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Strategic planning document
DHL express: Strategic planning document
EXECUT IVE SUMMARY
The aim of this strategic planning document is to thoroughly analyze a company and based
on the analysis find the right strategy that fits the company's business purpose and mission. The
right strategy, depending at what is directed, should help the company strengthen its position on
the market; increase profits; help with further development. If a company implements a wrong
strategy, it can cause bad damage or it can have huge financial impact on the company which
could even end up in bankruptcy, which wipes the company off the market.
The company chosen for this paper is DHL Express with focus on European region. DHL is part of
the Deutsche Post DHL (further "DP DHL�) brand/group. The reason why I have chosen DHL for
the Strategic Planning Document is that I have been working for DP DHL group for four years. I
work specifically for IT Services which is the service line that internally supports the whole IT
technology of the whole DP DHL group.
ABOUT T HE COMPANY
DHL was founded in San Francisco exactly 40 years ago by 3 budding entrepreneurs - Adrian
Dalsey, Larry Hillblom and Robert Lynn. It went from small company shipping papers by airplane
from San Francisco to Honolulu1 to global company shipping EVERYTHING around the world.
DHL delivers time-critical shipments as well as goods and merchandise by road, rail, air or sea. DHL
transports courier and express shipments via one of the world's most extensive networks to over
220 countries and territories. The company employs more than 300,000 employees all around the
world.
DHL Express provides wide range of easily accessible services and solutions for their
customers; from transport of letters, information to transport of parcels and goods. It operates in
more than 220 countries around the world and employs more than 100,000 employees. DHL
Express is number one in Europe with 25% of market share.
Brief history 2
1969 � DHL founded by Adrian Dalsey, Larry Hillblom and Robert Lynn in San Francisco;
1974 � The first UK office opened in London. Globally, DHL had more than 3,000
customers;
1979 � DHL extends its services to delivering packages. Only document services had been
available until now.
1983 � DHL is the first air express forwarder to serve Eastern European countries. An
international distribution centre was opened in Cincinnati, USA;
1985 � A state of the art hub was opened in Brussels. More than 165,000 shipments are
handled per night
1998 � Deutsche Post became a shareholder in DHL;
2002 � Deutsche Post World Net became the major shareholder in DHL and 100%
shareholding was completed by the end of the year.
1. DHL: Our Company Portrait [online]. Available at www:
<http://www.dhl.com/publish/g0/en/about/history.high.html>
2. DHL: Steps to success [online]. Available at www:
<http://www.dhl.com/publish/g0/en/about/history/history2.high.html>
2005 � DP DHL acquires Exel, the British logistics corporation. Exel primarily offers
transport and logistics solutions for key customers;
2008 � DHL opens new state of art European air hub at Leipzig/Halle Airport in Germany.
DHL legally operates under Group's title defined as Deutsche Post AG and uses its brand name
DHL. As previously mentioned DHL is part of DP DHL group and is formed by 3 divisions: Express,
Global Forwarding, Freight and Supply Chain supported by internal services Global Business
Services. Mail is a standalone division that is part of Deutsche Post brand. All four divisions
together create Deutsche Post DHL as the picture below describes.
3. DP DHL: Corporate Presentation, October 2009, p. 3 [online] Available at www.
<http://wcms.intra.dpwn.net/wcms/services/folder15912337/bundle1881176>
DHL has a divisional form of structure. The DP DHL group is organized into four operating
divisions, each of which operates under the control of its own divisional headquarters. The Group
management functions are performed by the Corporate Center.
Management responsibilities are structured in accordance with
decision-making, responsibility and reporting lines:
Board departments
Corporate departments
Business departments
Service departments
Regions
Departments
DHL Express provides standardized products and services - courier, express and parcel (CEP) both locally and globally depending on the country. Whether it is document or parcel, road or air,
DHL Express provides several different types of services that are divided to four basic groups:
1. Same Day
An immediate pick-up of a shipment by a dedicated courier, with an emergency delivery within the
same day via a dedicated network.
2. T ime Definite
Express door-to-door delivery by a certain time on an overnight or next possible business day
basis.
3. Day Definite
Reliable door-to-door delivery within a certain number of days
4. Optional Services
Shipping convenience with a range of optional services to support your express transportation
4. DP DHL: Annual Report 2008, p. 22 [online] Available at
www.<http://wcms.intra.dpwn.net/wcmsrepo/repo2836025/repo5006598/repo6566736/repoFolder197
5. DHL: Express Services Good afternoon [online]. Available at www:
<http://www.dhl.com/publish/g0/en/services/exp_services.high.html>
External Analysis
Courier Express and Parcel (CEP) services exist in every single country around the world. It is
neither country specific nor region specific industry. There are thousands of logistics companies
operating locally or internationally around the world and Europe is not an exception.
PEST LE
PESTLE analysis is a view on external environment companies operates in. There are five external
factors that influence life of organizations: Political environment, Economical environment, Sociocultural environment, Legal environment and Environmental factor.
The below PESTLE analysis focuses on CEP companies in European market.
Political Environment
European region is stable environment that is not affected by any significant political crisis in
countries and no major changes in political structure are expected in near future. More than half of
European states are integrated into European community, European Union and create one of the
biggest single markets for trade and investment in the world. EU enlargement has removed border
lines and has made trade and business more accessible for its members. It has brought greater
opportunities for businesses, wider range of companies and benefits for their customers.
EU has created closer links with immediate neighbors and enables bigger exports, free
movement of services, payments and capital for trade and investment. Prior liberalization in 90's
there were many national postal operators acting as monopolies. EU decided to start postal
reform that firstly completely liberalized CEP market. Liberalization has enabled both national
postal operators (Post Offices) and private postal companies to enlarge their business portfolio
into parcel and express market.
This happens through acquisitions of well-established companies and smaller national companies.
Exactly, as it happened to DHL through acquisition by Deutsche Post in 2002. Full liberalization in
Europe will be completed by 2012 which gives current companies time to strengthen their
positions, build new networks and gain wider portfolio of customers.
EU has also built up confidence in European political and economical future of each member which
enables companies to make longer term decisions, strategies and investment plans. Currently the
CEP market is highly competitive and companies have to have capital to establish strong and
powerful position in such an environment and have to have built up networks supported by the
modernist technologies.
Summary:
Europe is stable environment where no major political changes are expected. Full liberalization of
European postal market that will be finished by 2012 will bring more competition especially on
domestic level. However, there is a potential to merge or acquire those companies operating in the
local markets and increase market share. Big companies operating on international level have an
advantage of built global networks and modern technology behind them.
Economical Environment
CEP is highly potential market and its growth is directly related to the level of GDP. Global trade is
on the rising level and together with industrialization has made CEP services more important for
majority of industries. Additionally, product life cycles have been reduced, quality awareness
among customer is growing and in order to succeed companies are forced to maintain high quality
standards.
The global economic crises caused decline in economy and it has affected the entire logistics
sector. Volume of shipments decreased and the recession slowed down the whole market. Even
the big corporations have to fight with decreased revenues and change their investment plans and
business strategies.
Governments around Europe support investment plans by structural reforms and programs that
encourage investors to invest. During the big economic crisis in 30's this did not happen and
governments tended to act individually without multinational or even global cooperation. Today's
economies learnt from those mistakes which help to lower the implications, increase customer
demand and support start of growth. Due to the crisis companies changed their investment plans
but did not stop them. Merges with smaller companies, agreements and strategic acquisitions
represent one way of increasing the competitive advantage.
