Structural Transformation Through
E- Business
Ezgi Öztörün
Onur Okut
Agenda
A) About FedEx
1. Information About Company Establishment
2. Industry Development- FedEx Innovations (timeline)
3. Competitor Analysis
B) Structural Transformation Through E- Business
1. FedEx Problem
2. Impacts of E-Business on the Industry
3. As of January 2000 Announcement - New Implemented Structure
C) Between 2000 - 2010 FedEx
1. Evaluation of 2000 Announcements
2. Post - Implementation Strategies
D) Final Comments & Questions and Answer Session
A) About FedEx
1) Information About Company Establishment
Began operation as a customs broker in Niagara Falls, N.Y. (1903)
Frederick W. Smith - Federal Express in June 1971
Officially began operations on April 17th, 1973 - the modern air/ground
express industry was born
“Since its inception in 1973, Federal Express Corporation has transformed itself
from an express company to a global logistics and supply-chain management
company.”
A) About FedEx
2) Industry Development- FedEx Innovations
a) The Express Transportation and Logistics Industry
3 main trends:
The globalisation of businesses
Advances in information technology and
the application of new technology to
generate process efficiencies
The changing market demand for more
value-added services
The breakthough for
the industry!
A) About FedEx
With the advent of IT, express
transportation became an aggregation of
two main functions:
The physical delivery of parcels
The management and utilization of the
flow of information pertaining to the
physical delivery
A) About FedEx
2) Industry Development- FedEx Innovations
b) The FedEx Innovations (timeline)
1979 COSMOS (Customer Oriented Services and Management Operating System)
1984 PowerShip
1985 Bar-code Labelling
1994 FedEx Website
1996 FedEx interNetShip
1999 Partnership with NetScape
A) About FedEx
3) Competitor Analysis
To competitiveness of transportation companies depended upon 3 factors:
Their global network of distribution centers
Their ability to delivery wherever their customers conducted business
Speed- in order to avoid from the effects of rising inflation and global
competition
The 4 leading companies - UPS,TNT,DHL and FedEx-
held more than %90 of the worldwide market
A) About FedEx
SWOT Analysis
Strengths:
1) global scale Weaknesses:
2) new technology 1) prices
3) strong brand 2) labor disputes
image
Threats:
Opportunities: 1) relations with
1) global expansion foreign countries
2) world economic
2) joint-ventures
and political
conditions
“Although FedEx pioneered the Web-based
package-tracking system such systems became the
industry norm rather than a competitive
advantage”
B) Structural Transformation
Through E- Business
1) FedEx Problem
After the acquisition of Calibar Systems Inc. in 1998
Compatibility problem between Caliber and FedEx’s logistics
UPS’s competitive advantage
FedEx- confused customers
Effects of rising fuel prices in 1999
Pressure to re-think its business strategy and its supply-chain channels
B) Structural Transformation
Through E- Business
2) Impacts of E-Business on the Industry
The effects of the internet on express transportation and logistics market was
twofold:
Opportunities in logistics management -using the internet through engineer their
supply chain.
(Integration with customer supply chains was the key)
The express transportation needs presented enourmous opportunities for companies
such as FedEx.
(Growth in e-tailing and business to business (B2B) e-commerce)
By integrating these e-business trends, FedEx
renovated its structure to get rid of duality problems in
supply–chain organizations
B) Structural Transformation
Through E- Business
3) As of January 2000 Announcement - New Implemented Structure
A new branding strategy-extending the FedEx brand to
four of its subsidiary companies:
FedEx Express (formerly Federal Express)
FedEx Ground (formerly RPS)
FedEx Custom Critical (formerly Roberts Express)
FedEx Logistics (formerly Caliber Logistics)
Viking Freight (no change in 2000 however changed in
2002 and became FedEx Freight)
B) Structural Transformation
Through E- Business
FDX Corp. At the end of 1999
Federal FDX Viking Roberts
Express RPS
Logistics Freight Express
FDX Supply Caribbean
Chain Services Transportation
FedEx Corp.
FedEx
FedEx FedEx FedEx Viking FedEx Trade
Custom
Express Ground Logistics Freight Networks
Critical
FedEx Logistics
FedEx Home
Delivery
January 2000
Caribbean
Reorganization Transportation
B) Structural Transformation
Through E- Business
Introduction of a new low-cost residential delivery service - FedEx Home Delivery
Changes for B2B solutions
Growth in consumer e-commerce (B2C e-tailing)
BEFORE AFTER
Multiple brands Single branding
Separate sales force Single sales force
Multiple invoices/ Single
accounts invoice/account
Streamlined
Multiple automation
automation
Separate customer Single customer
service service
Was the January restructuring going to
bring the harvest?
C) Between 2000 - 2010 FedEx
1) Evaluation of 2000 Announcements
10%
Did it provide the right
9%
ingredients to achieve
the objectives of 8%
creating value for 7%
FedEx customers while 6%
at the same time 5%
UPS
FedEx
improving profitability 4%
Linear (FedEx)
for FedEx? 3%
2%
1%
0%
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
Return on Sales Ratio
C) Between 2000 - 2010 FedEx
1) Evaluation of 2000 Announcements
60000
Thousands$
50000 In short term, new
transformation of e-
40000 business and
January 2000
30000 UPS
FDX
announcements did
20000 not have a great
impact on the
10000
profitability.
0
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
Sales Volume - Revenue
C) Between 2000 - 2010 FedEx
2) Post - Implementation Strategies
Given the speed at which technology and the marketplace were changing, would
the new organization structure be adaptable to the FedEx’s business?
Restructuring of some of the subsidiaries such
as Viking Freight and Home Delivery Services
via B2C e-commerce modal completed in 2002
After the restructuring process completed, the
FedEx Corp. preferred to grow with the
acquisitions.
D) Final Comments
The primary reason for the transformation in 2000 was the result of acquisition
strategy. FedEx, however, grew after 2003 with acquisitions. We believed that this
acquisition oriented strategy can create new compatibility problems again and
affect FedEx’s performance negatively in long-run.
The adaptation problems of FedEx can easily be solved if our expectations will
realize. FedEx implemented an integrated system(like FedEx Corp.) The acquisition
strategy should always be complemented with integration strategy.
The problems in supply-chain of FedEx was solved with the support of internet
technology. Since 2000 transformations, FedEx renovated itself with e-commerce
applications such that B2C was a new idea for FedEx, unlike its competitor –UPS.
D) Questions and Answers
In 2000, FedEx did not only combine its subsidiaries but also transform its supply
chain systems. What factors gave rise to the structural transformation of FedEx?
The internet forced the company to consolidate its supply chain systems and
solutions as customers demanded global solutions .
Customers were confused because of decentralized structure of FedEx.
Integration with customer supply chains was the key.
Fill in the blanks:
______became
Speed of significance to achieve competitiveness, not only for the
transportation companies but also for their customers in
express transportation
____________________industry.
True or False?
After the 2000 implementations, FedEx did not anticipate to meet needs of businesses
specializing in B2C e-tailing.
False
