Saturday, July 21, 2012

FedEx Case

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FedEx Case

1. Federal Express’ strategy for competing in the overnight delivery industry was inventive as compared to the competition. The founder, Fred Smith, shared a vision of an express distribution service by capitalizing on the need of businesses for speed and reliability of deliveries. FedEx focused on creating a next-day service that was reliable and timely. It took losses in the first three years, but saw an increase in the years following. Also, part of the company’s strategy was to acquire their own means of transportation, technology, and warehousing. FedEx did not believe that contracting or leasing would help its quest for low costs. Recently, FedEx emphasized technology as their competitive advantage over the other delivery companies. It has embraced the Internet as an excellent way of communicating with customers one-on-one and gives them easy access to company information. Federal Express is currently using the strategy of focusing on low-cost, while producing the highest quality and satisfaction for the customer.

The strategy truly evolved since Fred Smith first started the company in 17, but still holds onto the foundation upon which it was built. Technology and competition has forced FedEx to brand themselves not only as an express delivery service, but now a multipurpose company. It reorganized into several subsidiary companies that function independently, but compete collectively under the FedEx name. This move helps each subsidiary to make their own improvements and become the best in the industry without sacrificing other parts at the same time. Its strategy has also expanded more into the global market, finding new markets and cheaper resources. Because FedEx determined that speed is the most important service for most customers, it decided to take hold of the opportunity and fought to be the “Speedy Gonzales” of the industry. Beyond improving their customer service, FedEx also found that this shortened order payment cycles, improved cash flow, and beat all competition.

Federal Express changed their business model to include e-business solutions by putting it as part of the subsidiary companies and making it a priority in their business strategy. The company could see that the market was evolving due to the increased use of the Internet. Therefore, they created an opportunity for customers via the Internet. In the year 000, FedEx went through a reorganization phase, part of that reorganization included changes needed to include e-business solutions. By reorganizing and placing e-business in a subsidiary while maintaining the FedEx name, there was growth and opportunity. Fed Ex is still undergoing some changes to make sure that it stays on top in e-business solutions.

. Changing industry conditions have dramatically shaped FedEx’s strategy in more than one way. Three main trends (1) the globalization of businesses, () advances in information technology, including the Internet, and () and the application of new technology to generate process efficiencies. As more American businesses expanded past the national boundaries of business, the demand for increased foreign services in transportation and delivery became greater. Thus, the need to refocus the strategy became apparent. Further, advances in technology created a larger demand for services because more businesses and individuals had greater and more efficient access to requests for services. Again, this change created a need for a new, more updated strategy. Finally, as the new technology was being used, customers could place more orders efficiently, the company could run more efficiently, and the demand for service was greatly enhanced because of efficiency. These three trends “paved a road” for the need for a new strategy. This new strategy had to be up-to-date, focusing largely on the increasing use of the Internet and also the world-wide market.

Specific changes that created new opportunities for the company include the following government deregulation of the airplane and trucking industries, trade deregulation in Asia Pacific, technological breakthroughs and applications innovations which include package tracking and more efficient opportunities for customer ordering, and rising inflation and global competition.

. The role information technology has played in FedEx’s strategy is exciting. By using IT as a major part of its business, FedEx has reached an almost entirely new group of people. It has maintained its reputation and increased its business at the same time. IT has created a greater opportunity for customers in the global market. They can now request service, pay for that service, and track the package online. Customers no longer need to speak to FedEx. They are now free to order as they need, twenty-four hours per day, seven days per week. Because of this, FedEx’s strategy has changed. It is now focused on the use of the Internet and other technological advances. Because this is such a critical aspect of the strategy, the implementation of the strategy had to be almost immediate. To compete with other major businesses in the industry, FedEx had to provide a service to customers that could be accessed using technology. They also had to provide a package tracking service. As they developed this service, their reputation and business grew.

Information technology has become an important aspect of FedEx’s operations because of increasing demands in service. As information technology improved, so did FedEx’s focus on its use in operations. The use of IT increased the efficiency of operations and lowered the cost of operations. It provided a marvelous opportunity for FedEx. The company recognized this and soon focused on the use of the Internet for customers for ordering, tracking, and paying for services rendered. In doing so, FedEx immediately found an increase in business, while enjoying a decrease in the demand of cost in operations. Technology creates a way for businesses to be successful; FedEx is a paramount example in this area.

4. FedEx has done several things with its value chain to develop new business. First they have always recognized the need to have technology and IT work to communicate the logistics that they run. They have developed internet technologies that work simply and efficiently to enable customers and sellers to use FedEx as a go between. This has enabled many companies to integrate FedEx technology into their own web sites for customers to use. However, up until January 1, 000 the organization of FedEx was very broad and tried to cater to too many customers without centrally organizing efficiently its information technology. After January 1, 000 FedEx performed a reorganization within the company to develop and initiate new businesses. These new businesses were organized to try and capture more of the logistics and transportation market. FedEx used their established name and brand and applied it across the board for the different silos they have within the organization. It was a smart move to integrate the FedEx name everyone recognizes. They are now centralizing their business and enabling customers to come to one site to get all the services they need.

5. It seems that FedEx is making good efforts and strides to adapt to the changing market. They seem to have a firm grasp on what IT can do to create business. Some possible things FedEx could do would be to continue with its consumer home delivery service. In the future the internet and shopping online will increase among end level consumers and more middle men will be out of the loop. This is an enormous opportunity for FedEx if it develops an efficient infrastructure to support these transactions. It is also important that FedEx continue to develop technologies that make shipping and logistics more convenient and efficient for customers. The industry is very competitive and FedEx must use its image and confidence of its customers to develop and implement new technologies to create the efficiency customers want.

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