Emerging markets represent big opportunity in long-term perspective. There is potential for
investment and development in emerging markets and it is expected that industrialization will bring
opportunities, the economy will growth and market for services will accelerate. The crisis negatively
affects profits of every company on one hand but on the other hand big corporations with strong
brand and position in the market have to exploit this opportunity. Smaller companies do not have
potential to expand because they are in bigger risk of losing money or even bankruptcy if they fail.
Big corporations are able to absorb that risk much easier.
Companies have started to reduce cost and people have started losing their jobs. Restructuring of
company structure is one of the way how to move forward. IT is core element of every company
that operates in logistics industry. Companies have to invest huge amount of money to
development and maintenance of their IT infrastructure. Recent trend leaves development in
Europe and transfers hosting and maintenance of the infrastructure to Asia.
Summary:
Conclusion from the Economical environment analysis is that companies should not stop their
investment plans because of economic crisis. It is important in current situation to strengthen
position in the market and expand if possible. Emerging markets represent a potential of rapid
economy growth. The risk of loss is the same for all companies but for big corporations is more
acceptable. Reduction of cost is evitable for every company and restructuring or outsourcing are
the ways of dealing with it.
Socio-Cultural Environment
The third aspect of PESTLE analysis focuses on forces within society. Social and cultural forces
affect customers' attitudes, interests and opinions. Companies must be able to offer products and
services that aim to complement and benefit customers' needs and wants. If they do not quickly
respond to changes in society they will lose market share and demand for their product or service
will decrease.
Removing of border lines makes trade and business in Europe more accessible. Emerging markets
are place that is constantly developing and rapidly growing. Although the infrastructure is not as
developed as in Western countries, there will be improvement with economic growth. It is important
for the company to establish its brand and achieve good and reliable image and service quality
among its customers. The portfolio of services that is offered in developing countries is not
usually complete and focuses on the biggest needs and wants of the business.
Companies do not have the only affect and responsibility to their customers. There are different
parts of society they are in contact with. There are needs of employees, investors and the society
as a whole. Research & Development department play an important role in this area. Customer
satisfaction surveys, employee satisfaction surveys, market surveys help the company to build its
brand and image, increase employees commitment and shape public awareness.
CEP market and logistics industry play one of the key roles in the economic growth globally not
only within European market. Increases in volumes of goods transport has lead to higher CO2
emissions which according to climate scientists have direct affect on global warming. It is social
cost for the society and governments discourage those social costs with fines, taxes and
legislation. Companies' responsibility is to decrease these cost and work with more efficient and
environmentally friendly means of transport. Social cost have negative affect on customers'
spending but could be balanced by larger offer of environmental friendly oriented products.
Summary:
Social forces affect customers' needs and wants and it is important for the company to know it
and benefit from it. Therefore the role of Research & Development is very important. Company
has to respond to changes in society quickly not to loose market share and demand for services.
Customer satisfaction surveys, market surveys, employee surveys play important role in building
company's brand and image in the market.
Border lines have been removed within EU and services are more accessible in the whole Europe.
Emerging markets represent an opportunity for companies to enter and establish their brand and
image.
Additionally, there are also social costs for the society that companies have responsibility for. The
affect on environment is significant and companies' role is to decrease those costs by working
with more efficient and environmentally friendly technology which is then balanced by larger
portfolio of environmental friendly oriented customers.
T echnological Environment
Technology environment is vital part of every business that rapidly moves it forward.
Technological innovations have changed the world and manner in which every business operates.
Technology has created society expecting immediate results. Information exchange between
customers, companies, people or any stakeholders is faster. That gives benefit to businesses as
they can react quickly to any changes in the operating environment. However, the ability to quickly
react also brings extra pressure on companies because they are expected to deliver on time and
without any delays.
Customers in service industry have to continuously face new challenges in planning, managing and
monitoring their business processes. Companies in CEP market (and not only there) started
offering customized logistics solutions to meet challenges: for example safety transport of
sensitive products such as pharmaceuticals and vaccines to the healthcare industry done within a
temperature-controlled environment. Operations in logistics industry is not only about cars, vans
and aircraft there are other parts of infrastructure that needs technological development and
improvement: posting, collection, sorting, transport, warehousing, delivery and last but not least
Information Technologies. IT is core. Speed and reliability are key success factors to be able to
meet standards and quality and gain advantage among competition.
It is important to pay special attention to IT area because service industry is fully dependent
on it. Companies invest huge amount of money to development and maintenance of their IT
infrastructure. As mentioned above IT is one of the key elements for logistics and operations
processes. Systems must be accessible and available at all times; security is evitable unauthorized access to data and data manipulation must be prevented, to ensure that software is
not delivered with defects or too late. Companies have to fight with decreased revenue and
reduce their cost in times of economic crisis but importance of IT technology is so significant that
they cannot stop investing in it. Otherwise there is a threat that they will fall behind and loose their
market share.
Outsourcing or in other words subcontracting is a way of reducing cost in IT area.
Development of new technologies, software or applications goes to another organization. Usually,
the company is specialized in software development. Or hosting and maintenance of applications
or services are transferred to another company. The decision whether to do in-house or
outsource is often based on achieving lower production cost and usage of available resources in
better way and focus energy on the core competencies of the business.
Summary:
Modern technology and environment is key to success of the company that helps to maintain or
gain competitive advantage. IT is the most important technology factor for logistics business
because speed and reliability are equal to success. However, there is an indisputable constant
threat of falling behind.Investments to the modernist technologies are evitable and in times of
economic crisis are much more important then anytime before. Company has to decide if it runs
internal IT organization or if it outsources most of the services and reduce cost.
Legal Environment
Legal rules play a role in nearly every aspect of company's operation from state regulations
through contracts to treatment of employees. Legal factor is very important because companies
work within legislative framework where legislation can either place numerous obligations or can
create market conditions beneficial for business.
CEP market is regulated by Postal directive applicable in all EU states. Full liberalization process will
be completed by 2012 which gives current companies time to strengthen their position, build new
networks and get more customers before new competition arrive. CEP market was fully liberalized
during 90's and no special license or authorization is required in most of the EU countries. Ten
states of EU require companies to receive explicit decision of National regulatory authority that is
called "general authorization� that enables them to start operating in those countries but it does
not represent a barrier. General authorization document contains several conditions that are
related to e.g. confidentiality of correspondence, restrictions on transport of dangerous goods,
data protection standards, etc.
As I said previously there are social cost for the society that must be balanced by companies'
obligations in terms of fines, taxes and additional legislations related to regulation of aircraft
noise, regulations concerning emission standards, obligations to reduce greenhouse gas that
forces companies to invest into more environmentally friendly means of transport.
Summary:
Legal factor is important for operations of every company. Companies have obligations like
directives, taxes and rules that they must be aligned with to be able to operate in the market. Legal
factor can either place numerous obligations on the company or can create market conditions
beneficial for business. Liberalization is an example of the benefit. Removal of border lines
together with liberalization enabled building and strengthening of positions in the logistics market.
There are no special and expensive authorizations necessary in CEP industry which is another
benefit for companies. On the other hand there are obligations that balance the above benefits in
terms of fines, taxes and directives that are mainly related to environment. Companies are forced
to invest into environmentally friendly operations.
