Fed Ex 1

Case IIII – Fed Ex

BAM479-OC: Strategic Management

Paige Sayler
 Fed Ex 2

Vision Statement

Our vision for Fed Ex is to be a vigorous and growing mail carrier services firm that

leverages of technology and affect the lives, all things considered.

Mission Statement

Fed Ex Corporation give their shareowners high value-added logistics, transportation, and

related business services through concentrated working organizations in a predominant financial

return. We provide businesses worldwide with a broad portfolio of transportation, e-commerce,

and business services. Our organization reach more than 220 countries and territories, connecting

with more than 99 percent of the world’s gross domestic product. Their customer requirements

will be met in the highest quality manner appropriate to each market segment served. Fed Ex will

endeavor to grow mutually fulfilling relationships with its team members, partners, and

providers. The wellbeing will be the first consideration in all operations and the corporate

activities will be managed to the highest ethical and professional standards. [2]

Mission Table Evaluation

Table 1 Mission Table Evaluation Matrix

Customers Products/Services Markets Technology Concern for Survival, Growth

& Profitability
Yes Yes Yes No Yes

Philosophy Self-Concept Concern for Public Image Concern for Employees

No No Yes No
 Fed Ex 3

Breaking down Fed Ex’s mission/purpose statement through the evaluation matrix, a

significant portion of the components were utilized. Among those not utilized are technology,

philosophy, self-concept, and concern for employees. The information above shows that the

mission statement could be enhanced by adding these three components.

Customers are identified within the mission statement; Fed Ex is providing their

customers in the highest quality manner appropriate to each market segment served.

The services are also identified within the mission statement, providing businesses

worldwide a broad portfolio of transportation, e-commerce, and business services.

The market is identified withing the mission statement, that the company works with

customers and clients worldwide serving more than 220 countries and territories.

Fed Ex does not identify technology within the mission statement.

The concern for survival, growth, and profitability is identified in the mission statement,

Fed Ex will endeavor to grow mutually fulfilling relationships with its team members, partners,

and providers.

Fed Ex does not identify philosophy, self-concept, and concerns for their employees in

the mission statement. However, Fed Ex’s mission does identify the public image with keeping

in mutually fulfilling relationships with its team members, partners, and providers. Making sure

their customers’ requirements will be met in the highest quality manner appropriate to each

market segment served.

 Fed Ex 4

Milestones

Fed Ex is consistently ranked among the world’s generally appreciated and confided in

managers. They provide to customers and business across the world, providing business services,

transportation, and e-commerce. Their organization offers joined business applications through

operating companies striving against one another to gain as a whole and be managed working

together, all under the Fed Ex brand.

 Federal Express is what Fed Ex was first named as when incorporated June 24, 1971 in

the state of Delaware. A man named Frederick W. Smith began with the idea to create

and airline to solve the challenges all businesses face [3]

 The company had relocated from Little Rock, AR., to Memphis, TN. In 1973 operation

began with pickup and delivery of the first overnight packages, only 186 packages on the

first night of opening to 25 cities [3]

 Just two years later Congress passes public law 95-163, deregulating U.S. domestic air-

cargo transportation. Federal Express purchases a Boeing 727, with capacity of 40,000

pounds, taking first flight in 1978 [4]

 In 1984 Federal Express came out with the first PC-based automated shipping system

Gelco Express International, a worldwide courier that first serviced to 84 countries and is

now offered in 160 countries [3]

 Federal Express is renamed to FedEx in 2000, Their services are divided into companies

that operate independently yet together: FedEx Express, FedEx Ground, FedEx Global

Logistics, FedEx Custom Critical and FedEx Services [2]

 In 2005 Fed Ex launches two around-the-world flights, eastbound and westbound.

Having these flights provides faster services [1]

 Fed Ex 5

 Fed Ex was ranked ninth in the business Superbrands list 2008, being the only company

representing the transportation industry [2]

External Factor Assessment

The External Factor Evaluation Matrix completes a review of the successful opportunities

and threats that FedEx faces within the industry. Fed Ex competes with high competitors,

making it challenging to provide the competitive services.

