Online purchases have also been continuously growing, increasing demand for package delivery services. Survey studies revealed three in five Internet users shopped online in the last twelve months (Spryest, 2011). An expanding e-commerce market is likely to drive demand for freight 6 Today, there is a huge concern regarding environmental awareness.
Faded uses environmentalism's recyclable packaging and hybrid vehicles to reduce harmful emissions into the environment (Hoyt, 2006). This emphasizes Feeder's posture towards environmental protection and safeness. . Technological Due to technological advances, customers can readily track their shipment. Using a wireless system, Faded offers package-tracking data through its web-enabled devices, allowing customers to track their shipments door-to-door (United States Securities and Exchange Commission, 2013).
However, there is a high implementation and maintenance cost in using high-tech information technologies. Large-scale system failures could damage Feeder's credibility, creating a logistic catastrophe. C. Opportunities International expansionFaded Express recently acquitted its Indian service provider, Parka's Air Freight, one of the largest domestic express companies in India (Bell, 2007). Feeder's expansion initiatives magnify their global reach, whilst reducing their heavy dependence on the U.
S. Market. Research indicates that the Chinese air-express market is expected to grow 34%, thrice the global average of approximately 11% (Denominator, 2010). With their increased focus in China, Faded is well positioned to benefit from one of the key growth markets in Asia. Contracts/Joint-ventures Faded could benefit from forming contracts and Joint ventures with large reparations.
Their Joint venture with the multinational financial services corporation, American Express further integrates and widens their customer base, potentially leading to increased profitability and growth prospects (Faded, Bibb). 7 D. Threats E-substitution Due to the Internet's growing popularity, emailing and text messaging has virtually replaced postal letters as a communication medium. Information delivery such as accessed online (e. G. Electronic banking).
Other forms of electronic communications, such as fax machines and telephones have also substituted mail. These forms of e- obstruction pose a threat to Faded services.Intense competition The shipping service industry is highly competitive, especially in periods of little or no macroeconomic growth. Some of Feeder's competitors have better financial resources and can raise capital more easily. Due to the industry competitive pricing environment, Feeder's ability to achieve expansion is limited. Additionally, if competitors offer a broader range of bundled services, this could impede Feeder's ability to maintain or grow its market share.
8 Internal Analysis Strong brand image In 2013, Faded was ranked tenth in FORTUNE magazine's World's Most AdmiredCompanies' list (CNN Money, 2013). It invests heavily in advertising, promoting its brand through print and broadcast advertising, corporate sponsorships and special events. A strong brand image drives retail business, boosts domestic revenue thus facilitating international expansion. Large scale of operations Faded provides transportation, e-commerce, and business services. It operates through various segments. It is one of the largest express transportation companies, engaged in packages and freight deliveries to over 200 countries worldwide (Faded, ICC).
Its large scale of operations enables it to serve a broad customer base, increasing its profit margin. Strong financial position In 2006, Feeder's total asset saw an 11% increase from the previous year (Faded Corporation, 2006, p. 10). In 2009, despite the global recession, it managed to escape relatively unscathed due to its strong financial position acting as backup. Faded was consequently able to maintain its position in the market during the downturn. B.
Weaknesses Dependence on the U. S. Market Faded generated almost 73% of its revenue from the U. S. Arrest in 2009 economy and/or Feeder's sales in the U.
S. Do not grow as expected. Furthermore, the concentration of operations in the U. S makes it vulnerable to country specific factors (e.
G. Labor strikes). 9 Weakening financial performance Faded witnessed an overall decline in revenue in its key segments. Faded Express revenues saw declined by 8. 4% from 2008 to 2009 (Faded Corporation, 2009, p.
8). A continuation of this trend will reduce Feeder's growth prospects and diminish investor confidence in the company. Rising prices In 2013, Faded increased prices by 3. 9% in view of the surge in demand.
Despite this, Faded still projects a 13% profit increase (Stanton, 2013). However, this temporary profitability may be harmful in the long term, as higher prices makes decreases affordability, especially in more subsistent economies such as China and India. With its segmentation strategy, Faded aims to 'operate independently of each other and yet compete collectively (Faded, 20th), allowing each segment to specialize in its own niche rather than concern itself with the entire market. Feeder's target market is small to medium business owners who require their services on a weekly basis.Faded acquired Kink in 2004 for $2. 4 billion, 'expand[ins] its presence among small and midsized businesses that have long been Kink's main customer base'.
Faded Chairman stated "it [was] supremely logical for [them] to offer revise to the whitewall's and office segment that are analogous to what [they] offer [their] corporate customer base" (Deutsche, 2003). Faded has a more defined white-collar customer base, mainly consisting of "fast-cycle logistics shippers seeking time-definite morning deliveries" (Richer, 2009).Their services will meet demands for time-definite morning deliveries to wholesalers,' (ibid. ) manufacturing businesses, retail stores, and high-value goods.
10 Recommendations Although Faded has been successful in moving into the international arena, it still does not have a competitive advantage in the shipping industry. Its chief competitor, UPS, controls the ground shipping market (see Appendix A), guaranteeing them a large portion of the domestic market share.Faded should maintain a controlling stake in the express delivery market while increasing their market share in domestic ground delivery, by further differentiating itself from UPS through innovation and service offerings. Securing more business partnerships, even at slightly lower margins, will help develop brand loyalty. This is especially true of long-term contracts with large firms.
Studies predict the international package market will grow by 5-6% in the coming ears, nearly double the expected annual growth in world GAP (Waistlines, 2014).Faded should continuously invest capital in Asia, whilst penetrating into foreign markets by partnering with local carriers. This will give them valuable insight into a relatively foreign and unknown market. Acquiring smaller shipping companies, such as Excel (I-J) or Suppose (France) also increases their international reach. Faded could seek alternative energy sources to reduce their operating costs.
Investing in solar power or bio-fuels could help counter additional costs due to increased fuel prices.Faded should utilize economic aircrafts to increase their carrying capacity, thereby reducing the number of operating planes. Lastly, by forging strategic alliances with oil and gas suppliers, they could bargain for discounts, whilst curtailing the negative effects associated with volatile oil supplies. Looking forward, Faded has positioned itself for growth opportunities in the domestic and international arena. It has exhibited an exceptional track record of international expansion and good financial restraints during times of easy credit, proving it can operate successfully even in a tough economic climate.