Environmental Analysis
Transportation industry causes major impact on the green house gases in the atmosphere.
Mobility has increased and brought many indisputable advantages that must be weighed against
the social, economic and environment costs it causes. Countries issue legislation that forces
companies to reduce emissions.
Companies have started implementing projects that help them to find out ways how to reduce
pollutions and to be compliant with issued legislation. Transportation companies are dependent on
fossil fuels and to reduce their dependency they have to look for commercial vehicles and aircraft
powered differently or non-conventionally. Change of vehicle is not the only option that would
reduce air pollution there are other ways that companies could take: to make their business more
efficient and effective, to reduce shipping time, to take uniform approach, to offer climate-neutral
products or train employees.
Research & Development department plays important role in those projects because it helps to
come up with new ideas, technologies, procedures and processes.
Summary:
Transportation industry has great effect on air pollution globally. It is undisputable fact and
companies are forced to fulfill the requirements of governments to reduce their contribution on
pollution of the global environment. Companies have started implementing projects that help them
fulfill those requirements. Research & Development department is key to the success of it.
PEST LE Summary
Based on the PESTLE analysis I have identified opportunities and threats that will be taken into
account during the SWOT analysis.
Opport unit y: Full liberalization of European postal market that will be finished by 2012
brings new opportunities to increase market share by acquisitions or merges with other
logistics companies or newly liberalized companies. Established companies wit big market
share, global network and technology have competitive advantage.
Opport unit y: Border lines have been removed within EU and services are more accessible
in the whole Europe. Emerging markets represent a potential of rapid economy growth
therefore it is an opportunity for companies to enter and establish their brand and image and
gain bigger market share.
Threat : Role of Research & Development department in the company is very important.
Company has to respond to changes in society quickly not to loose market share and
demand for services. Customer satisfaction surveys, market surveys, employee surveys play
important role in building company's brand and image in the market.
Threat : In times of economic crisis economy slowed down and revenue decreased.
Reduction of cost is evitable for every company and restructuring or outsourcing are the
ways of dealing with it.
Threat : Social costs represent a responsibility of companies towards society. The affect
of transportation and logistics companies on environment is significant and companies' role
is to decrease those costs by working with more efficient and environmentally friendly
technology which is then balanced by larger portfolio of environmental friendly oriented
customers. Companies are forced to invest into environmentally friendly operations by fines,
taxes and directives placed by governments. Therefore, companies have started
implementing projects that help them fulfill those requirements.
Threat : Modern technology and environment is key to success of the company that helps
to maintain or gain competitive advantage. IT is the most important technology factor for
logistics business because speed and reliability are equal to success. However, there is an
indisputable constant threat of falling behind. Investments to the modernist technologies are
evitable and in times of economic crisis are much more important then anytime before. The
role of Research & Development is evitable here.
Porter's Five Forces
Courier Express Market is highly competitive market and its growth is directly related to
growth of GDP. Customers of logistics companies are demanding. Technology improvements
reduce product life cycles, quality awareness among customer is growing and in order to succeed
companies are forced to maintain high quality standards.
DHL Express has three biggest competitors in CEP market. They are UPS, TNT and FedEx. As you
can see in the Picture 2 below DHL Express has the highest market share of 25% as a single
company in Europe. All four major competitors operate internationally and have global network
with good and modern technology behind them. The picture below also shows us that third of the
European market is dismantled among small and medium sized companies that operates
independently.
European market portrait
Customers of logistics companies vary from individuals to big industrial or manufacturing
companies. All of them expect that the delivery service will be simple and convenient and that the
delivery will be on time without any delay and in a good quality. Customers are more and more
demanding because range of suppliers is broadening and they are looking for customized and
innovative solutions for delivery of their goods.
6. DP DHL: Annual Report 2008, p. 58 [online] Available at www.
<http://wcms.intra.dpwn.net/wcmsrepo/repo2836025/repo5006598/repo6566736/repoFolder1971660
The range of offered products is wide but could be introduced in three basic categories:
Courier services are fast, door-to-door pick up and delivery services of high-value goods or
urgently required documents.
Express services are time-sensitive, usually guaranteed services and have delivery time a
specific day (in general the next day) and/or specific time.
Parcel services are the transport of largely standardized packages with usually nonguaranteed delivery time of 2-3 days (Time-definite and Day-definite)
Porter's Five Forces mode will help me to analyze five forces that influence the logistics industry
and better understand the environment in which DHL Express operates in and competitive
advantage the company has or could gain.
T hreat of New Entrants � HIGH
CEP market is large and very attractive to business. Everyone needs to deliver package or
parcel. Everyone needs to use courier. Logistics industry is important and dominates to the service
sector. It is very easy to entry. There are no special legal barriers, patents or licenses necessary to
run the business. There are exceptions as described in PESTLE analysis but those exceptions do
not represent "impossible to achieve� requirements. The market is still growing and there is an
assumption that will grow further.
There are no border lines among members of EU which would threaten new companies to
enter the CEP market. Company that wants to succeed in such a competitive environment has to
have a good network that enables it to operate on local and international level. Good network
requires time and financial investment. High technology standard is must.
Companies have to protect themselves from the threats of new entrants therefore it is important
for them to find ways to turn disadvantages in their favor. They have to capitalize from their
historical experience and try to find better ways to provide their service. Current big players in CEP
market are well established leaders that have significant cost advantage that is unavailable for the
new entrants. Large companies have buying power that allows them to offer discounts to their
customers. Simply, bigger the business is lower average unit cost they are able to produce.
Cust omers' loyalt y is anot her import ant f act or t hat increases barriers t o ent ry f or ot her
compet it ors. Loyal and sat isf ied cust omer will be unlikely t empt ed t o go t o compet it ors or
new ent rant s. Est ablished companies usually do business set on long-t erm part nerships
and cont ract s. The basic rule says t hat cust omers get everyt hing t hey need or
want .
There are many advant ages t hat economies of scale gives t o big corporat ions
but t here are also limit at ions t hat must be t aken int o account . Those limit at ions give
compet it ive advant age t o smaller and medium sized companies. Large companies are very
complex and wit h higher complexit y t he product range is widening. This makes it dif f icult t o
succeed and be t he best . Specializat ion and innovat ive ideas are crucial. Large companies
are also known f or t heir high level of bureaucracy which gives smaller companies big
advant age because t hey can sat isf y cust omer f ast er and it is what mat t ers in logist ics
indust ry. Also large companies have t housands of employees wit h dif f erent labor relat ions
in every count ry which causes addit ional legal cost . In case of powerf ul workers union it can
decrease power of t he company and make t heir operat ion more dif f icult especially in t ime
of rest ruct uring.
As I have mentioned modern technology is an important factor that significantly helps to
increase market share and creates more barriers for new entrants. Outsourcing or off shoring are
possibilities for companies to take advantage of other economies of scale and use their buying
power and specialization in favor of further development.
Summary:
In summary, logistics market is large and is attractive to business because when GDP grows
the demand for services grows. There is no special barrier to entry. In fact, it is very easy to entry.
The market is still growing and there is an assumption that will grow further. Successful companies
have built networks that enable them to operate on local and international level. Good network
requires time and financial investment. High technology standard is must. Historical experience and
appearance in the market is an advantage for companies like DHL.
