Q1- Describe the growth strategy of federal express. How has this strategy differed from those of its competitors?
Federal Express, commonly referred to as FedEx is a cargo-carrying airline that started its operations years ago. First, it considered its domestic market. FedEx management decided to utilize the strategy of focused service to grow its market share. The strategy involves having a prime location that is suitable for the business from where then the services are offered to the clients. This helped FedEx have quick efficient services provided to its customers whereby mails were delivered by night. The focused service means that the customer base will grow steadily and FedEx only had to increase the size of their facilities and the number of personnel. FedEx was the first company to offer overnight services to its clients. Clients were therefore assured of the quick services offered at any given time by FedEx. The strategy next used to complement the provision of focused service was the creation of a focused network. A focused network ensures that customers are served much better and they don’t have to go to a central operation centre. This was made possible with the introduction of a computerized system that linked the entire operations of FedEx. This system was useful in tracking luggage and keeping records of the company as well as ensuring flow of information between the different operations.
FedEx also introduced a system of clustered service to its systems. In the initial stages, FedEx mainly dealt with mail delivery as its key business but this has changed over time to include a variety of cargo related services (Fitzsimmons, 77). It is currently the major all-cargo airline service worldwide. This strategy automatically saw FedEx rise to the top during its initial formative years. The diversified network meant that FedEx could effortlessly and efficiently provide a variety of services globally.
FedEx intensified its efforts by entering into franchise contract. Through a franchise deal, an investor becomes the owner of an independent operation that bears the name of the parent company but is only bound by a contractual agreement. By entering into franchise arrangements, FedEx could expand its network without having to utilize its internally generated revenues. Several headquarters were placed in respective continents to overlook the operations of its branches and those of its franchises (Weatherbe, 56). The headquarters were to ensure that operations of FedEx were undertaken appropriately. The strategy developed by FedEx differs a lot from that of other companies. The key thing in running franchises is to ensure that the value and competence is maintained. FedEx gains by gaining higher returns through revenues paid for the use of the franchise rights while the franchisee gains immensely from having to use an already established brand rather than having to create a brand from scratch. In addition, they stand to gain benefits from already existing economies. The main issues to be covered by the franchiser are the extent of the autonomy to be allowed the franchisee, the process of crisis solving and the sort of the contract.
Q.2- What risks are involved in the acquisition of Tiger International?
Global of services & Global service strategies
Acquisition by FedEx of Tiger International globalised services offered by FedEx. It increased the amount of cargo carried, the efficiency in its delivery and reduced the time of transport of cargo. This purchase also gave FedEx special rights such as landing rights in many countries. Tiger international came with its limitations despite all these benefits. This acquisition doubled the debts. This was attributable to the fact that the acquisition consumed massive amounts of FedEx’s financial resource, and additionally led to the acquirement of debts to meet the company’s running requirements.
Another hindrance was that transportation of heavy cargo overnight was limited. It became difficult to plan successful schedules for both daytime and night since this entailed a higher number of air jets (Pride, 35). This was very expensive and it lowered the profits of FedEx for a considerable duration of time. Consequentially, the achievement of short and long-term goals became limited and the company had to reduce expenses incurred in other transactional dealings that were luxurious in nature. For instance, the employee promotional functions achieved through increment of wage and extra pay for extra hours had to be foregone, to keep the business running efficiently.
FedEx also faced the problem of integrating the many Tiger workers into its system. It became mandatory for FedEx to change its way of operating due to this merger. This was a great disadvantage to FedEx, owing to the fact that the adjustment process had to take much time, during which the manner of serving managerial tasks was altered, slowing down the company’s achievement of objectives. The risks of acquiring Tiger International were immense, requiring great sacrifices, but FedEx took the risk and currently reaps great benefits.
Q.3- Addition to the question of merging FedEx and Flying Tiger pilots, what other problems could be anticipated in accomplishing this acquisition?
One limitation that came with the merger of FedEx and Tiger Flying Pilots was that FedEx found it difficult to deal with the Union culture of Tiger Pilots. This was because FedEx operations were mostly corporate. It became difficult to choose between these two policies. Many problems could arise from the merger of FedEx with Tiger pilots. FedEx promised to employ all the Tiger Pilots because of this merger. This could lead to congestion in the FedEx working environment. Such a situation may lead to the dismissal of some of the experienced employees of FedEx. This congestion could also ensure an increase in the expenditure by FedEx. This is because the many employees would need a lot of pay and other many benefits that come with the business world. Additionally, it would be difficult to integrate the working capacities of the staff of two different companies, with different experiences and different working approaches to a single unit of skill. This would have to limit the kind and amount of output given in a given time period.
FedEx could also face the challenge of incorporating the laws of Tiger Pilots in its system. This would mean that previous FedEx employees would have to adapt to new rules. This will curtail the efficiency with which these employees work (Hoover Inc, 29). The question of seniority could also arise because of this merger. This is because Tiger senior pilots would need the same position and privileges they enjoyed from their previous employers. This would be a great dilemma since it would be difficult to decide who to promote and who to give a lower position. As a result, conflict would be expected, converse to the cooperation required for the progress of a working force.
Work Cited
Fitzsimmons, A. James. Service Management: Operations, Strategy, and Information Technology, 5th Edition. California: McGraw-Hill Publishers, 2006. pp.77-90.
Hoover Inc. Hoover’s Handbook of American Business. New York: Hoovers Publishers, 2007.pp. 29-50.
Pride, William, M. Marketing Express, 3rd Edition. Boston: Cengage Learning Publishers, 2008. pp.35-49.
Wetherbe, James, C. The World on Time: the 11 Management Principles that made FedEx an Overnight. Michigan: Knowledge Exchange Publishers, 2010.pp. 56-80.