Opportunities Weight Rating Weighted

Score
1 Same day .09 4 .36
delivery
2 New customers .07 3 .21
from shipping
software
3 Lower inflation .05 2 .10
rate
4 Decreasing cost .07 2 .14
of transportation
5 Demand for the .08 4 .32
courier,
logistics, and
freight services
6 Technology .09 4 .36
Threats Weight Rating Weighted

Score
1 Competitors .09 4 .36
2 Fuel cost rising, .07 2 .14
and oil drastic
drops and spikes
3 Economic .07 2 .14
conditions
4 Lawsuit of .08 4 .32
drivers
5 New rivals .09 4 .36
6 Globalist .07 2 .14
policies
7 Uncertain arrive .08 2 .16
date
 Fed Ex 6

Total 1.00 3.11

The EFE above shows Fed Ex’s opportunities and threats within the company. From the

second Fed Ex took to the skies in 1973, they have been kicking off something new in delivery

and logistics. Starting off with the opportunities Fed Ex offers same day delivery. Same day

delivery has the potential to fundamentally change the way we shop. Shipping in within your city

for FedEx is no problem. Shipping across the country, yes but depending on availability. [5] Fed

Ex offering same day delivery guarantees that the company will not risk missing customers

because other companies cannot assist their customers pressing needs.

Over the last few years Fed Ex has put huge quantity of money into the online platform,

opening new sales and creating an opportunity. The organization can use this opportunity by

realizing its customers better and serving their requirements. Fed Ex offers your company to

integrate your shipping software with your e-commerce platform. The shipping software will

consolidate orders from your workplace, making a label, and packing slip creation quick and

simple.[6] Fed Ex works toward improve customer service with internal pressures to decrease

costs. Lowering the shipping costs can cut down the expense of Fed Ex’s products also

decreasing the cost of transportation. This opportunity can go either way, boost its profitability,

or pass on the benefits to the customers to gain market share.

Courier service is one of the most customized modes of delivery and, therefore, one of

the most dependable. The demand for the courier, logistics, and freight services, is increasing

quickly in rising economies in Middle East, Europe, and Africa regions, this opportunity offers a

strong growth potential for the company. A great opportunity for Fed Ex has come upon in the
 Fed Ex 7

demand for the courier, logistics, and freight services. Fed Ex is explicitly ending its business

relationship with Amazon in the United States [8]

Command and Control is the satellite to ground-level operations system, that empowers

Fed Ex to deliver packages the quickest, most secure, and best route, in any weather condition.

The database coordinates Fed Ex logistics around the world, the system utilizes satellite and PC

communications technology to detect the best routing and traffic data continuously and preforms

as a weather management tool. If weather happened to disrupt the on-time delivery for the

customer, Fed Ex uses their data to alternate a new route for the package to make it on-time. The

Command and Control system guarantees the smooth coordination of over 750 customer service

workstations, and over 500 airplane and traffic centers all around the world. [10]

Fed Ex has their fair share of threats compared to the opportunities, beginning with Fed Ex’s

competitive competitors which include US Postal Services, UPS Emery, DHL, RPS, and

electronic-document delivery services. If strong competition increases, long-term sustainability

will be a challenge for Fed Ex. Fed Ex is gearing up to compete, Amazon and Uber Freight.

Amazon has disrupted one more industry: shipping. Fed Ex is explicitly ending its business

relationship with Amazon in the United States, which they have been building their own delivery

network of centers, vehicles, and airplanes to grow its logistics and transportation ability. [10]

With Fed Ex offering the faster transportation i.e. jet fuel has high cost of fuel being more

expensive for the company. The oil costs remain highly unpredictable with extraordinary drops

and spikes. The economic conditions of different countries are in crisis. For the time being, a few

economists trust for a solid worldwide bounce back in the third quarter of 2020, others caution

that the pandemic could be far more economically destructive than any other outbreak, and stay

alert that the recovery could take much longer. [11] Over the year’s nations chose to take up anti-
 Fed Ex 8

globalization ideologies to protect their interests against globalization. Fed Ex’s development

depends vigorously on globalist policies. If the anti-globalization were to spread further, the

organization might be compelled to retreat to a national US operator.

