O Malakas

Federal Express is an express transportation company, founded in 1973 by Frederick W. Smith. During his college years, he recognized that the United States was becoming a service-oriented economy and needed a reliable, overnight delivery service company designed to solely transport packages and documents. He wrote a Yale term paper on this idea, and received a 'C'. His professor thought it would never work. Fortunately for Frederick Smith, he didn't take it to heart and ended up building that company he dreamed of.

He found investors willing to contribute $40 million, used $8 million in family money, and received bank financing. He started Federal Express with over $80 million, making it the largest company of its time ever funded by venture capital.

Background

Federal Express became successful so quickly because all their competition became weaker at the same time. They built a super-hub in Memphis, Tennessee, where all packages from the United States would be loaded on the correct transport and shipped out each night.

Today, Federal Express has over 143,000 workers worldwide, and delivers more than 3 million express packages to 200 countries daily. One major change has affected Federal Express. In January of 1998, Federal Express changed to FDX Corporation.

FDX Corporation now includes Federal Express, Roadway Packaging System (RPS), Viking Freight, Roberts Express, and Caliber Logistics. Even though FDX owns all these companies, Federal Express still remains independent. FDX's strategy is to corroborate on selling and synergies for all FDX companies, but run operations separately and keep each company's strengths and markets separate. Therefore, some information will be about FDX, but most will be for Federal Express as its own company. For example, Frederick Smith, the founder of Federal Express, is now the Chief Executive Officer of FDX. Federal Express' CEO is currently Theodore Weise.

Mission Statement

The Mission Statement of FDX is "to produce superior financial returns for stockholders, by providing high value-added logistics, transportation and related information services through focused operating companies". This mission statement shows that FDX has a clear focus. (1) The main focus is to bring returns to stockholders. (2) They will emphasize adding value above and beyond just their service of transporting an object from one place to another. (3) Their focus of operations will be logistics, transportation, and related information. This mission statement is focused enough to keep FDX from diversifying into for example, food products; yet vague enough to allow growth in all of those areas.

Philosophy

FDX and Federal Express, in particular hold a People-Service-Profit philosophy. The 'People' goal is the continuous improvement of management's leadership. The 'Service' standard is 100 percent customer satisfaction. The 'Profit' goal is much like any other company's goal, and is essential to long-term viability. This philosophy governs how FDX runs its business, and defines strategies.

Federal Express Five-Point Strategy

Federal Express has five strategies that govern business tactics. These are to improve service levels, lower unit costs, establish international leadership and sustain profitability, get closer to the customer, and maintain the People-Service-Profit Philosophy.

Major Strategic Issues

FDX is focused on three primary growth strategies. A collaborative sales process that leverages their shared customer relationships, aggressive global marketing of the broad FDX portfolio to targeted prospective customers, and a strategic application of information systems to reduce costs and improve customer access and connectivity.

FDX Corporate Subsidiaries

All subsidiaries of FDX follow the focus of their mission statement: logistics, transportation, and related information. Since their mission statement allows for growth, they also have room to acquire more companies whose operations are similar. Currently, these are the names and descriptions of the companies under FDX, other than Federal Express.

RPS: North America's second-largest provider of ground small-package delivery. It also services 28 European countries and Puerto Rico.

Viking Freight: The premier brand name in less-than-truckload freight movements throughout the western United States.

Roberts Express: Engineer and execute time-specific, door-to-door surface and air-charter delivery solutions that solve special-handling challenges for FDX customers within North America and Europe.

Caliber Logistics: Develops and implements customized logistics solutions that help FDX customers manage costs, improve customer service and focus on their core business activities.

The Sales Breakdown for these FDX companies in 1998 is shown in Figure 1 on Page 1 of the Appendix. As you can see, Federal Express still accounts for 83 percent of total revenues. The next largest is RPS, bringing in 11 percent of FDX's total revenues.

Federal Express Sales & Sales Growth

Federal Express is a very large company, and their sales are shown in Figure 2 on Page 1 of the Appendix. Federal Express had revenues of $13.3 billion in 1998, grown 15 percent from 1997. Federal Express has also had steady growth for the past five years, signifying a very strong company.

Customers, Markets, and Services

Federal Express serves business-to-business, business-to-individual and individual-to-individual accounts. Federal Express' markets include over 200 countries where 90 percent of all the world's revenues originate. Federal Express provides both document and freight deliveries as well as supporting services.

Competitors

Federal Express' competitors include: United Parcel Service, Airborne Express, Emery Worldwide, DHL Worldwide, BAX Global, and United States Postal Service. The market share each of these companies hold is shown in Figure 3 on Page 2 of the Appendix. Federal Express holds 46.5 percent, the largest portion, with UPS and Airborne Express as the largest competitors. As shown from the preceding information, Federal Express is clearly a large, strong,