– Fedex Logistics has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in FedEx Corp.: Structural Transformation Through e-Business Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
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.
Operational resilience
– The operational resilience strategy in the FedEx Corp.: Structural Transformation Through e-Business Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
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.
Organizational Resilience of Fedex Logistics
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Fedex Logistics does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Successful track record of launching new products
– Fedex Logistics has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Fedex Logistics has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
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.
No frontier risks strategy
– After analyzing the HBR case study FedEx Corp.: Structural Transformation Through e-Business, it seems that company is thinking about the frontier risks that can impact Strategy & Execution strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study FedEx Corp.: Structural Transformation Through e-Business, is just above the industry average. Fedex Logistics needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Skills based hiring
– The stress on hiring functional specialists at Fedex Logistics has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
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.
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 cash cycle compare to competitors
Fedex Logistics has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Fedex Logistics is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study FedEx Corp.: Structural Transformation Through e-Business can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
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.
Products dominated business model
– Even though Fedex Logistics has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - FedEx Corp.: Structural Transformation Through e-Business should strive to include more intangible value offerings along with its core products and services.
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.
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 -
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.
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.
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.
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.
Loyalty marketing
– Fedex Logistics has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
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.
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.
Better consumer reach
– The expansion of the 5G network will help Fedex Logistics to increase its market reach. Fedex Logistics will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Fedex Logistics is facing challenges because of the dominance of functional experts in the organization. FedEx Corp.: Structural Transformation Through e-Business case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Leveraging digital technologies
– Fedex Logistics can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Strategy & Execution industry, but it has also influenced the consumer preferences. Fedex Logistics can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Learning at scale
– Online learning technologies has now opened space for Fedex Logistics to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
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 -
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Fedex Logistics.
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.
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.
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.
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.
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.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Fedex Logistics will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Shortening product life cycle
– it is one of the major threat that Fedex Logistics is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study FedEx Corp.: Structural Transformation Through e-Business, Fedex Logistics may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Strategy & Execution .
Increasing wage structure of Fedex Logistics
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Fedex Logistics.
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 .
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.
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.
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.