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IPSITA BEHERA, MOHIT GUPTA, NEHA CHAHAL & SHARAD KUMAR SHUKLA opasdfghjklzxcvbnmqwertyuiopasdfg hjklzxcvbnmqwertyuiopasdfghjklzxc vbnmqwertyuiopasdfghjklzxcvbnmq wertyuiopasdfghjklzxcvbnmqwertyui opasdfghjklzxcvbnmqwertyuiopasdfg hjklzxcvbnmqwertyuiopasdfghjklzxc vbnmqwertyuiopasdfghjklzxcvbnmq wertyuiopasdfghjklzxcvbnmqwertyui opasdfghjklzxcvbnmqwertyuiopasdfg hjklzxcvbnmrtyuiopasdfghjklzxcvbn mqwertyuiopasdfghjklzxcvbnmqwert yuiopasdfghjklzxcvbnmqwertyuiopas dfghjklzxcvbnmqwertyuiopasdfghjklz xcvbnmqwertyuiopasdfghjklzxcvbnm qwertyuiopasdfghjklzxcvbnmqwerty
GROUP 7

Q How and why has the express mail industry structure evolved in recent years?
The US express mail industry is highly consolidated. 85% of the market is served by 3 service providers. There are six second tier players who serve the remaining 15%. FedEx and UPS lead the industry in services and innovation. 1) A host of services are provided to suit the needs to different businesses. Overnight shipping and next morning delivery are most popular amongst other services like next afternoon delivery and second day service. 2) It is imperative for businesses to facilitate fast information dissemination. Express mails have provided a medium for establishing this. All business and individuals today use this service. 3) Most players use the hub-and-spoke model. Major hubs act as collecting grounds for mail from all over America. The mails are then sorted and then sent off to respective destinations. Priority is given too early-next and next-morning mails 4) The industry is governed by the rules set by UPS and FedEx. This being so because of the magnitude of their operations. There is fierce competition between the 3 big players, however the second -tier six players dont pose any threat to these companies. US Postal one of the second-tier players has a monopoly in first class letters and charges high fee for them.

Q How have the changes affected small competitors?


Due to the oligopolistic nature of this industry it is very tough for new entrants to come in. The terms are dictated by the 2 giants. 1) The entry barriers for this industry are very high. This is because to set up a network and supporting infrastructure will require huge capital investment. As such there is no brand loyalty, however all the major players are known for their reliability and for a new entrant to establish the same will take a lot of time. 2) This industry is highly consolidated with only 3 major players-somewhat on oligopoly. The industry is also characterized by numerous price wars between the 2 giants, namely, UPS and FedEx. Rest of the companies generally follow the trends set by these two firms or fall out. 3) Big customers do get volume discounts and can negotiate prices with sales representatives. However smaller customers have to take what is being offered to them. The only say that they can switch between the players, but due to intense competition, the prices offered are generally the same. 4) The inputs to this industry are fuel, planes, vans, customs and permits etc. the companies do liaison with relevant industries to prevent themselves from fuel hikes. 5) Business can use fax , telex etc to send important documents. Emails can also be used for the same purpose. These provide them with low cost alternative to express mail.

Q How has Airborne survived, and recently prospered, in this industry?


