Fedex vs Ups
QUESTIONS 1. If you had to identify one of those companies as excellent, which company would you choose? On what basis did you make your decision? More generally, what is excellence in business?
2. Prepare to describe in class the competition in the overnight package delivery industry, and the strategies by which those two firms are meeting the competition. What are the enabling and inhibiting factors facing the two firms as they pursue their goals? Do you think that either firm can attain a sustainable competitive advantage in this business?
Competition in the express delivery Market
The $45billion US domestic delivery market could be categorized into 2 segments. These consisted of letters weighing 0 to 2 pounds, packages weighing 2.0 to 70 pounds, and freight weighing over 70 pounds. The mode of transit categories were air and ground with the time categories being overnight, deferred delivery, three day delivery and regular delivery which occurred 4 or more days after pickup.
The air express segment was a $25bn portion of the US package-delivert industry, and was concentrated in letters and packages, overnight and deferred, and air or air and ground. Virtually all FedEx business activities were in the air express segment of the package delivery industry, only 22% of UPS’s revenues were derived from its next day air business. FedEx and UPS’s competition for the dominance of the $25bn domestic air express delivery market foreshadowed in an unusually challenging future
Background of the 2 companies
FedEx
Fedex was formed in 1971, as the brain child of Fred Smith who started the idea of the business as a undergraduate term paper for a Yale economic class. Smith’s strategy dictated that FedEx would purchase the planes that it required to transport packages, whereas all other competitors used the cargo space available on passenger airlines. In addition to using his own places, Smiths key innovation was a hub and spoke distribution
2. Prepare to describe in class the competition in the overnight package delivery industry, and the strategies by which those two firms are meeting the competition. What are the enabling and inhibiting factors facing the two firms as they pursue their goals? Do you think that either firm can attain a sustainable competitive advantage in this business?
Competition in the express delivery Market
The $45billion US domestic delivery market could be categorized into 2 segments. These consisted of letters weighing 0 to 2 pounds, packages weighing 2.0 to 70 pounds, and freight weighing over 70 pounds. The mode of transit categories were air and ground with the time categories being overnight, deferred delivery, three day delivery and regular delivery which occurred 4 or more days after pickup.
The air express segment was a $25bn portion of the US package-delivert industry, and was concentrated in letters and packages, overnight and deferred, and air or air and ground. Virtually all FedEx business activities were in the air express segment of the package delivery industry, only 22% of UPS’s revenues were derived from its next day air business. FedEx and UPS’s competition for the dominance of the $25bn domestic air express delivery market foreshadowed in an unusually challenging future
Background of the 2 companies
FedEx
Fedex was formed in 1971, as the brain child of Fred Smith who started the idea of the business as a undergraduate term paper for a Yale economic class. Smith’s strategy dictated that FedEx would purchase the planes that it required to transport packages, whereas all other competitors used the cargo space available on passenger airlines. In addition to using his own places, Smiths key innovation was a hub and spoke distribution