Fed Ex has the threat related to lawsuits with drivers and unfortunately a customer of Fed Ex

had an experience with a disrespectful driver. The customer had a well-placed surveillance

camera catching the delivery driver carrying a large package to the front entryway of the

customers’ home. The delivery man makes no attempt to ring the doorbell or even approach the

front door, instead the driver lifts the package over his head and throws it over the gate. Inside

the package: a PC monitor. [9]

With mostly everything being on lockdown and now opening back up Fed Ex suffers. Planes,

trains, trucks, transport across the world are still struggling to restart after the lockdown. This

will continue to be a threat for Fed Ex until the world is completely reopens for business.

Internal Factor Assessment

Fed Ex being one of the leading companies in the industry, they have various strengths that

help it to flourish in the marketplace. These strengths are not only help it to protect the market

share in existing markets but also help in showing clear insight to new markets. Weakness are

the areas where FedEx can improve upon.

Strengths Weight Rating Weighted Score

1 Developing new .07 4 .28
products
2 High level of .04 3 .12
customer
satisfaction
3 Reliable .05 3 .15
 Fed Ex 9

Suppliers
4 Strong dealer .05 3 .15
community
5 Strong free cash .04 3 .12
flow
6 Variety of .07 4 .28
Services
7 Brand .06 3 .18
Reputation
8 Electric Trucks .06 3 .18
9 Competitive .04 3 .12
prices
10 Diversified .06 3 .18
business
operations
Weakness Weight Rating Weighted Score
1 Limited success .04 2 .10
outside core
business
2 Delivery staff .05 2 .12
need training
3 Delivery driver’s .06 2 .14
behavior
4 Increasing .03 3 .12
transport costs
5 Claim Policies .07 2 .14
6 Poor .05 2 .12
management of
capacity-demand
7 Overdependence .03 3 .12
on US market
8 High operating .03 3 .12
costs
9 Seasonality of .03 2 .06
business
10 Transport .07 3 .21
damages
Total 1.00 3.01

The IFE above, starts by showing off the strengths within the company. To start off with,

Fed Ex has had a successful track record so far in developing new products, from the concept of

express delivery to alternative jet fuel, their perpetual striving to provide the best. [19] Fed Ex
 Fed Ex 10

having the free cash flow benefits them in the way of being able to expand into new projects and

build the company. Fed Ex has reserved a spot for 20 Tesla completely electric trucks, they have

consistently centered around maintainability and using alternative-fuel vehicles to build

productivity in operations and fuel usage. [15]

Fed Ex customers know their needs will be fulfilled because their company offers the

widest variety of services. Fed Ex has a well-diversified business blend, which gives it a

competitive edge over its companions. Below the Fed Ex brand, they offer a whole range of

diversified services through their group companies. Fed Ex has the following business segments:

Fed Ex Express, Fed Ex Ground, Fed Ex Freight, Fed Ex Services. Fed Ex having a strong and

dedicated relationship management department, they were able to achieve a high level of

customer satisfaction among the customers. The company has also invested in training the sales

team to disclose to the customer how he/she can extract the maximum benefits out of the

products.

According to Forbes 2019 ranking, Fed Ex is ranked 35th in regarded companies, 51st in

world’s best employees, and 89th in most valuable brands. Fed Ex being well-known for

reliability, speed, and high-quality service makes customers know the company is highly

regarded as a brand. [12]

Even with Fed Ex being one of the leading organizations in its industry they have faced

weaknesses and challenges in moving to other product segments with its present culture.

Fed Ex had pulled their financial forecasts, to figure out they will be reducing their delivery

capacity, as the coronavirus pandemic disturbs worldwide trade patterns and economic activity.

The executives at Fed Ex say the world is evolving rapidly. [18]

 Fed Ex 11

For Fed Ex to fulfill the expanded need, Fed Ex enlists outsider transportation

contractors. The company purchasing transportation costs are quickly increasing all around the

world. Fed Ex Express, Fed Ex Ground, Fed Ex Home Delivery shipping rates will increase by

an average of 4.9%, Fed Ex SmartPost shipping rates will also increase all for U.S. domestic,

U.S. export and U.S. import services. [16]

Fed Ex is known from some customers of inappropriate handling of packages,

inconsiderate conduct, rash driving by its drivers. In many cases, these drivers are contract-based

and non-FedEx employees. The numbers of frustrated customers are increasing by Fed Ex’s

claim policy in their products have not yet been delivered and in transit. Nadalie Sciantarelli

states she had ordered a laundry shelf back in April. She tracked her package on the Fed Ex

website, finding out it had arrived in Oak Park Fed Ex facility on April 24 th. Everyday after that

she received a notification her package was ‘on the truck’, until April 29 th the notifications

stopped. Yet she never received the package, she called Fed Ex for them to tell her to call

Walmart and have them file the claim. [17] Another one of Fed Ex’s serious issues confronting

any transport industry especially in developing countries is the damages caused during

transportation. This would affect the bottom-line of Fed Ex directly because the organization

must honor the claims.

