FedEx (FDX) SWOT Analysis / TOWS Matrix / MBA Resources
Air Courier
Strategy / MBA Resources
Introduction to SWOT Analysis
SWOT Analysis / TOWS Matrix for FedEx (Germany)
Based on various researches at Oak Spring University , FedEx is operating in a macro-environment that has been destablized by – there is increasing trade war between United States & China, increasing inequality as vast percentage of new income is going to the top 1%, increasing energy prices, increasing household debt because of falling income levels, central banks are concerned over increasing inflation, customer relationship management is fast transforming because of increasing concerns over data privacy, talent flight as more people leaving formal jobs,
increasing government debt because of Covid-19 spendings, geopolitical disruptions, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that FedEx can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the FedEx, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which FedEx 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 can be done for the following purposes –
1. Strategic planning of FedEx
2. Improving business portfolio management of FedEx
3. Assessing feasibility of the new initiative in Germany
4. Making a Air Courier sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of FedEx
Strengths of FedEx | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of FedEx are -
Low bargaining power of suppliers
– Suppliers of FedEx in the Transportation sector have low bargaining power. FedEx has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps FedEx to manage not only supply disruptions but also source products at highly competitive prices.
Ability to lead change in Air Courier
– FedEx is one of the leading players in the Air Courier industry in Germany. Over the years it has not only transformed the business landscape in the Air Courier industry in Germany but also across the existing markets. The ability to lead change has enabled FedEx in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
High brand equity
– FedEx has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled FedEx to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Organizational Resilience of FedEx
– The covid-19 pandemic has put organizational resilience at the centre of everthing FedEx does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Highly skilled collaborators
– FedEx has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Air Courier industry. Secondly the value chain collaborators of FedEx have helped the firm to develop new products and bring them quickly to the marketplace.
Sustainable margins compare to other players in Air Courier industry
– FedEx has clearly differentiated products in the market place. This has enabled FedEx to fetch slight price premium compare to the competitors in the Air Courier industry. The sustainable margins have also helped FedEx to invest into research and development (R&D) and innovation.
Strong track record of project management in the Air Courier industry
– FedEx is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Effective Research and Development (R&D)
– FedEx has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – FedEx staying ahead in the Air Courier industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Superior customer experience
– The customer experience strategy of FedEx in Air Courier industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Innovation driven organization
– FedEx is one of the most innovative firm in Air Courier sector.
Learning organization
- FedEx 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 is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at FedEx emphasize – knowledge, initiative, and innovation.
Digital Transformation in Air Courier industry
- digital transformation varies from industry to industry. For FedEx digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. FedEx 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.
Weaknesses of FedEx | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of FedEx are -
High bargaining power of channel partners in Air Courier industry
– because of the regulatory requirements in Germany, FedEx 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 Air Courier industry.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, FedEx is slow explore the new channels of communication. These new channels of communication can help FedEx to provide better information regarding Air Courier products and services. It can also build an online community to further reach out to potential customers.
Interest costs
– Compare to the competition, FedEx has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Aligning sales with marketing
– From the outside it seems that FedEx needs to have more collaboration between its sales team and marketing team. Sales professionals in the Air Courier industry have deep experience in developing customer relationships. Marketing department at FedEx can leverage the sales team experience to cultivate customer relationships as FedEx is planning to shift buying processes online.
High cash cycle compare to competitors
FedEx has a high cash cycle compare to other players in the Air Courier industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Employees’ less understanding of FedEx strategy
– From the outside it seems that the employees of FedEx 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.
Capital Spending Reduction
– Even during the low interest decade, FedEx has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the Air Courier industry using digital technology.
Lack of clear differentiation of FedEx products
– To increase the profitability and margins on the products, FedEx needs to provide more differentiated products than what it is currently offering in the marketplace.
Ability to respond to the competition
– As the decision making is very deliberative at FedEx, in the dynamic environment of Air Courier industry it has struggled to respond to the nimble upstart competition. FedEx has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Compensation and incentives
– The revenue per employee of FedEx is just above the Air Courier industry average. It 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.
Products dominated business model
– Even though FedEx has some of the most successful models in the Air Courier industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. FedEx should strive to include more intangible value offerings along with its core products and services.
FedEx Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of FedEx are -
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 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.
Better consumer reach
– The expansion of the 5G network will help FedEx to increase its market reach. FedEx 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.
Leveraging digital technologies
– FedEx 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, FedEx is facing challenges because of the dominance of functional experts in the organization. FedEx can utilize new technology in the field of Air Courier industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Buying journey improvements
– FedEx can improve the customer journey of consumers in the Air Courier industry by using analytics and artificial intelligence. It 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.
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the Air Courier industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. FedEx 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 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.
Loyalty marketing
– FedEx 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.
Creating value in data economy
– The success of analytics program of FedEx has opened avenues for new revenue streams for the organization in Air Courier industry. This can help FedEx to build a more holistic ecosystem for FedEx products in the Air Courier industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Air Courier industry, but it has also influenced the consumer preferences. FedEx can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Manufacturing automation
– FedEx can use the latest technology developments to improve its manufacturing and designing process in Air Courier sector. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Developing new processes and practices
– FedEx can develop new processes and procedures in Air Courier industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for FedEx 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 to hire the very best people irrespective of their geographical location.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, FedEx 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 FedEx to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Threats FedEx External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of FedEx are -
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.
Consumer confidence and its impact on FedEx 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 Air Courier industry and other sectors.
Stagnating economy with rate increase
– FedEx 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 Air Courier industry.
High dependence on third party suppliers
– FedEx high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Environmental challenges
– FedEx 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 can take advantage of this fund but it will also bring new competitors in the Air Courier industry.
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 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, FedEx may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Air Courier sector.
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.
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 business can come under increasing regulations regarding data privacy, data security, etc.
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.
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 needs to understand the core reasons impacting the Air Courier industry. This will help it in building a better workplace.
Easy access to finance
– Easy access to finance in Air Courier industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. FedEx can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Regulatory challenges
– FedEx 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 Air Courier industry regulations.
Weighted SWOT Analysis of FedEx Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at FedEx 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 FedEx 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 FedEx 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 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 needs to make to build a sustainable competitive advantage.