Big companies and corporations use economies of scale in their favor. Bigger company can
provide higher discount and has lower profit. Customers' loyalty is another important factor that
increases barriers to entry for other competitors because of long-term partnerships and contracts.
On the other hand there are also disadvantages for big companies that must be taken into
account. Large companies are very complex and with higher complexity the product range is
widening. Specialization is an answer to it. Large companies are also known for their high level of
bureaucracy which gives smaller companies big advantage. Bureaucracy slows down the whole
process. Strong workers unions decrease power of the company and make its operation more
difficult especially in time of restructuring.
Modern technology helps to gain competitive advantage and be ahead of new entrants.
Companies should take advantage of outsourcing or off shoring companies and use their buying
power in favor of specialization and development.
T hreat of Substitute Products or Services � HIGH
Every customer has a choice when and what to buy. Substitute products or services create a
ceiling on the price. Any need or want of the customer could be satisfied in different ways and it is
up to the customer which company to choose. Threat of substitute products is very high in CEP
market because range and price of offered products is similar. Customer can quite easily turn and
goes to the competitor.
Research & Development department plays outstanding role for this aspect. It is important to
know what customer wants and needs therefore customer satisfaction surveys must be held.
Surveys help to identify the problem of substitute products and help to answer what substitute
products customer considers. They help companies to better position themselves in the market
and among customers, uncover customers perceptions, improve customers loyalty, or help to
make technology and product improvements.
For a company to be able to succeed in such a competitive environment it is important to know
who the competitors are and what service they provide that could substitute the service they
offer. It is also important to consider their benefits, price, weaknesses, constraints, limitations,
reason for switching between products and barriers to switch. Based on that information,
company can defend the threat easier and attract customer from another substitute service by
innovation for example. It is important to communicate and educate customers about services the
offer. Customers must be tempted to purchase and if they are loyal it would stop them from
switching to another company. Marketing and Advertising is therefore highly important for this
factor. Companies have to invest in building their brand and image to gain competitive advantage.
Summary:
The range of offered products and prices in logistics industry is similar. Therefore threat of
substitute products is very high. Role of Research & Development department is important and
helps to identify what customer wants and needs, the problem of substitute products or answers
what substitute product customer considers. Its role is also to get knowledge about competition
and their offer. Based on that information, company can defend the threat easier and attract
customer by the added value (innovation for example). Investment in Marketing and Advertising
cannot be forgotten. These departments communicate and educate customers about brand and
image of the company, about products that are in the offer. They help to gain competitive
advantage.
Bargaining Power of Customers � HIGH
Logistics industry is highly competitive and there are many companies that offer similar products.
Customer has the power to decide if to pay high or low price, to decide between cheaper or more
expensive company. And also customer has the power to walk away and make a deal with
competitor. Loyalty increases when customers get better value or benefits for the same price.
Therefore it is important to build customer satisfaction, build partnerships or provide discounts.
Basically, any reduction of the price that customer "negotiates� means lower profit for the
company.
Customers are very sensitive to price and are willing to switch to the competitor very easily if the
service, company offers, does not differentiate from any other service that can be purchased in
the market. Price is the magic word that matters. Therefore it is important for the company to
differentiate and offer something more. If it cannot be price then for example it can be company's
attitude towards environment and using climate-neutral transportation or products.
T here always must be value added for the customer.
Suppliers always outnumber customers. This is a market rule. Therefore, customer has the
advantage and is allowed to choose from a range of companies who offer the logistics service.
The logistics industry offers similar products and customer is able to compare prices and types of
services from different companies.
Company has to be differentiable for the customer and unique in some way. As I indicated
above price is not the only factor that influences the customer, although it is a strong influencer. It
is important to create a tight and loyal relationship with the customer and offer range of services
for good price and quality. There are many tools company can use to fasten the customer: special
offer, favorable financial arrangements, long-term contracts, etc. Customer's switching costs are
dependent on the strength of the cooperation and linked tasks. Therefore companies in service
delivery have to invest in modern technologies. Internet could serve as an example. It has
completely changed the world of logistics and e-commerce has brought new financial
opportunities not only for customers but for suppliers as well.
Summary:
Logistics industry is highly competitive and the range of products and prices is similar. Logistics
companies always outnumber customers and customers very easily switch to competition.
Therefore it is important to gain customers loyalty and provide benefits that would tight them to
the company. It is also important to differentiate from competition and to provide offer with added
value for example climate-neutral products. There are many tools company can use to fasten the
customer: special offer, favorable financial arrangements, long-term contracts, etc. Customer's
switching costs are dependent on the strength of the cooperation and linked tasks. Modern
technologies are able to tight customer to the company and increase switching costs.
Bargaining Power of Suppliers � HIGH
In this section I would only focus on bargaining power of suppliers in Information technology
area which is the most important factor for the logistics industry. Every company has to invest
huge amount of money into IT to be able to stay on top.
There are two types of technology used in CEP market "front-office� and back-office�.
Front-office technology represents computers, telephones, scanners, handhelds etc. and backoffice technology is the more important one. It is primarily used for operational purposes of the
service, it creates the network. For example: systems that help companies to improve their
operational efficiency like GPS or track & trace system that help to locate the parcel for the
customer at any time.
Investments to modern IT technologies are big and every company has to decide if it runs internal
IT organization or if it outsources most of the services. In the latter case, decision of using
expensive but highly skilled company or cheaper and badly skilled company is essential because it
could potentially lead to higher cost in future. IT knowledge and skills are the core for success of
the company in logistics industry. What is modern yesterday is out of date today. The threat of
falling behind is present.
Usually, company contracts with few companies for longer period of time. Global companies tend
to supply from already existing suppliers. It is beneficial for both sides. Both supplier and the
company can use buying power in favor of specialization and development in their sectors.
Summary:
Suppliers in IT have an advantage of skills and importance. Every company in logistics industry is
dependent on its network and IT systems. Therefore companies and specifically the large
companies spent big amount of money for development of Information Technologies to be able
to stay on top. Company can either use internal IT organization or outsources the services. IT
knowledge and skills is the core for success of the company in logistics industry. There is a
constant threat of falling behind.
Rivalry Among Current Competitors � HIGH
Rivalry among the big players is high and is very intensive especially on international level. There
are many middle or small companies that represent danger and increase rivalry on local or
international level. As mentioned several times it is very important for the company in order to
succeed to differentiate from its competitors. One of the ways, they can do, to come up with
innovative ideas. The role of Research & Development department is then inevitable. Therefore it
is important to employ skilled and committed people with new ideas that help the company to
increase its competitive advantage.
Porter's Five Forces summary:
Based on the Porter's Five Forces analysis I have identified opportunities and threats that will be
taken into account during the SWOT analysis.
Threat of new entrants is very high in CEP market but existing big players have built national and
international networks that provide competitive advantage against new entrants. Historical
experience and appearance in the market is an advantage for companies like DHL and customers'
loyalty increases barriers to entry for other competitors because of long-term partnerships and
contracts. Big companies and corporations use economies of scale in their favor. Bigger company
can provide higher discount and have lower profit. However, bureaucracy that exists in large
companies gives smaller organizations competitive advantage. Bureaucracy slows down the whole
operating process. Outsourcing or off shoring are used to reduce cost and suppliers' buying power
is used in favor of specialization and development.