The operating costs for Fed Ex are increasing year after year, 2018 $61.178B and a

9.73% increase from 2017. In 2019 the operating costs were $65.227B and in 2020 were 66.8B.

[21] Fed Ex relies upon the US market for a huge aspect of its income. US accounted for more

than two third of the brands revenue. This shows its over reliance on the US markets. [20]
 Fed Ex 12

Fed Ex also has a weakness in its seasonality of business. As seasonal fluctuations

happen, they affect volumes, revenue, and earnings. Fed Ex has their fair share of threats

compared to the opportunities.

SWOT Analysis

Fed Ex being one of the leading companies in the industry. The company’s main

opportunities include technology, FedEx uses command and control to deliver packages the

quickest, most secure, and best route, in any weather condition. Their threats include new rivals

and/or competitors. Fed Ex is explicitly ending their business relationship with Amazon in the

United States, reason being, Amazon has disrupted one more industry: shipping. They have been

building their own delivery network of centers, vehicles, and airplanes to grow its logistic and

transportation ability.

Fed Ex have various strengths that help it to flourish in the marketplace including developing

of new products and variety of services. Weakness are the areas where FedEx can improve upon

including claim policies and transport damage. This is nothing new to Fed Ex but many cases,

these drivers are contract-based and non-FedEx employees.

Industry Analysis

Porter Five Forces Analysis

The Porter’s five forcers analysis was developed by Michael Porter, provides insight to

the competitive environment and sustainability of an organization. The five factors are rivalry

among competing firms, potential entry of new competitors, potential development of substitute

products, bargaining power of suppliers, and bargaining power of consumers.

 Fed Ex 13

Rivalry Among Competing Firms

FedEx is well-established organization who has a solid brand image worldwide in the

logistic industry. Threat of new competing firms in the courier and logistic industry is low, and

this is generally a result of high capitalization. Boats, aircraft carriers, and vehicle for by road

transportation that is needed can be costly. Some of FedEx’s strongest competitors are UPS,

DHL, USPS and XPO Logistics. FedEx is one of the leading companies in the industry. In 2019,

Fed Ex had revenue of 69.7 billion and operating in over 220 countries. [22]

Potential Entry of New Competitors

It is difficult for the new competing firms to compete with the giant companies in the market,

who has built their strong brand image. When building a company in the logistic industry, there

are strict rules and regulations by the government. The ever-growing set of government

regulations impacts mostly every supply chain.

Amazon is even finding is difficult competing with Fed Ex and UPS, and Amazon states, “At

Amazon, we regularly evaluate the requirements of our businesses to ensure we are structured in

the best way possible to meet the evolving needs of our customers. After careful consideration,

we have decided to pause our Amazon Shipping service in the US. Our last day for pick-ups will

be June 5th.” Amazon is asking their customers to find a replacement service due to Amazon not

being able to focus on the outpouring in orders from the coronavirus pandemic. [23]

Potential Development of Substitute Products

Fed Ex does face potential development of substitute products, every industry faces this

threat. Any competitor of Fed Ex would be an example, UPS delivers the same products as many

multiple other companies do as well. But the threat of substitute products for FedEx is low
 Fed Ex 14

because of low number of alternatives. Not many other companies offer the air delivery services

as Fed Ex.

Bargaining Power of Suppliers

In the logistic industry the bargaining power of suppliers is very low, and mainly because of

the standardized products or services. The powerful suppliers would use their negotiating power

to produce higher prices from the firms in Air Delivery and Freight Services field. Fed Ex needs

to continue to build an efficient supply chain with multiple suppliers. When developing with

dedicated suppliers whose business depends on Fed Ex, that is where Fed Ex would benefit.

