Feb 5, 2021 in Management

FedEx Corporation

Introduction

The idea of the first quick service delivery of letters and parcels is wholly owned by an American named Fred Smith, who passed a long time to realize his dreams. However, in the history of FedEx, there were difficulties that could destroy the company at the stage of its implementation and the following activity. Today, FedEx is one of the leading companies in the market of express deliveries and transport of goods.

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General Characteristic of FedEx Corporation

FedEx is one of the leading companies in the market of deliveries. FedEx is a world-renowned brand. It was founded in 1971 by Fred Smith. The head office of the company is in Memphis, USA. Fred Smith presented a draft of a delivery service for one night as a course work, for which the teacher gave him a satisfactory mark. However, his idea was more than satisfactory. Today, FedEx employs more than 275,000 employees, and its revenue is more than $ 30 billion every year. A strategy of the company is delivery in one night. A key success factor is competent logistics. The basic principle of a general delivery service lies at the heart of the FedEx business.

The priority directions of the company are:

  1.  Messenger express delivery of documents, parcels and packages. At present, the company holds 70% of the market of courier services the USA and Canada, as well as a significant part of the European market. The FedEx network covers 220 countries in the world that allows providing quality and reliable service to its customers.
  2.  Express air transportation of bulky, heavy, dangerous and other goods. Having more than 600 transport aircrafts, FedEx is the fifth largest airline in the world and has the largest cargo division. It allows delivering of goods anywhere in the world as soon as possible.

The company offers a wide range of express delivery services for the time-definite transportation of documents, packages and freight. FedEx offers the following services on dispatch outwards:

  • Delivery of goods on the system door-to-airport, airport-to-airport or door-door.
  • Packaging of goods.
  • Cargo insurance.
  • Customs clearance.
  • Delivery to the airport.
  • Cargo handling.
  • Cargo tracking throughout the route.

AStrategy of the Company

FedEx Corporation was an innovator in courier delivery. In a year of its inception, customers had to call the company to make an order. FedEx introduced special boxes for letters (drop boxes). In 1984, FedEx started to provide free computers and software to its key customers enabling them to monitor their parcels and letters. In 1994, the company opened a website - the first site for transportation offering services to track the movement of goods.

A problem of the US Postal Service working before FedEx was speed of delivery. Sending a message, a person had to wait at least a week until it reached the recipient. However, FedEx offered a completely new revolutionary concept that allowed sending of mails overnight. The company has managed to create an excellent infrastructure on receiving of letters. A great number of small vans of FedEx travel about all US cities. If a person wants to send a letter to someone, he/she just needs to come to a van and put the post in a special slit on one side. On the same day, it will be delivered to the airport, where there is a plane of the company. Coordinated work of air and land transport is the main secret of the company allowing it to deliver letters and goods very quickly. Nowadays, not only FedEx is able to implement delivery of goods on the territory of the US for one day. However, this company was the first. Therefore, it confidently takes the leading place.

Success of the company is due to:

  1.  Identification of the needs of people to implement quick dispatch of letters.
  2.  Competent logistics meeting the needs of customers.
  3. Skillful positioning differentiating the company from its competitors due to the difference of its services. Nowadays, it is due to the fact that FedEx was the first.

The company is also characterized by the fact that it not only constantly improves technologies of goods delivering, but also expands the range of services almost taking the entire warehouse logistics of customers. The company widely uses software. There are three main stages, which use different software: taking orders, development of optimal routes of delivery and handling and sorting of goods in distribution centers. Each electric car and each worker has a computer. All of them are connected to a central server. A person on the computer has all instructions about goods. Control of operations is performed automatically through the bar-coding technology. A collector arrives to the cell and scans the address. Therefore, computers help optimize work and reduce costs.

Sacks, in which correspondence is put according to the addresses, are originally labeled. When an arrived container is unloaded, the computer prints the markers and the staff sticks them on bags. Letters with high speed move through the pipeline and each automatically falls into the definite bag. Sacks are packed in trays and then in containers. A persons task is to put these bags on the conveyor with the barcode on top at a distance of 40 centimeters from each other. In such a way, the machine could scan the barcode. On this stage, according to experts, it is cheaper and more profitable to use the manual labor than machinery.

FedEx Corporation is built on innovations. Even in times of sectoral or general economic downturn, employees that provide an innovative idea, which is embedded in the business process, receive $ 25 thousand from the company. Despite massive changes in global communications technology in the past 30 years, the company has managed to survive and even thrive. In fact, all the activities of FedEx is based on ignoring the well-known business strategies. For example, the company threw a frequently used competitive business diversification during the crisis. FedEx directs all its resources only on the development of the basic direction. In 1983, having gone through two periods of an industry downturn, FedEx entered the business world history as the first company to make billions of dollars solely due to the core business.

Another point that distinguishes FedEx policy is the purchase of other companies during the crisis. According to the company, it allows buying cheaper, help competitors get rid of business and strengthen the market position. For example, FedEx bought Caliber System Inc. in a difficult economic year for America, which was a kind of signal to partners, customers and competitors about the stability of the company.

Administrative Methods of Management

Since all entrepreneurs actively choose goals of their organizations and manage them at the beginning of their activities, all of them can be considered as managers. Some of them remain outstanding managers for a long time. Fred Smith clearly demonstrated his managerial talent realizing an idea that has provided a huge success of Federal Express. Due to the rapid development of the industry, there is a constant danger that the structure of any growing organization can get out of control. Leaders of FedEx fearing this went on very drastic measures. They decided to form organizational goals maintaining the linear organizational structure.

Between any ordinary workers and senior managers, such as the general manager of the company, should be no more than five layers of management. On average, the span of control in the organization is about twelve subordinates. However, in the units that perform similar tasks, it reaches twenty people. For example, a lower-level manager can manage fifteen - eighteen couriers. A manager of the next level can have only three low-level managers. Applications for replenishment of manpower resources are regularly compared with performance metrics. Statistics in this area indicates increase in the past indicators due to the redistribution of tasks and automation. In order to attract peoples attention to the need of maintaining a simple organizational structure, Federal Express has developed a special information campaign providing presentations, as well as publishing newsletters and articles.

To reward employees who have made a major contribution to achieving this goal, there is a system of stimulation for improved performance. It included a program of payment for efficiency and was associated with a program of management by objectives. In 1997, three weeks before the 90th anniversary of the UPS, employees organized a 15-day strike. A substantial part of the postal system of the country was paralyzed. FedEx unexpectedly had about 800 thousand of additional express parcels per day. Thousands of employees voluntarily worked overtime. After the end of the strike, the share of FedEx in the market of express delivery increased by two percentage points and reached 43%. Fred Smith ordered to pay award to all the workers and thanked them in a special 11-page letter.

Conclusion

History of FedEx - the worlds giant of aircraft and cargo transportation - is remarkable by the fact that it was created during the crisis in 1973. Contrary to the business logic, its founder Frederick W. Smith managed to create a successful company. Many adverse circumstances have become a disaster for many transport companies, but not for FedEx. Nowadays, it is a very flexible organization. FedEx is a leading organization in the market of good delivery.

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