Strategic Management and Leadership (Term Paper Sample)

Strategic Management and Leadership -FedEx
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Table of Contents
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1. Introduction  PAGEREF _Toc382377212 \h
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2. Indicators of Success  PAGEREF _Toc382377213 \h
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3. Factors Supporting FedEx’s Success  PAGEREF _Toc382377214 \h
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3.1. Innovation  PAGEREF _Toc382377215 \h
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3.1. Strong brand image  PAGEREF _Toc382377216 \h
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3.2. Strong leadership:  PAGEREF _Toc382377217 \h
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4. Validation of FedEx Corporation's Success  PAGEREF _Toc382377218 \h
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4.1. The VRIN Framework  PAGEREF _Toc382377219 \h
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4.1.1. Value  PAGEREF _Toc382377220 \h
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4.1.2. Rarity  PAGEREF _Toc382377221 \h
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4.1.3. Inimitability  PAGEREF _Toc382377222 \h
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4.1.4. Non- substitutability  PAGEREF _Toc382377223 \h
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4.1.5. Summary  PAGEREF _Toc382377224 \h
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4.2. Global Strategy Framework  PAGEREF _Toc382377225 \h
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5. Leadership of FedEx Corporation  PAGEREF _Toc382377226 \h
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5.1. Fiedler Contingency Model  PAGEREF _Toc382377227 \h
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5.2. The 4 E’s of Leadership  PAGEREF _Toc382377228 \h
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5.2.1. Envision  PAGEREF _Toc382377229 \h
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5.2.2. Enable  PAGEREF _Toc382377230 \h
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5.2.3. Empowerment  PAGEREF _Toc382377231 \h
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5.2.4. Energise  PAGEREF _Toc382377232 \h
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6. Conclusion and Recommendation  PAGEREF _Toc382377233 \h
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7. References  PAGEREF _Toc382377234 \h
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Introduction
The Federal Express Company, commonly referred to as FedEx was established in 1973 by Fredric Smith. The firm was the pioneer of the logistics sector as well as express transportation. Currently, FedEx is the leading delivery firm and capitalises on global transportation and delivery of packages and parcels. FedEx offers five main services which comprise of global express delivery, customs brokerage, overnight delivery of packages, freight delivery, and delivery of small parcels. In addition, the firm has quality customer service that is exhibited by the firm’s determination of going to greater extents to ensure that their clients are served (Berger, 2010). Being a transnational firm, FedEx offers various products and service for different nations. For instance, in New Zealand, FedEx offers FedEx packaging and International Priority (IP) service).
The objective of this report is to analyse how successful FedEx is as well as discuss the strategic reasons behind that success. This is achieved through the analysis of Strategic capabilities leading to competitive advantage, strategies based on strategic capabilities leading to growth, the leadership of the firm, as well as the firm’s international strategy.
Indicators of Success
A number of reasons as well as different perspectives exist touching on what is meant by a corporation being successful. Various organisations along with managers all together differ when measuring degrees of success (Wu, 2010). FedEx reported revenues of 35.5billion dollar for the financial year of 2009, a decrease of 6.5% from 38 billion dollars in 2008. In addition, in 2009, the gross profit decrease by 11.2% to 9.1 billion dollars whereas net income dropped by 91.3-percent to just 98 million dollars (FedEx, 2010). Clearly, it is quite obvious that the economic crisis hit the firm equally hard, particularly since almost two-thirds of its income is generated from its Express unit which provides the quickest and thus most costly form of shipping to businesses and clients.




Figure showing revenue breakdown of FedEx
Source: (Amsler, Cullen, and Erdmenger, 2010)
On the other hand, the firm can be seen to be successful as it has managed to recover relatively well in the economic year 2010, recording net income of 181, 345, 281 million dollars respectively in the first three quarters. In the third quarter, revenue increased by 7% from that of 2009 to 8.7 billion dollars (SRI, 2011). Notably, as the recession ended, FedEx seemed to have increased market share as smaller, minor players were forced to terminate operations. The firm was hit hardest by the general decline in volume that it was delivering across all lines of service on a day-to-day basis, however it reduced costs and reorganised operations to ease the damage. All the business lines of the firm saw surges in revenue and profit for the most current quarter, apart from FedEx Freight which recorded a loss because of amplified costs. FedEx has announced approximately a 6-percent increase for this sector which its clients seem quite willing to accept.