Another benefit of Fed Ex should experiment with is product designs, as in using different

materials. When the prices rise for one raw material then the company could shift over.

Bargaining Power of Consumers

The bargaining power of consumers refers to the pressure that consumers can put on

businesses to get them to provide higher quality products, better customer service, and lower

prices. As for the bargaining power of buyers in the courier and logistic industry is high. Fed Ex

has no problem with consumers, being individuals and companies. Fed Ex has a courier contract

with some of the companies which benefits them but with consumers that do not have the courier

contract it can be different. They would be able to buy from another company because for

example, low prices.

Competitive Strategies

SWOT Matrix

Strengths Weaknesses
1. Product innovation 1. Claim policies
 Fed Ex 15

2. High level of 2. Transport damages

customer satisfaction 3. Delivery driver
3. Varity of services behavior
4. Brand reputation 4. High operating costs
5. Electric Trucks 5. Poor management of
capacity-demand
Opportunities SO Strategies WO Strategies
1. Same day delivery 1. Focus on expanding 1. Figure out
2. Technology internationally and transportation route of
3. Demand for the following guidelines. damages, package
courier, logistics, and All S & All O losses. W1, W2, W3,
freight services W5, O2
4. Decreasing cost of
transportation
Threats ST Strategies WT Strategies
1. Competitors 1. Security on 1. Better management
2. New rivals drivers/employees. All W & All T
3. Lawsuit of drivers S2, S4, T1, T2, T3
4. Uncertain arrive date

SWOT Analysis

Fed Ex has been kicking off something new in delivery and logistics, and Fed Ex offers

an opportunity of same day delivery, increasing day by day technology,

Fed Ex strengths include their variety of services and a well-known reputation. As one of

the leading companies in its industry, Fed Ex has numerous strengths that help the company to

thrive in the marketplace. Even with Fed Ex being one of the leading organizations in its industry

they have faced weaknesses and challenges in moving to other product segments with its present

culture. Weaknesses are where Fed Ex an improve upon.

Strengths
 Fed Ex 16

Fed Ex has had a successful track record so far in developing new products, they had

reserved a spot for 20 Tesla completely electric trucks, Fed Ex have consistently centered around

maintainability and using alternative-fuel vehicles to build productivity in operations and fuel

usage.

Fed Ex has a dedicated customer relationship management department that is able to achieve

a high level of customer satisfaction, and a good brand equity among the customers. Fed Ex has

a well-diversified business blend, which gives it a competitive edge over its companions. Below

the Fed Ex brand, they offer a whole range of diversified services through their group

companies. Fed Ex has the following business segments: Fed Ex Express, Fed Ex Ground, Fed

Ex Freight, Fed Ex Services. Fed Ex being well-known for reliability, speed, and high-quality

service makes customers know the company is highly regarded as a brand. They are ranked 35 th

in regarded companies, 51st in world’s best employees, and 89th in most valuable brands.

Weaknesses

Fed Ex is known from some customers of inappropriate handling of packages, inconsiderate

conduct, rash driving by its drivers. In some cases, these drivers are contract-based and non-

FedEx employees. The numbers of frustrated customers are increasing by Fed Ex’s claim policy

in their products have not yet been delivered and in transit. Another weaknesses Fed Ex has is

the operating costs, they are increasing year after year, 2018 $61.178B and a 9.73% increase

from 2017. In 2019 the operating costs were $65.227B and in 2020 were 66.8B. Fed Ex had

pulled their financial forecasts, to figure out they will be reducing their delivery capacity, as the

coronavirus pandemic disturbs worldwide trade patterns and economic activity. The executives

at Fed Ex say the world is evolving rapidly.

 Fed Ex 17

Opportunities

Fed Ex offers same day delivery, which has the potential to fundamentally change the

way we shop. Shipping in within your city for FedEx is no problem. Shipping across the country,

yes but depending on availability. Fed Ex offering same day delivery guarantees that the

company will not risk missing customers because other companies cannot assist their customers

pressing needs. Fed Ex is updating their technology daily and making the company have more

potential. The technology of Fed Ex offers your company to integrate your shipping software

with your e-commerce platform. This would lower the shipping costs can cut down the expense

of Fed Ex’s products also decreasing the cost of transportation. This opportunity can go either

way, boost its profitability, or pass on the benefits to the customers to gain market share.

