Case Study: Federal Express Corporation, Internal

Customers and Quality

The name “Federal Express” is synonymous with quality. The Federal

Express Corporation is widely recognized as a world leader in the areas of
both transportation and information. Not only can Federal Express deliver
packages overnight to almost anywhere in the world, but also it can track
those packages and tell customers where they are at any given time. Federal
Express Corporation is a company worth almost $20 billion that delivers
more than three million packages a day to more than 200 countries. Not bad
for an enterprise that started as the result of a “C” term paper written by an
undergraduate student at Yale.

While attending Yale, Fred Smith – founder, chair, president and CEO of
Federal Express Corporation – wrote a paper explaining how a company
could be started that could deliver packages anywhere in the country.
Smith’s professor wasn’t impressed and gave the paper a grade of C. Smith
might not have set Yale’s College of Business on fire, but he did set the world
on fire with one of the most innovative ideas in the history of business. But it
took more than vision, strategic thinking, innovation, and analytical ability to
build one of the most successful companies in the world.

Fred Smith, who served in the US Marine Corps from 1966 to 1070,
understood the value of “taking care the troops”. While building his
company, Smith never lost sight of the fact that its most important asset was
its employees. He cared about them empowered them, and treated them
well. To Smith, Federal Express employees were ad are just as important as
customers. In fact, they are customers – internal customers. Smith gained a
well deserved reputation for taking care of his employees. As a result, when
he needed them most, they took care of him.

One year during Christmas season, the company’s busiest and most
profitable time of year. Smith and Federal Express faced a debilitating pilot’s
strike. Either Smith would meet what appeared to be unreasonable demands
on the part of his pilots or the pilots would cripple the company by striking.
Smith knew a pilot’s strike might cause his company to lose a significant
percentage of its business to archival United Parcel Service. Even so, he held
his ground with the pilots. Why Smith was able to refuse to back down shows
how critical the concept of treating employees – drivers, sorters, and office
personnel – staged a spontaneous rally in support of Smith and the company.
The employees let the pilots and the world know that Fred Smith had been a
model of fairness over the years. They also showed the pilots that they had
no support outside of their cockpits. The pilots backed away from their threat
to strike during the holidays and Federal Express had an excellent Christmas
season