Threat of substitute products is very high because the range of offered products and prices in
logistics industry is similar. Role of Research & Development department is crucial and helps to
identify what customer wants and needs and solve the problem of substitute products. Investment
in Marketing and Advertising is important because these departments communicate and educate
customers about brand and image.
Bargaining power of customers is high because range of products and prices is similar and
customers very easily switch to competition. Therefore it is important to gain customer loyalty and
provide benefits and differentiate from competition. Customer has to experience the added value.
Customer will not switch to competition if there is a linked relationship and dependency that would
increase the switching cost.
Bargaining power of Suppliers in IT is high. Logistics companies are dependent on network and IT
systems. IT knowledge and skills is the core for success of the company in logistics industry. There
is a constant threat of falling behind. Therefore it is important to choose right supplier.
Rivalry among current competitors is high because all four biggest competitors are successfully
established on international level and have experience with competition. Local or international
competitors represent third of the European market and must be taken into account as well.
Therefore differentiation and innovation are important for the company. The role of Research &
Development department is indisputable here.
Internal Analysis
Internal Analysis serves as a tool that tells me if company is capable to use opportunities and
defend from threats that were found during the analysis of external environment.
From the analysis of external environment I know that CEP market is highly competitive.
Customers are demanding and request effectiveness, efficiency, speed and quality. Company that
wants to succeed in this environment must have good operational network and modern
technology that would support it on local and international level. Successful companies work on
development of their competencies to become core competencies to get bigger competitive
advantage.
Competences
DHL Express has been in logistics business for 40 years now and it has built its brand and business
on tradition. It provides wide range of easily accessible services and solutions for their customers;
from transport of letters, information to transport of parcels and goods. It operates in more than
220 countries around the world and employs more than 100,000 employees. DHL Express is
number one in Europe with 25% of market share. It wants to become a Logistics company of the
world.
The advantage of operating globally, using of fixed routes and standardized workflows for delivery
is enormous. DHL Express operates in tight cooperation with other divisions (Mail, Global
Forwarding & Freight and Supply Chain) which helps to better address customers' needs. Modern
Information Technology stands behind the success without any discussion. Customer and service
support serves 24 hours a day and 7 days a week.
DHL Express has built its success on committed employees and experts. DP DHL group belongs
among the five most admired companies in the world in logistics industry. It is on fourth place just
behind FedEx, UPS and TNT according to the Fortune magazine. It invests huge amount of money
onto research and development area and has come up with several interesting projects aimed on
employees, shareholders and customers, environment and innovations. DHL pays special attention
to Marketing & Sales area and presentation of their brand and image. DHL knows that educated
customer and employer will bring future benefit.
Core Competences
Core competences represent competitive advantage of a company. They help to differentiate, be
more profitable, be more successful and gain more market share. DHL works on its competences
very hard to gain the competitive advantage and be the best in the Express market. They say that
size is not enough and they are not the best just because of the biggest market share but also
because they are able to provide the best service, innovative solutions and achieve customers'
satisfaction.
DHL Express' core competency is guaranty of the fastest delivery in a good quality anywhere. As I
said in previous text the trick behind that is the network in which DHL Express operates �
consisting of more than 220 countries, standard routes, modern technologies, standardized
procedures and processes and last but not least more than 100,000 committed employees.
Further more DHL's aim is to continue in improving its core competencies and continue in
innovation, quality and productivity and provide career development opportunities for their
employees. And in the same time be seen as socially responsible organization.
DP DHL group and subsequently DHL Express have rolled out strategic programs and initiatives
that they believe drive the company forward to the future and are based on core competencies:
First Choice program is focused on improvement of business processes based on
customers' needs. The rationale behind is to strengthen customers' loyalty and intensify and
broaden business with current customers. DHL also wants to change the corporate culture
of DP DHL group and improve collaboration among employees across divisions and regions
to provide better value to their customers.
Roadmap to Value program is focused on transparency, profitability, cost reduction,
performance, organic growth, sustained increase in the company value, etc. This program is
aimed to make DHL first choice for customers and employees and also for investors.
As mentioned several times in this paper environment and social costs are closely
connected therefore DHL has rolled out a program focused on climate protection and
disaster relief. It is called Go Green. The company itself set a goal to achieve 30%
improvement in CO efficiency by 2020. Therefore it has implemented measures such as fleet
optimization (both aircraft and ground vehicles) and expand range of climate-neutral and
climate-friendly products. Additionally, the company is an official partner of United Nations
organization and provides logistical support during natural disasters.
The main driving force behind the programs and initiatives are people, the human resources, the
organization itself. People are the great benefit that DHL Express has. Educated, skilled and smart
people are the core competence that helps to move the company towards future. DHL rolled out
an initiative called Discover logistics to present logistics as an exciting industry that looks into the
future and introduces DHL as attractive employer. DHL uses an online career portal that is taken as
an adequate and fitting recruiting tool in the age of internet.
Position Audit
Position Audit will tell me if DHL Express is able to take advantage of opportunities and is able
to mitigate threats that were identified previously.
The analysis of External environment revealed an opportunity for DHL to increase market
share by merging with other logistics companies or newly liberalized companies. According to the
Picture 2 third of European market is dismantled among small or medium logistics companies.
Through mergers and acquisitions DHL could enlarge its network and result of having better and
efficient facilities with loyal customers. DHL has assets that allow the company to go that way.
Another opportunity that appeared was entrance into Emerging markets. There is potential
of rapid economy growth and profit. DHL has already entered in these countries and through
Marketing is working on establishing of its brand and image there.
Modern age has brought changes and constant development of technology and demand.
This represents a threat for the company that will not be able to quickly react to those changes
and the company may loose market share. As indicated in PESTLE analysis role of Research &
Marketing is evitable and represents must for the company. DHL invests into this area and mitigate
this threat quite successfully.
Economy crisis has brought slow down of economy and decrease of revenue. Every company
has to deal with that threat and mitigate it. DHL is aware of that threat and is convinced that
strong brand makes them safe and well-equipped for difficult times. Therefore, they plan less
investments and have started working on lowering of indirect costs by cost-cutting. Therefore,
they have started with restructuring and initiatives that improves cross-divisional cooperation.
Social cost and responsibility of companies represents another threat for companies in terms
of fines, taxes and customers' perceptions. Logistics industry has significant negative effect on
environment and companies' responsibility is decrease the social cost by working with more
efficient and environmentally friendly technology to balance it. DHL has come up with their goal
Living responsibility and initiated several innovations and programs to deal with this threat (e.g. Go
Green program). Research & Development has played an important role in it.
21st century is the age of modern technologies and namely Information Technologies.
Logistics is based on technology because speed and reliability are basics for success and to fall
behind is relatively easy. DHL Express mitigates this threat by strong internal IT organization that
supports the whole DHL network. Additionally, DHL uses knowledge of IT companies like Hewlett
Packard and IBM to use the modernist IT tools and technology. Additionally, DHL also outsources
highly skilled specialists to cooperate on innovations and innovative ideas. Roadmap to Value
program helps to mitigate that risk.
Threat of new entrants is very high in CEP market and DHL has to mitigate the risk and does
it very well. It has built strong national and international network that provide high competitive
advantage. Experience and strong brand increase loyalty and create barriers for new companies to
entry. DHL has 25% of European market share which brings an advantage of economies of scale.
