Fedex
Introduction
The AASCB case talks about the small package express delivery industry and its evolution. This is a very interesting case to study because of the fact that more and more people are shipping small packages every day especially with the growth ecommerce. It is also interesting because of how this industry has allowed people to conduct business with other people around the world. Today consumers in the US can make purchases or send files directly to and from business in places like China because of this industry. In my opinion the most interesting thing about this case is how the company FedEx was born from a simple observation that Fred Smith Jr. made about shipment overnight. This case took you from the embryonic stage of the express shipping industry and walks you through the growth, where UPS jumps in because barriers are lowered. It then walks you through the decline where only a few companies are standing due to price wars and consolidations in the industry.
Threat of New Entrants
In the express delivery industry our first force is the threat of new entry which starts off a weak force. It starts with FedEx and the theory that passengers and packages should be treated differently. After this observation FedEx made the idea of shipping packages at night to be ready for delivery in the morning. The case stated that FedEx was able to operate airplanes. In class we discussed barriers to entry in an industry, and I felt that the airplane was one those barriers. The jet planes, although regulated by CAB, helped create a cost advantage for FedEx. Other companies that may have wanted to jump into the embryonic stage of this industry could not because it was costly and heavily regulated. While other shipping companies around the world may have existed, they could not yet jump into the express delivery. The weakness of this force had a big push on profitability because no one else was able to compete. It took three years for FedEx to turn in a profit
The AASCB case talks about the small package express delivery industry and its evolution. This is a very interesting case to study because of the fact that more and more people are shipping small packages every day especially with the growth ecommerce. It is also interesting because of how this industry has allowed people to conduct business with other people around the world. Today consumers in the US can make purchases or send files directly to and from business in places like China because of this industry. In my opinion the most interesting thing about this case is how the company FedEx was born from a simple observation that Fred Smith Jr. made about shipment overnight. This case took you from the embryonic stage of the express shipping industry and walks you through the growth, where UPS jumps in because barriers are lowered. It then walks you through the decline where only a few companies are standing due to price wars and consolidations in the industry.
Threat of New Entrants
In the express delivery industry our first force is the threat of new entry which starts off a weak force. It starts with FedEx and the theory that passengers and packages should be treated differently. After this observation FedEx made the idea of shipping packages at night to be ready for delivery in the morning. The case stated that FedEx was able to operate airplanes. In class we discussed barriers to entry in an industry, and I felt that the airplane was one those barriers. The jet planes, although regulated by CAB, helped create a cost advantage for FedEx. Other companies that may have wanted to jump into the embryonic stage of this industry could not because it was costly and heavily regulated. While other shipping companies around the world may have existed, they could not yet jump into the express delivery. The weakness of this force had a big push on profitability because no one else was able to compete. It took three years for FedEx to turn in a profit