Airborne Express: Economics of Strategy and Organization
AIRBORNE EXPRESS
Economics of Strategy and Organization
1 Why has the express mail industry been so difficult for smaller players?
Small players like BAX GLOBAL, DHL WORLDWIDE EXPRESS, TNT, etc. lacked resources to expand their base. Fed Ex had huge hub facilities with 2.4million square feet of floor space.
Smaller players focused on segments rather than the whole market on the whole. BAX GLOBAL focused on heavy cargo and was not considered competitive for overnight letters. RPS targeted price-sensitive business customers and focused on two day deliveries via ground network. U.S Postal service was prohibited by law from offering volume discounts to business customers and was also unable to track the packages efficiently. U.S Postal service had poor on time delivery record. DHL and TNT focused mainly on the international market, maintaining a low profile in U.S market.
Competition from substitutes (like fascimile and electronic mail were faster than express mail) was also intense making it hard for small players to compete on margin and also maintain its operations. Whereas large players could offset the price margin loss by depending on overall market instead of a niche segment.
Small players were also unable to provide services like- tracking of shipment, schedule a pickup, prepare paperwork, efficiently when compared to the big ones.
Finally, small players found it extremely difficult to compete on prices, products and customer support with the large players.
2 This is an industry with two major players. Why is competition between FedEx and UPS so fierce?
Both FedEx and UPS accounted for over 70% of the total market share. They heavily competed on price, products and customer support. The following points validate the major differences between these two giant firms and why they are close rivals. a Federal Express (Fed Ex), held around 45% of the marketplace and was the first mover of the industry, closely followed by United Parcel Service(UPS).
b
Economics of Strategy and Organization
1 Why has the express mail industry been so difficult for smaller players?
Small players like BAX GLOBAL, DHL WORLDWIDE EXPRESS, TNT, etc. lacked resources to expand their base. Fed Ex had huge hub facilities with 2.4million square feet of floor space.
Smaller players focused on segments rather than the whole market on the whole. BAX GLOBAL focused on heavy cargo and was not considered competitive for overnight letters. RPS targeted price-sensitive business customers and focused on two day deliveries via ground network. U.S Postal service was prohibited by law from offering volume discounts to business customers and was also unable to track the packages efficiently. U.S Postal service had poor on time delivery record. DHL and TNT focused mainly on the international market, maintaining a low profile in U.S market.
Competition from substitutes (like fascimile and electronic mail were faster than express mail) was also intense making it hard for small players to compete on margin and also maintain its operations. Whereas large players could offset the price margin loss by depending on overall market instead of a niche segment.
Small players were also unable to provide services like- tracking of shipment, schedule a pickup, prepare paperwork, efficiently when compared to the big ones.
Finally, small players found it extremely difficult to compete on prices, products and customer support with the large players.
2 This is an industry with two major players. Why is competition between FedEx and UPS so fierce?
Both FedEx and UPS accounted for over 70% of the total market share. They heavily competed on price, products and customer support. The following points validate the major differences between these two giant firms and why they are close rivals. a Federal Express (Fed Ex), held around 45% of the marketplace and was the first mover of the industry, closely followed by United Parcel Service(UPS).
b