Possibility of more favorable prices offer, higher discounts bring new customers and help to build
long-term partnerships and contracts. DHL knows about the advantage and work on it with help of
Sales and Marketing and Research & Development department � programs First choice and
Roadmap to value help to mitigate that threat.
On the other hand the advantage of DHL as a big corporation has also brought more
bureaucracy and slow down of processes. This is a fact and I can only confirm it as a DHL
employee. Program like Roadmap to value helps to mitigate it and brings more transparency and
performance. DHL has started with restructuring of the company organization that also brings
cost reduction. First choice program brings more collaboration between employees and
consequently brings innovations.
The range of offered products in logistics industry is similar. Therefore the threat of
substitute products is very high. DHL works on mitigating it through Research & Development and
through First Choice program. The result of the initiatives has brought identification of customers'
wants and needs and help to solve the problem of substitute products. DHL continues on
improvement of the products and services that are in the offer. High quality together with speed
and reliability are key success factors. Standardized systems, processes and workflows enable the
DHL sales force to increase productivity. Again the programs Roadmap to value and First Choice is
an answer to the threat of substitute products.
Bargaining power of customers is very high in logistics and threat of losing customers is significant.
DHL knows that therefore invest in Marketing & Sales and in constant communication and
education of customers. It has built well-established and well-managed brand that is one of the
most valuable assets of any company on national or international level. First Choice program helps
to align processes with customer needs and subsequently bring cost efficiency.
Suppliers play an important role in logistics business, their power is high especially in IT. Information
technology is a key success factor. All systems must be accessible and available at all times;
unauthorized access to data or data manipulation must be prevented, and it is important to
ensure that software is not developed with defects. The success of IT depends critically on
employees and suppliers. DHL uses its internal IT organization and as mentioned above DHL also
uses knowledge of IT companies like Hewlett Packard and IBM and outsources highly skilled
specialists to cooperate on innovations and innovative ideas. Investment in that area is high but it
is worth it. DHL uses knowledge and core competencies of other companies in its favor.
Rivalry in CEP market is high and DHL is aware of it. DHL Express has started working on
tighter cooperation with other divisions; uses cross-divisional synergies and works on
improvement of products and services through differentiation and innovation and invests in
research and development. Additionally, DHL has competed to gain highly qualified specialists and
managers and through First Choice program "fight� successfully with competition. Surveys,
improvements, innovations, transparency, cooperation and restructuring is a way for DHL to
mitigate the risk of high rivalry and sustainable work on maintaining and extension of its market
share.
SWOT Matrix
OPPORT UNIT IES
Mergers and acquisitions
Investment in Emerging markets to strengthen market position and gain new market share
Investment into strategic programs
Active Sales and Marketing department
Improvement of products and services through innovation
Specialization of products
Improvement of collaboration cross-divisionally
Deepen relationship with suppliers to be able to use their buying power
Differentiation from competition (e.g. expand offer of climate-neutral and climate-friendly
products)
Intensify and broaden business with current customers to increase their dependency
Customized solutions for every customer
Increase productivity by strengthening of standardized systems, processes and workflows
� key factors quality, reliability and speed
Education of customers
Communication to customers
Build more transparent organization by restructuring and cost-cutting initiatives
Outsourcing or off shoring
Be seen as socially responsible organization
Become First Choice for employees
Become First Choice for customers
T HREAT S
Slow down of economy due to economic crisis and lower profit
Social cost and impact on environment
Threat of falling behind in IT due to technology development and rapid changes
High dependency on network and IT
High threat of new entrants (doing business in highly demanding and attractive
environment)
High threat of substitute products
High bargaining power of customers
High rivalry among existing competitors
ST RENGHT S
History and experience
Strong brand and image
Strong financial position
High market share
Cost advantage
Global network and standardized workflows
Cross-divisional experience and cooperation
Standardized product portfolio
Portfolio of loyal customers
Broad portfolio of quality IT suppliers
Very good customer support
Established and strong Research & Development department
Strong Marketing & Sales
High level of technology
Skilled and committed employees
Very potential employer
Committed employees and highly skilled specialists
Official partner of United Nations
WEAKNESSES
Third of European market is dismantled among small and medium companies which
weakens the power of DHL Express
Bureaucratic environment (danger of slower processes and potential loss of customers)
Wide range of customers' portfolio (from individuals to big companies)
Wide range of product portfolio (worse identification of targeted customer)
Customers easily switch to competition
No major differentiation among the major competitors (network, history, experience,
customer portfolio, product portfolio)
SWOT Analysis
SWOT analysis is process of minimizing or mitigating threats by turning them into opportunities,
turning weaknesses into strengths, and matching of strengths with opportunities.
T hreats
Economic crisis has brought slow down of economy, lower number of shipments and
consequently lower revenue and profit to the organization. DHL Express is strong organization
with strong brand and good financial situation that make it safe for the time-being. It is an
opportunity for DHL Express to work on making the organization more transparent, less
bureaucratic and restructure its organization. These initiatives would bring cost-cutting and help to
financial health of the company for the future. It is also an opportunity to outsource or off shore
some of IT services from suppliers and use their buying power in terms of competitive advantage.
There is a big threat of falling behind due to speed of technology development and high
dependency on IT and network for DHL Express. It is not possible to avoid that threat but it is
important for the company to minimize it. DHL Express uses broad portfolio of quality suppliers like
HP and IBM that help to minimize the risk of falling behind. Thankfully, the dependency is twosided. It is not only for DHL Express but also for the suppliers. It is important to deepen the
cooperation and create stronger dependencies. This could be done through innovative projects
held through Research & Development department.
As previously indicated the threat of new entrants is very high in CEP market, however, DHL
Express mitigates this risk very well. It has built strong global network. It has experience, history,
strong brand and very good image in the market. As a big company it has financial advantage and
can offer more favorable prices and discounts to the customers. Sales & Marketing and Research
& Development departments help to minimize that threat. Strategic programs that work on
improvement, innovation, education and communication cross-divisionally, among employees and
customers are the success factors.
The threat of substitute products is very high in logistics and it is important to fight with this threat
and differentiate for the customer. Customer is interested in quality, reliability and speed; therefore
it is important for DHL Express to work on specialization and provide customized solutions for
customers. Good and recognizable brand brings image of quality and this is strengthen through
Marketing & Sales activities - communication channels, advertisements, commercials and further
initiatives.
Customers have strong bargaining position in logistics industry because all logistics companies
provide similar portfolio of products. There are many competitors on domestic and international
level that are not easily recognizable for customers and therefore it is relatively easy for them to
switch to competition. Customers very often rely on image of the company and its historical
experience which is a big advantage for DHL Express. Therefore the investment into Marketing &
Sales is important and work on further development in that area is a big task. It is important to
know what customer needs and surveys play an important role in it. DHL Express takes initiatives
based on it and came up with strategic programs that work on improvement of company's assets
in customers' eyes.
There is high rivalry among competitors in logistics industry as indicated before. DHL Express has
to fight with it but it has the advantage of international company with history and experience, with
strong and recognizable brand and good image. Cross-divisional cooperation, highly skilled
specialists, committed and educated employees, strategic programs focused on improvement of
company's strengths and weaknesses are ways of dealing with rivals and competition. The
existence of smaller rivals gives to DHL Express the possibility to merge with those companies and
use their resources, assets and networks to gain more market share. Cooperation and
collaboration on innovations and programs with them creates opportunity to further minimize this
threat.
