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 FedExheld more than %90 of the worldwide market
A) About FedEx
SWOT Analysis
Strengths:
1) global scale
2) new
technology
3) strong brand
image
Weaknesses:
1) prices
2) labor disputes
Opportunities:
1) global
expansion
2) joint-ventures
Threats:
1) relations with
foreign countries
2) world
economic 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
At the end of 1999
FDX Corp.
Federal
Express
RPS
FDX Supply
Chain Services
FDX
Logistics
Viking
Freight
Roberts
Express
Caribbean
Transportation
FedEx Corp.
FedEx
Express
FedEx
Ground
FedEx
Logistics
FedEx Logistics
January 2000
Reorganization
FedEx Home
Delivery
Caribbean
Transportation
Viking
Freight
FedEx
Custom
Critical
FedEx Trade
Networks
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/
accounts
Single
invoice/account
Multiple automation
Streamlined
automation
Separate customer
service
Single customer
service
Was the January restructuring going to
bring the harvest?
C) Between 2000 - 2010 FedEx
1) Evaluation of 2000 Announcements
10%
9%
8%
7%
6%
UPS
5%
FedEx
4%
Linear (FedEx)
3%
2%
1%
Return on Sales Ratio
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
0%
1999
Did it provide the right
ingredients to achieve
the objectives of
creating value for
FedEx customers while
at the same time
improving profitability
for FedEx?
C) Between 2000 - 2010 FedEx
60000
50000
40000
30000
UPS
FDX
20000
10000
Sales Volume - Revenue
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
0
1999
Thousands$
1) Evaluation of 2000 Announcements
In short term, new
transformation of ebusiness and
January 2000
announcements did
not have a great
impact on the
profitability.
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
of significance to achieve competitiveness, not only for the
Speed
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