Assignment Paper

Final Project Analysis

FINAL PROJECT OUTLINE

1. Situational Analysis
a. Key trends shaping FedEx this coming year1
i. “Growth of e-commerce: E-commerce continues to be a catalyst for the other trends below and is a vital growth engine for businesses, as the internet is increasingly being used to purchase goods and services. While our residential e-commerce revenues are much smaller than our business-to-business revenues, it is the fastest growing market and requires constant innovation to make delivery to consumers more flexible, convenient, efficient and cost-effective. Through our global transportation and technology networks, we contribute to and benefit from the growth of e-commerce. “
ii. “Globalization of trade: As the world’s economy has become more fully integrated, companies are sourcing and selling globally. With customers in more than 220 countries and territories, we facilitate this supply chain through our global reach, delivery services and information capabilities. Despite the recent trade tensions, we continue to believe that globalization will drive international volume growth over the long term. “
iii. “Faster, more efficient supply chains: Companies of all sizes continue to depend on the delivery of just-in-time inventory to help them compete. We have taken advantage of the move toward more efficient supply chains by helping customers obtain more visibility into their supply chains and near real-time information to manage inventory in motion, thereby reducing overhead and obsolescence and speeding time-to-market. “
iv. “ Influx of high-tech businesses and high-value-added goods: High-tech and high-value-added goods have increased as a percentage of real economic output, and our various operating companies offer a unique menu of services to fit virtually all shipping needs of high-tech and high-value-added industries.”
b. Courier industry is an ever-demanding industry not only on business to business but expanding over to consumer-business.
i. UPS is the main competitor with FedEx It is ranked above FedEx on the latest Fortune 500 level.
ii. The gross profit for ups period ending May 31,2019 was $8,975.00 over FedEx in the same time frame.2
iii. The industry is projected to continue to expand over the five years to 2024, albeit at a slower rate compared with the current period. Factors that have historically helped boost demand for industry services, such as consumer spending and corporate profit, are forecast to continue rising, supporting revenue growth over the next five years. Additionally, the rise of e-commerce and decline of brick-and-mortar stores will likely benefit industry operators. Shipping volumes are expected to increase over the five years to 2024, as consumers shop on websites such as Amazon and eBay that largely rely on industry services to transport products. Consequently, industry revenue is forecast to increase at an annualized rate of 4.0% to $132.4 billion over the next five years.3
iv. Factors that will affect FedEx or courier industry in the future is competition.
1. Amazon is looking into forming their own courier service to breakaway from FedEx, UPS and USPS.3
2. “Amazon has initiated the last leg of its delivery operations in many areas, hired its own drivers and operates its own fleet of vehicles. Furthermore, the company has been in talks with air-cargo companies to lease airplanes and start its own freight operations. The threat of customers such as Amazon turning into industry competitors will likely be the biggest challenge for major players during the outlook period.”3
2. Problem Analysis and Description:
a. Some gaps that are facing FedEx is staying competitive in the growing market.
i. UPS already holds the top space for profitability.
ii. Amazon using self-courier operating will cut into revenues from both FedEx and ups.
iii. Fuel prices and expansion.
1. JIT demand makes the demand for jet fuel stronger which pushes the pricing up.
2. Expanding globally rather than Nationally has been difficult as well.
a. Getting more services into the UK and Asian Markets.
3. Cutting operating costs:
a. Any reduction in the amount of operating costs consumed yearly will allow for expansion in E-Commerce, global expansion.
b. annualized growth in the number of enterprises in the industry, ranked against all other industries. A greater intensity of companies entering an industry increases the pool of potential disruptors.3
c. “A hot topic in the industry relates to the use of independent contractors (IC), independent contractors are people that are hired by a company to perform tasks for the employer but have control over how the work gets done and what will be done. Workers that are hired as IC are subject to self-employment tax, benefiting the company hiring the worker. Both large and small couriers use IC in everyday business, FedEx current contracts with almost 9,000 small businesses. The CLDA has been lobbying in Washington to ensure that IC status is retained throughout the courier industry.”3