Airborne Express - Five Forces free essay sample

FedEx matched not only each others prices, but also the others innovations and services; e. g. early-morning delivery, same-day service, and an ability to track packages by the Internet. ) Smaller players (DHL, TNT, BAX Global, RPS) targeted specific market segments, in turn, competition in those particular segments are not that intense. However, as a result of the UPS strike and UPS lost volume, it would appear that the competitive landscape is shifting, and smaller carriers are eciding to compete in a greater variety of segments of the express mail market. The Postal Service planned a major advertising blitz to promote its express services, and is petitioning Congress for the right to grant volume discounts. UPS began to plan its strategy to recoup its lost volume. And, Airborne and RPS forged a relationship that would integrate each companys strengths. Write-Up: (1) Change of Five Forces Over Time; and (2) Main Strategic Issues The factors influencing the barriers to entry have significantly strengthened since FedExs incorporation. We will write a custom essay sample on Airborne Express Five Forces or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page FedEx introduced overnight delivery to the express mail market. It was a leader in technological innovation, and was dedicated to continually improving the companys service quality. FedEx raised industry standards. As a result, the capital requirements necessary to enter the market increased, the economies of scale of the major carriers increased, and access to distribution channels became more difficult to obtain. The threat of substitutes grew over time. Prior to email and facsimile, regular mail was the only practical substitute for express mail. However, with the invention of the internet and the fax machine, these two viable substitutes for delivering letters and documents surfaced. Also, the bargaining power of labor increased over time. As industry practices shifted towards employing part-time wages widened. In UPS case, such a disparity in wages resulted in a national walkout. The bargaining power of customers increased over time. FedEx expanded the variety and increased the quality of services. By expanding the variety, the value of UPS two-day delivery service was devalued. And, in turn, UPS and other carriers had to expand its services to compete with FedEx. However, as a result of vigorous competition, almost identical services, and low brand loyalty, the consumer became xtremely price sensitive. The rivalry between UPS and FedEx has remained constant, yet intense, since FedExs entrance. However, it would appear that competition within the industry has intensified as a result of the UPS labor strike (see exhibit 5b). The express mail industry is less attractive at the conclusion of the case for the big players (FedEx, UPS) than it was prior to the UPS labor strike, yet it still remains attractive. The UPS labor strike created an opportunity for several peripheral carriers to compete for market share. Therefore, one strategic issue acing the large carriers is determining the best course of action to successfully thwart the threat from an increase in competition. This involves pricing, operation efficiency, and possibly expanding their own operations into smaller market segments (attacking the threats bread and butter). In addition, success in the international market is considered essential if consistent growth is to be maintained. DHL and TNT have extensive experience and solidified positions in the international market. Furthermore, both carriers have presence in the United States, and could potentially expand their domestic operations. The second strategic issue is determining a course for international expansion, while also preparing for DHL and TNTs probable response to such expansion. Even after the UPS labor strike, the express mail industry is still not attractive to smaller carriers (Airborne, RPS). As a result of the labor strike, smaller carriers were provided an opportunity to expand into larger market segments within the industry. For example, the partnership between RPS and Airborne directly targets a broad range of UPS customers, and the Post Office is petitioning Congress for the right to grant volume discounts. In this case, the retaliation of the larger carriers is a main issue. For example, FedEx and UPS have both introduced distanced based pricing and Airborne must decide whether or not to adopt such a pricing scale. Finally, the smaller firms must access their international market strategy. In regards to DHL and TNT, how do they respond to FedEx and UPS increasing their expansion into the international market? In regards to Airborne, does it need to expand its operations, stay the course, or leave the international market all together as a result of the larger carriers expansion?