Command and Control is the satellite to ground-level operations system, that empowers Fed Ex

to deliver packages the quickest, most secure, and best route, in any weather condition. The

command and control help Fed Ex decrease their cost in transportation.

The demand for the courier, logistics, and freight services, is increasing quickly in rising

economies in Middle East, Europe, and Africa regions, this opportunity offers a strong growth

potential for the company. A great opportunity for Fed Ex has come upon in the demand for the

courier, logistics, and freight services. Fed Ex is explicitly ending its business relationship with

Amazon in the United States.

Threats

Fed Ex’s competitive competitors which include US Postal Services, UPS Emery, DHL,

RPS, and electronic-document delivery services. If strong competition increases, long-term

 Fed Ex 18

sustainability will be a challenge for Fed Ex. Fed Ex is explicitly ending its business relationship

with Amazon in the United States, which they have been building their own delivery network of

centers, vehicles, and airplanes to grow its logistics and transportation ability. Furthermore, Fed

Ex has had their fair share of threats related to lawsuits with drivers and unfortunately a customer

of Fed Ex had an experience with a disrespectful driver.

SO Strategies

Fed Ex is consistently ranked among the world’s generally appreciated and confided in

managers. They provide to customers and business across the world, providing business services,

transportation, and e-commerce. Their organization offers joined business applications through

operating companies striving against one another to gain as a whole and be managed working

together, all under the Fed Ex brand. Fed Ex would benefit from making their company

international – which it is, but not completely. The demand for the courier, logistics, and freight

services, is increasing quickly in rising economies in Middle East, Europe, and Africa regions.

Fed Ex needs to take this opportunity because it offers a strong growth potential for the

company.

WO Strategies

Fed Ex suffers from poor employees on some ends, loosing or damaging packages. Fed

Ex is well known for loosing packages, damaging packages, or having no respect for the

customers packages. If Fed Ex could figure out these issues it would reduce their weaknesses.

Most of the company’s weaknesses have to do with the employees, having better management

could turn the company around when or if the company punishes the employee for doing wrong.

Some customers have claimed of inappropriate handling of packages, inconsiderate conduct, rash
 Fed Ex 19

driving by its drivers. The numbers of frustrated customers are increasing by Fed Ex’s claim

policy in their products have not yet been delivered and in transit. There are serious issues

confronting any transport industry especially in developing countries is the damages caused

during transportation. This would affect the bottom-line of Fed Ex directly because the

organization must honor the claims.

ST Strategies

A customer had a well-placed surveillance camera catching the delivery driver carrying a

large package to the front entryway of the customers’ home. The delivery man makes no attempt

to ring the doorbell or even approach the front door, instead the driver lifts the package over his

head and throws it over the gate. Inside the package: a PC monitor. This is an example of why

Fed Ex should have some sort of security to watch and contain their employees to behave and

keep the company brand name under wrap. Fed Ex is known from some customers of

inappropriate handling of packages, inconsiderate conduct, rash driving by its drivers. In many

cases, these drivers are contract-based and non-FedEx employees. But that is still no reasoning

for customers products to be damaged and someone must pay for the employees childness.

WT Strategies

Better management is needed for the company of Fed Ex because of the weaknesses and

threats. The weaknesses and threats are repeating and have been repeating for years. It is time for

better management to get this situation and default under control to build the company better and

increase customers. Repeating weaknesses refer to mostly the employees, same as for threats

pointing toward the employees’ fault. Appropriate and hard-working employees are hard to find

and are needed for Fed Ex to keep the company going at the rate they are. Fed Ex is defiantly
 Fed Ex 20

doing just fine with the company they are managing now but help would be something to think

about and proceed with.

Financial Analysis

Growth Rates

The company’s growth rate is referred to the percentage change of a specific variable within

a specific time-period. As for Fed Ex, their company growth would include revenue and net

income. Fed Ex’s current sales/revenue growth rate is currently 13.33, the industry being 2.67

[25]. The five-year annual average for the company being 7.84. Fed Ex is ranked No. 14, tied

with American Express and Netflix. Fed Ex has been ranked among the top twenty in the

FORTUNE Most Admired Companies List for the last twenty years [24]. Fed Ex has a

continuous incline on sales, and I believe will continue to.

