An external analysis is a strategic tool to help companies to identify external and internal environments, which can affect organization’s performance. The elements of the analysis have the potential to affect an organization’s more immediate industry and competitive environment (Thompson, et al. 2015). This includes political, economic, social, technological, environmental, and legal/regulatory forces. This paper will give an external analysis of FedEx, a company that offers transportation, e-commerce and business services in the delivery and freight industry.
Federal Express (FedEx) corporation was founded in 1973 as a company shipping high-priority goods in the marketplace. Frederick W. Smith established the company is 1973 and specializes in the delivery of products and goods internationally in more than 220 countries and territories. The company employs 425,000 employees worldwide, and operates namely as FedEx Express, FedEx Ground, FedEx Freight, FedEx Services, and FedEx Office.
INDENTICATION OF THE INDUSTRY
FedEx is identified as a provider of transportation, e-commerce, and business services that offers time-certain delivery services and international trade services such as customer brokerage, and global ocean and air freight forwarding (ICD Research, 2014). The company compete globally among top competitors including C.H. Robinson, XPO Logistics, Purolator International, USPS, PostNet, DHL, and UPS. The company has a well-diversified business mix, which provides its competitive edge over its peers (ICD Research, 2014).
Source: Strategic Reports of FedEx Corporation. Retrieved from http://economics-files.pomona.edu/jlikens/SeniorSeminars/vector2010/pdf/fdx.pdf
EXTERNAL ENVIRONMENT ANALYSIS
Although the company has few competitors, the logistic industry is still a competitive sector due to its large consumer volume, lower costs, and favorable operating conditions (ICD Research, 2014). The transportation and business service markets are highly competitive and sensitive to price and service. The rivalry among other competitors is measured by price, cost, and market shares (FedEx Annual Report, 2013).
To compete effectively with competitors, FedEx focuses on providing reliable service at compensatory prices. The company’s greatest threat is if current and future competitors offer a broader range of services or more effectively bundle their services or more or current customers become competitors, which can impede the ability sustain competitiveness and maintain or grow market shares (FedEx Annual Report, 2013).
To gain competitive advantage over rivals, the company employs strategic alternatives which include increasing the size and profitability. FedEx businesses are capital intensive, therefore, the company makes capital decisions based on projected volume levels. FedEx maintains industry-leading operating margins by leveraging the company seven core strategies to keep their competitive position solid. These strategies include low cost culture, innovative technology and automation, engineering excellence, exceeding customer expectations, excellence in execution, flexible operating model and long haul superiority (FedEx, 2018).
Political factors play a significant impact on FedEx viability in the market. An analysis of FedEx’s involvement in legislative policymaking reveals that corporate participation in politics extends beyond the purchase of political favors in a spot market (Fisch, 2005). FedEx reputation in part, is based on its political expenditures and has developed an active presence since founding the company.
FedEx regulatory initiatives include air cargo deregulation, trucking deregulation, aircraft noise regulation, and urgent letter exemption to the Private Express Statutes-benefits its peers, and the statistics suggest that other firms may have been freeriding on FedEx political activities (Fisch, 2005). FedEx has been successful in efforts to establish regulation in areas of the logistics industry and in particular, these legislative changes benefits the company itself (Fisch, 2005).
People with familiar with FedEx will attribute their success in the political realm to a disciplined and well-informed government affairs staff that is bolstered by Frederick W. Smith’s involvement with politicians, policy organization, and charitable causes (Fisch, 2005).
FedEx connects more than 99 percent of the global GDP providing a unique opportunity for the company to deliver a positive impact around the world to create a diverse workforce, supplier base, and culture to serve its customer (Kelly, 2017). FedEx has been faced with imposed tariffs on industries and the company faced a direct hit of low profit margins and decline in volume. Adjusted earnings for the fiscal 2018, will be $15 to $15.40 a share (Schlangenstein, 2018).
FedEx realigned their strategies to focus on a stronger outlook based on foreign tax benefits from their international corporate structure, the benefits from the U.S. tax reform and improve operating performance. To boost economy and domestic investment, FedEx spent $3.2 billion to increase wages, fund pensions and expand its express hub in Indianapolis as a result of the U.S. tax reform (Schlangenstein, 2018).
Demographic and cultural aspects of the macro-economic society are determinants that affect an organization. FedEx focuses on the consumer’s needs and wants to reach their targeted audience. FedEx thrives on building relationships and delivering solutions to programs the customers’ needs and expectations. The company seeks to ensure that campaigns to their target audience. The company’s global expansion into other countries offer consumers efficient and flexible returns backed by the reliability of FedEx. Global expansion is influenced with high literacy rates, which is comprehensive to their global strategy.
FedEx is successful due to its advancement in technology. FedEx offers E-commerce, mobile services, and supply chain management services. FedEx continue to earn profited growth providing fast ground shipping service. FedEx deploys technology that enables the company to be more efficient, and improve productivity and service (FedEx, 2016). FedEx is focused on improving margin trends through better balance and volume and yield higher productivity (FedEx, 2016). Since the acquisition and expansion of supply chain management to drive growth in evolving retail and e-commerce markets.