 Airborne Express was formed out of the merger of two companies named Airborne flower traffic association of California(1946) and Pacific air Freight (1949). Both the companies specialized in delivery of urgent times. During its nave stage the company focused on business customers who regularly shipped large volumes of urgent times primarily to other business locations. This was their core competency and they could easily bank on it. Airbornes cost efficiency came from the following factors: y Unlike its competitors, it owned the airport that served as its major hub. As a result, it neither had to pay landing fees nor did it face to tailor make facilities y It provided warehouse space on the airport site unlike its competitors which was a great attraction for business customers. y It also operated the nations only privately owned foreign trade zone in Wilmington. This led to reduced property taxes y It relied less on automation and more on humans than FedEx or UPS. This was also cost effective because part time wages were roughly $7 per hour. y Airbornes fleet primarily consisted of used aircrafts modified to their own requirements. Moreover Airbornes patented cargo containers fit through passenger door of an aircraft thereby eliminating the requirement of a cargo door. All this led to run its aircraft 80% full unlike its competitors who utilized 65-705 only y Airbornes volume consisted of afternoon and second day deliveries as a result airborne could use truck more often than its competitors. The cost of a truck was only 1/3rd of owning and operating a similar amount of aircraft capacity. y Airborne owned and operated only a portion of its delivery vans and rest were contracted which handled 60-655 of Airbornes volume. This delivery was 105 less expensive than company owned pickup and delivery. y Airborne courier picked and delivered more parcels per stop than a FedEx driver which helped reduce labour cost per unit by 20% for pickup and 10% for delivery. Airborne invested selectively in technology and banked uponusing competitors as guinea pigs. CRM-It focused on call centre automation and made sure that many customers would speak to the same service agent each time they called. It streamlined its supply chain and targeted logistics managers of major shippers using 500 - person sales force. CUSTOMIZATION- It positioned as flexible, solution oriented express carrier with tailor made services. This way it was able to grab major accounts like Nike , Compaq, Technicolor and Xerox. Collaboration with RPS helped them to improve their physical distribution system.

    

Q What must Robert Brazier, Airborne's President and COO, do in order to strengthen the company's position?
    Airborne should identify the key growth markets in its industry, such as Internet -based logistics, which is essentially the use of Internet technology to coordinate all aspects of freight shipping, from ordering and pick-up to payment and delivery. Airborne should also diversify into business segments other than business customers. This would help it in globalizing its brand. Airborne should think about diversifying its services in various different areas. Airborne should invest more into its international business and should try to widen its reach to new countries.

Key Differences among Express Mail Carriers


Airborne Express
Product Line International and domestic services. Overnight(Morning delivery, afternoon delivery, second day delivery), Business customers, sending large volume of urgent items. Only residential deliveries no heavy seasonal No automation sorting, no retail service centre, own a only a portion of delivery vans rest on mile / parcel basis ,more parcels / stop the other parcel services Airport at Ohio Through sales force no ad on mass media Automated customer service but not having facilities like scheduled pick up and creating shipping Paper work. Focus software, Tracking of cargo can be done by customer himself and submission of information electronically ,call centre automation more functions online 13300 vans, 175 aircrafts ,ohio airport

Federal Express
International and domestic services. Overnight(Morning delivery, afternoon delivery, second day delivery), Small Packages for express delivery Air express mail carrying small packages. Pick up by customers convenience

UPS
International and domestic services. Overnight(Morning delivery, afternoon delivery, second day delivery), Parcel delivery where time is not much of a concern. Common Parcel Carrier

Target customer segment

Summary of productmarket positioning Pick-up & delivery (inbound and outbound logistics)

Pick-up->companies convenience, Single fleet of Trucks.

Air & hub operations Marketing & Sales

Customer Service

8 hubs in US and 5 international hubs. Aggressive Marketing, large sales force and promotional schemes. Highly automated customer service.

1 national Hub, 5 regional hub No marketing department but spend 80% more than Federal Express. Initially not that good but eventually provided services similar to FedEx.

IT

Cutting-edge information and logistics technology like COSMOS,DADS etc.

Similar to FedEx and with a back up site in Georgia.

FIRM infrastructure and HRM

No layoff policy, cross training employees, quality improvement trainings, freedom of making decisions, incentive pay as per performance,

High wages, promote managers. Infrastructure is simple and functional.

Procurement

International operations

Airport as hub ,no landing fees, sorting manually done U.S and overseas

Initial failure. Focus on intra-Asia shipments to cover 211 countries.

Operating in 200 countries with operating loss running in hundreds of millions.