case study – federal express

8/3/2019 Case Study Federal Express

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Case Study Federal Express

Group 4:

Abhijeet Rao 71

Sonam Chandni 87

Savio Pillai 93Ishan Sankhe 100

Jatin Naik 102

Tanvi Mhatre 118


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Case Facts


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Introduction

Federal Express was the brainchild of Frederick W.Smith Jrwho at the age of 27 incorporated the company in 1971.

Implementing the new concept of air transportation of

packages.

Carried out a Market study to understand the nature of the

market for small package air-service.

Invested about $90 million that was accumulated from

different sources.


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Thus, Federal Express Corporation (FEC) became the largest

single venture capital start up in the history of American

Business.

Started Operating in April 1973 and achieved Break-Even

Point in mid-1975 and served more than 130 cities in the U.S

Had over 2000 employees and showed an average daily

volume of around 19000 packages .

The Air-Freight industry was growing rapidly after 1965.


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80% cargo going in and out of the airport was dealt by 3intermediaries - Air Cargo , Freight Forwarders , U.S Postal

Service (USPS).


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Question 1 : How did FedEx

Evolve? Indentify major changes

in the market ?


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How did FedEx Evolve ?

What is FedEx ?

Who and When did FedEx start ?

Why did FedEx Start ?

How did FedEx start its operations ?


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What is FedEx ?

i. International Courier company

When and Who started FedEx?

i. Frederick W. Smith

ii. 1971


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Why did FedEx Start ?

i. Huge Market Potential for exclusive Air

Freight Service

How did FedEx start its Operations?

i. Finance

ii. Logistics Memphis


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Major Changes in the Market

(for FedEX)

Prior Market Condition - Unawareness of the

Advantages offered by Air Freight

Services Offered

1. Emergency

2. Rush

3. Routine

Priority 1

SAS

Economy Air


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(for FedEX)

Brand Recall :

i. Emery 61 %

ii. Airborne 22 %iii. FedEx 12 %

Efficiency :i. FedEx 93 %

ii. Emery 42 %


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(for FedEX) External Source:

i. Then 6 packages ; Now 3 million packages and

documents

ii. FedEx controlls more than 50% of Overnight Delivery

Market (in US)

iii. FedEx handles Goods - 4 % of US GDP and 1.5 % of World

GDP

iv. Total Revenue $ 39.3 Billion anually


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Question 2 : Which similarities

can you identify in the present

Indian scenario ?


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Caters to large geographical area

Airfreight industry accounts for small

percentage of overall cargo industry

Market is on evolving stage

Lot of growth potential


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High competition in the market

Presence of various intermediaries


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Question 3 : Taking the overall

situation in account suggest a

marketing plan for a courier ?


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Proposition

Position- Provide logistics and distribution

services

Segmentation- Local Businesses, individuals

Target market- E-commerce portals


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Competitors

Local courier service companies-vichare

Global courier service companies-federalexpress, DHL

Companies in-house logistics department


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Opportunity

Market size for the year 2006-07 (Fig in Cr) 2007-08 (Fig in Cr)

Online Travel Industry 5500 7000

Online Non Travel

Industry

1580 2210

E -tailing 850 1105

Online classified 540 820

Paid content subscription 20 30

Digital Downloads 170 255

Total B2C/C2C E-Commerce

Market

7080 9210


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Product

Last mile logistics - Highly reliable, within 24 hours intracity delivery.

Reverse logistics - Fast pickup and timely return to origin

Cash on delivery - Accept payment in cash upon delivery

Offline payment collection - Multiple payment collectionoptions for virtual goods and services

Customer support - Remarkable online & offline customer

support


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Price

It usually depends on the volume that the e-commercecompanies start-off with.

Even if you have just started and have very low volumes,

logistics companies offer good rates which are much lowerthan the regular walk-in rates, but they would come down

further only if the e-commerce company show significantly

incremental volumes month on month

A rate of Rs. 25-30 per 500 grams (incl. all taxes, Fuel

Surcharge etc.) is good to start off with.


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Promotion (Cont)

For start ups cost will be crucial point by providing rates lower

than big logistics services our courier services will create a

market for it self.

Besides we will be providing intra city logistics services where

timely delivery of goods will be possible at lower costs.

Additional services

Online tracking of parcels

case study – federal express

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