Figure showing Solvency and Liquidity of FedEx
Source: (Amsler, Cullen, and Erdmenger, 2010)
FedEx has been successful since for the past five years the firm has decreased its debt burden by 1 billion dollars whilst growing shareowner equity by 5.6 billion dollars within the same duration. The firm has decreased its debt particularly over the past few quarters from 2.6 billion dollars in 4th quarter in 2009 to $2 billion in 3rd quarter of 2010. The firm’s debt both short term and long term is fairly trivial when seen as a percentage of equity or asset. Rival UPS currently has a considerably higher debt burden and thus, its debt as a fraction of assets and equity are 29.9-percent and 124.8-percent respectively (FedEx, 2011). In spite of its tendency for acquisitions and recent plans on expansion, FedEx greatly outperforms UPS in terms of debt management. It primarily acts as some reason for concern that FedEx has recorded a net change of $743 million in cash through the first three quarters of 2010. Nevertheless, with 1.55 billion dollars still retained in its reserves, this does not pose a problem presently. It is noteworthy that the biggest percentage of this funds used in 2010 went to settlement of debts early. Currently, FedEx holds a current ratio of 1.57, which has surged at high rate yearly from 2006 as a result of settlement of debts in addition to increasing assets.
Factors Supporting FedEx’s Success
Innovation
FedEx holds a strong history of innovation by fitting computers in delivery trucks, providing modern mechanisation for mailing services and introducing tracking software and capabilities. In 1979 capabilities came to be the first shipping firm to use a computer to handle parcels (Berger, 2010) when it established Customers, Operations and Services Master Online System (COSMOS), an integrated computer system to manage parcels, people, and means of transportation as well as climate conditions in real time. Subsequently, the firm uses Digitally Assisted Dispatch System (DADS) to manage on-call pickups for clients. This system enables clients to arrange pickups within a day. In addition, FedEx was first to provide package-status map out for better consumer service through fedex.com.
The innovative culture in FedEx Corporation acts as a distinctive capability enabling competitive advantage with reference to the design of their services, management, as well as other process facilitating prevention of strategic drift. To sustain the innovative culture, FedEx developed an information technology project referred to as the FedEx Innovation Labs, designed to generate an environment of collective thinking on key technologies like advanced optics for scanning, social networking, robotics, and so on (FedEx, 2010).
Strong brand image
The success of FedEx is mainly founded on its strong brand image. FedEx is among the most reputable names in the international express delivery services segment. On account of success in innovation FedEx has obtained a strong brand image. The firm runs its four segments of business under the FedEx brand name: FedEx Express, FedEx Freight, FedEx Services, and FedEx Ground (FedEx, 2013). In addition, FedEx promotes its brand by means of broadcast and print advertising, special events, as well as corporate sponsorships. The firm's promotion and advertising costs were 379 million dollars in the financial year 2009, 445 million dollars in financial year 2008, and 406 million dollars in financial year 2007 (Berger, 2010). In addition, the retail operations is fuelled by the firm's strong brand image fuels its. Furthermore, besides driving domestic revenues, the strong brand image facilitates global expansion too.
Strong leadership
The overall leadership of FedEx is one of the key reasons for their success over the years. For over three decades, the firm has been led by Frederic Smith and as a result of his dedication, strong leadership and commitment FedEx is among the top 100 firms internationally (CNNMoney, 2008). The leadership style of Smith has contributed to the firm’s success due to “The purple promise” dedicated to making all FedEx experiences exceptional. Smith underpins this philosophy constantly through facilitating company training programs as well as setting expectations. Smith provides his workforce with tools to perform their tasks right as well as his management team hold frequent meetings to ensure employees are aware of their importance. For a fir...