Logistics industry has highly negative impact on environment and creates additional social cost for
the company. It also has negative impact on image of the company; therefore DHL Express
mitigates this threat by initiatives like Go Green program and close cooperation with United
Nations organization by help during natural disasters. Big companies have to use their power and
authority to educate their customers, suppliers and employees and work on decrease of the
negative impact.
Weaknesses
As found out during the PESTLE analysis third of European market is dismantled among small and
medium sized companies which weakens the power of DHL Express. It mainly affects the domestic
markets. The small and medium companies do not generally operate internationally because they
do not have such a network and financial assets to build their international position and gain
market share. However, these small and medium companies represent an opportunity for DHL
Express for merge or acquisition and additionally for gain of more market share. DHL Express is in
the position of strong and financially healthy company and this is an opportunity that is quite easy
to use.
DHL Express has more than 100,000 employees globally and large international network which
creates friendly conditions for bureaucracy. Bureaucracy creates formal and informal networks
that connect organization levels to one another through flows of information and cooperation
and there is a danger that these flows and organizational levels become to complicated and in
some cases double the work needed or it can happen that two organizational levels do the same
task. Bureaucratic environment slows down processes and procedures in the company and causes
loss of customers. In order for DHL Express to turn this into strength it is important to use and
support work of Research & Development department, support further cross-divisional
cooperation, work on standardized process workflows and create smooth cooperation channels
among people in different levels of organizational structure.
DHL Express has wide range of customers' portfolio from individuals to big companies. It is given
by company size and environment it operates in. There is another weakness connected with this
one and it is wide portfolio of product offer. It is again given by size of DHL Express and the nature
of logistics environment. All four biggest competitors cannot be easily differentiated; they all have
strong brand, history, experience and similar product offer. Therefore it is not difficult for customer
to switch to competition. I believe that the above weaknesses cannot disappear, however DHL
Express can work on minimizing the impact. It is important for DHL Express to broaden and
intensify business with current customers and increase their dependency by providing customized
solutions for every customer. If customer uses tools of DHL Express and is dependent on its
network it is costly to switch to competition. DHL Express has to work on improvement of
products and services and through innovation and specialization increase productivity, reliability
and speed of their services. This will tight the customer closer and there will not be any desire to
switch to competition. Investment programs are the way to move those initiatives forward. The
role of Sales and Marketing is important at this stage because it supports the company and
educates and communicates with customers. If company is seen as a strong, financially healthy
organization, with good image and recognizable brand, it attracts customers.
Matching Opportunities and Strengths
Mergers and acquisition were identified as a big potential for DHL Express to increase their market
share and strengthen position in European market. DHL Express would use power of those smaller
competitors, their networks and customer portfolio to gain bigger competitive advantage.
European market will be fully liberalized by the year 2012 and it is clear that there will be more small
and medium sized competitors in near future. DHL Express has experience with merge and
acquisition around the world. I do not have to go far and say example of PPL, Czech logistics
company that operates as a partner of DHL. From my perspective as a customer it has given to
PPL better image and competitive advantage because anytime I have need to deliver a package I
called PPL. However, in times of economic crisis when companies change their investment plans,
every investment like this must be fully analyzed and evaluated. This is not time for quick decisions
and actions. DHL Express has the biggest market share at the moment and any merges or
investments to purchase new companies could be postponed to near future.
Size of European market is limited but there are still gaps and opportunities for logistics companies
in Emerging markets. Emerging markets have the potential of high economy growth and despite
the influence of economic crisis the growth has slowed down but has not stopped. Therefore it is
important for DHL Express to be present in those countries and invest in active Sales & Marketing.
The aim is to continue and expand DHL Express presence and continuously work on brand and
image recognition. The offer of product portfolio cannot be full because DHL Express would not
be profitable if it offers the full range.
As DHL Express is big company it is important to work effectively, efficiently, be reliable, be quality
and be speedy. It is not easy in all situations, therefore it is evitable to run strategic programs that
work on company's strengths and weaknesses and provide new opportunities. As discovered
during the internal analysis DHL Express has started several strategic programs that help the
organization to stay on top.
First Choice program is focused on improvement of standard business processes and workflows
based on customers' needs. The program intensifies cross-divisional collaboration. It educates
employees to actively cooperate and by their attitude interest more customers and work on good
relationship with current customers. Closer cooperation with customers and employees brings new
innovative ideas and identifies gaps. If the company exactly knows what the customer wants, it
helps to work on customization of products and workflows to satisfy their need. Specialization
and customization is definitely an important and strong opportunity for DHL Express and it is one
of the most important opportunities I have identified. It also increases dependency that forces
customers to stay with DHL Express.
Roadmap to Value program is focused on transparency, profitability, cost reduction and
performance. Productivity of DHL Express will be increased by strengthening of standardized
systems, processes and workflows and it will bring the key success factors that customers
request: quality, reliability and speed. Restructuring of the organization will bring more transparency
and although there will be redundancies connected with it I strongly recommend to take this step.
Outsourcing is an opportunity for DHL Express to use skilled specialists and use their buying power
to stay modern IT company in logistics world.
Climate protection is high topic in 21st century and DHL Express has to pay attention to it. Go
Green program is focused on climate protection and disaster relief. It helps to decrease social
commitment the company has towards society. And it also provides opportunities for the
company to work on expansion of climate-neutral products offer to the customers which help DHL
Express to differentiate. It is important to start using energy efficient technologies (modern fuel
efficient vehicles), train employees to be environmentally conscious, develop climate-neutral
products and use standardized workflows and systems. Therefore, further investment into
Research & Development organization is important.
Employees are the treasure of any company. Skilled, educated and committed employees are the
core benefit for every company. DHL Express has very good image of employer and in order to
stay on top it is important to inform, educate and communicate with its employees. Standardized
workflows and standardized processes make it easier to work reliably, with good quality and be on
time. Employees are the people who communicate with customers and are the first point of
contact. Therefore it is important for DHL Express to hold regular employee surveys, issue
bulletins, provide trainings and career development plans. Marketing & Sales do not only
communicate with outside world but also inside the organization.
Value Chain Analysis
Inbound Logistics
DHL Express operates in more than 220 countries around the world and employs more than
100,000 employees. DHL Express is number one in Europe with 25% of market share. The DHL
brand and image is strongly recognized and their customers know that they will receive quality and
fast service. Skilled, educated and committed employees and specialist are those that help to run
the company towards future. DHL Express is aware of that. Modern technology in terms of
vehicles, Electronic Data Interchange systems (EDI) enabling planning, monitoring, operating and
checking, handhelds, GPS, barcodes and scanners, track and trace systems stand behind the
success. Information Technology is core for every logistics company. It is heart of the whole
system that helps to work effectively and efficiently. DHL Express has an internal IT organization
that supports and maintains the applications 24 hours a day, 7 days a week to provide full support
to their customers. Information Technology helps to reduce time and consequently cost of the
service which is what customer values. DHL Express has started several programs to standardized
workflows and processes to better satisfy customer and make more efficient network.
Operations
DHL Express offers wide range of portfolio products and customers can either use service
number or internet to order any logistics service. DHL also maintain service points where any
customer can drop off or pick up shipments and have them packed at no extra charge. This is one
of the innovative ideas that DHL Express provides to offer climate-neutral shipping product within
their Go Green program. Possibility of track and trace their shipment is nothing exceptional
nowadays.
Research & Development department plays an important role in development and success of DHL.
There are several strategic programs running in DHL to strengthen its position in the market. First
choice program aims for DHL to become the first choice for its customers. Go Green program
represents commitment to environment and social issues. Innovation centre that gather
employees with excellent skills coming with new innovative ideas. Additionally, there are employee
programs and surveys that help to measure and to support their commitment. Skilled and
educated employees are core for every business. They are the people who meet with customers
and they help to build customers' loyalty. Surveys also can show to management how familiar
employees are with the key strategies and how strongly they are identified with them.
Outbound Logistics
DHL has thousands of customers and thousands of orders every day. Although their aim is to
deliver faster and with quality delays and mistakes could happen. However, DHL works every day
on improvement of processes, procedures and networks to satisfy every customer need and
provide appropriate solution. As mentioned several times IT is the element that helps to deliver the
shipment on time and with quality.
DHL Express have several warehouses in every country and there is one international hub that
serves for all international deliveries in Europe and globally. It is in Leipzig, Germany.
DHL Express has uniform range of international time-definite and domestic day-definite express
services in European region. It continuously expands its services to developing countries. For
example they now offer overnight delivery from all European major cities and economic centers to
those countries. Furthermore the day-definite road transport was expanded which help to acquire
better contracts in industrial sector especially in automotive industry an in consumer goods
delivery.
These services are supported by processes, procedures, standards and strict cost control.
Cooperation across the divisions brings cost savings. Consolidation and restructuring of IT
infrastructure and transferring operating functions brings further savings.
Marketing & Sales
DHL Express has very active sales and marketing organization that help to present DHL's brand
and build image of quality. It also works on expanding company's presence into emerging markets.
Asset of a company lays in well-established and well-managed brand especially in the service
sector. Good brand also gives a competitive advantage in the labor market. It is important to show
the company as an attractive employer to get highly skilled and committed employees. DHL uses
modern tools for marketing. As an example can serve an online career portal used as a recruiting
tool.
DHL also reworked its corporate design and every service employee wears uniform clothing.
Employees are educated about their company through Brand manuals. There is multi-lingual
internet platform for DHL employees to get consistent information and be aware of the brand
image. Customer retention, customer loyalty and brand recognition are amongst the benchmarks
that DHL values to reach success.
These innovative programs that DHL is running are expensive for the company. They know that
the benefit will not come in short-term. Brand awareness and trust cannot be gained in short-time.
However, if it is gained it could have long-lasting.
After Sales
Customer support and customer service is very important in logistics industry because one of the
most important factors is customer satisfaction. Therefore, DHL Express regularly holds customer
satisfaction surveys because they help to identify problem of substitute products, help to answer
what substitute products customers consider, make better position in the market and among
customers, uncover customers' perceptions, improve customer loyalty and make product
improvements. DHL Express knows that loyalty of the customers increase with satisfaction and if
customer gets better value or benefit for the same price it could mean lower profit for the
company but it is worth it in long-run. Research & Development and Marketing & Sales
organizations have their significant role in After sales.
objectives
Using the SWOT analysis and Value Chain Analysis I have identified the main DHL Express
objectives and goals.
Increase profitability and productivity
Work on further growth despite economic crisis and invest into emerging markets
Balance the economic decline by restructuring and cost-cutting initiatives
Remain preferred provider and retain market share
Remain technology leader and improve relationship with suppliers
Specialize and customize products to achieve customer satisfaction
Differentiate by expansion of climate-neutral and climate-friendly products
Provide services in high quality and efficiency
Use Research & Development organization and improve products and services through
innovation
Invest into strategic programs
Use power of Sales & Marketing and communicate with customer and educate employees
and become their first choice
Strategy Formulation
DHL Express is well known organization with recognizable brand and good financial situation.
Economic crisis has brought less revenue and profit of the organization decreased. Therefore, the
first goal is to stabilize the company situation and return to the level before economic crisis as
soon as possible. It means increase profitability and productivity of the organization. This is an
opportunity for the company to make the organization more transparent and start with
restructuring initiatives like improvement of cross-divisional cooperation, work on standardized
process workflows, create easy cooperation channels among people in different levels of
organizational structure and make redundancies if it is necessary. All these activities will bring lower
cost for the company.
Emerging markets were identified as an opportunity for DHL Express to increase its market share
due to their growth potential. Although economic crisis has brought cost-cutting initiatives I see a
big opportunity for DHL Express to invest in building of networks and activities in those countries
and initiate active Sales & Marketing there. Another investment opportunity represents merge or
acquisition with small or medium sized companies in the EU market. Although, it would bring new
customers and new networks I see it as more risky then investment into Emerging markets due to
consequences of economic crisis in EU region and do not recommend taking this step. It is much
feasible to retain the current market share and remain preferred provider in the region.
DHL Express uses internal IT organization that supports all its IT systems around the world. It
represents high investment and cost for the company to stay on top. DHL Express employs top
specialists in this area and is one of the technology leaders. DHL Express closely cooperates with
IT suppliers and skilled specialists on software developments and innovations. Although
investment in this area is important I also recommend including the IT organization to restructuring
and cost-cutting initiatives. And carefully consider contracting of outsourcing or off shoring
providers and use advantage of lower prices.
It is important for DHL Express to broaden and intensify business with current customers and
increase their dependency by providing customized solutions. This will bring differentiation for the
customer. DHL Express has to work on improvement of products and services and through
innovation and specialization increase productivity, reliability, quality and speed of the service.
Innovation and specialization also gives DHL Express space to work on environmentally friendly
products and solutions. DHL Express has already started with programs that are targeted on the
above opportunities and are supported by Sales & Marketing organization. Customer satisfaction
surveys must be held at least once a year and the results must be taken into account during the
programs development. The main objective of the program for DHL Express is to become First
Choice for the customer.
As I stated in Value Chain Analyses, employees are the treasure of the company and skilled,
educated and committed employees are the core benefit for every company. DHL Express belongs
among the most admired employers in logistics industry and in order to stay on top employees
must be educated, informed and trained. It is important to create for them standardized
workflows, processes and procedures that will make their life easier. It is important to hold
employee surveys at least once a year and communicate the results of it to employees and make
actions based on it and provide personalized development plans. They are the first who
communicate with customers and make them stay or leave. DHL Express has already initiated a
program focused on it. The main objective of the program is to become First Choice for
employees.
Strategic programs represent an area that DHL Express has already initiated, and as proved by the
analysis, they represent important success factors for the organization and it is valuable and
worth to continue them. The most important once are First Choice program, Roadmap to Value
program and Go Green program. The details of these programs could be found on page 40.
Marketing & Sales organization must further work on image of DHL Express and its brand
awareness worldwide. This department communicates with inside and outside world of the
company and together with Research & Development must by financially supported by the
company to bring advantages. I see these two organizations as one of the most important ones
and as the top layers above all innovations, specializations, customizations, solutions, education,
trainings and programs.
conclusion
Although I thoroughly analyzed all aspects of the company and went through the analysis of
external and internal environment my strategy does not differ from the official strategy of DHL
Express. On one hand it is disappointment but on the other hand I am glad that I am working for a
company that has clear picture of its goals and targets.
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