Net income helps indicate how profitable and successful the company is, which is why net

income is important to look at. Fed Ex’s year to date net income is 176.72, and the industry

being 2.64. The five-year annual average for the company being 4.15 [25].

Price Ratios

Fed Ex as a company has as current P/E ratio of 40.47, and industry being same, 40.47.

The P/E ratio five year high for the company is 88.11, and low being 17.49. Both high and low

P/E ration five year is unavailable. Fed Ex has a high P/E ratio, which can indicate the market

expects big things from this company and Fed Ex has high growth possibilities.

The price/sales ratio is a valuation metric for stocks. Fed Ex’s price/sales ratio for the

company is 1.04, and the industry being 1.33. The numbers indicate the investors were not
 Fed Ex 21

willing to pay as much for Fed Ex stocks as they were to other delivery companies in the

industry [25].

Profitability Ratios / Profit Margins

The profitability ratio is used to measure a company’s returns against its sales, assets, and

equitability [26]. The current profitability of Fed Ex company is more than double of what

industry is. The company is at a 70.21, and the industry being 35.73. The net profit margin for

Fed Ex company is currently 1.86, and industry being 5.00, this would mean Fed Ex is behind

compared to others in the industry for profitability. The net profit margin has had its fair shares

of slightly increasing and decreasing over the last five years. Even with Fed Ex company being

lower than the industry standards, the slight increase and decrease in net profit margin, it comes

to show how Fed Ex is sustaining their financials.

Fed Ex’s pre-tax margin for the company currently is 2.41, and the industry being 6.82. The

pre-tax margins are the company’s earnings before taxes are taken from the total revenue and is

shown as a percentage. Comparing the company to the industry, the company is less profitable

than other companies in the industry [25].

Financial Condition

To measure the financial condition for Fed Ex can be measured in a variety of different

rations. The two ratios to have a good measure on the financial condition situation would be

debt/equity and book value per share.

Fed Ex’s company debt/equity ratio is currently 1.19, and the industry being 1.16, not much

of a difference and indicates the company is doing slightly better compared to the industry [25].

The debt/equity ratio helps to determine the financial leverage has by showing the proportion of
 Fed Ex 22

equities and debts that Fed Ex uses for financing assets [27]. The debt/equity ratio is where the

stockholders take interest, they are looking for the company to increase. When the company’s

value increases, the company’s stock value increases as well.

Next is the book value per share, which is another ration that could help measure on the

financial condition situation. Book value share can be defined as the amount of equity available

to shareholders expressed on a per common share basis. The current and historical book value

per share for Fed Ex from 2006 to currently now is $74.12 [25].

Investment Returns

There are several different return ratios that help track and monitor investment returns, the

ratios will help assist investors in understanding where the investments are the most and least

effective. Return on equity, return on assets, and return on capital are some of the investment

ratios used to keep track and monitor the investment returns. First, I will be speaking on the

return on equity, which is used to determine the level of efficiency the company is at turning

shareholder equity into profit. Fed Ex has a return on equity for a five-year average of 9.48, and

industry being 11.34 [25].

Fed Ex has a return on asset for a five-year average of 2.44, and the industry being 4.86 [25].

The return on asset ratio shows how a company’s total assets relate to the profitability of the

company [26]. Fed Ex’s 2.44 is quite low, especially compared to the industry of 4.86. The

return on asset ratio needs to be higher, the higher ratio the better. Fed Ex will need to work on

improving asset utilization, to be able to increase the return on asset ratio to be in the same

ballpark as the other companies in the industry.

 Fed Ex 23

Fed Ex has a return on capital for a five-year average of 2.86, and industry being 5.64. Same

as the return on asset, the company is lower than the industry by quite a bit amount. The

company being lower than the industry on the return on capital means Fed Ex is experiencing a

smaller return on capital than the industry average [25].

Management Efficiency

Reviewing Fed Ex’s income per employee it may be that Fed Ex is not making the revenues

necessary to complete employees at a competitive rate, and I say this because Fed Ex’s income

per employee is reported to be 7.14k, compared to the industry average of 16.26k. This may be a

reason Fed Ex has difficult employees and some that damage packages and the brand name.

Employee’s not being paid enough does not make an individual happy, keeping your employees

happy keeps the company happy.

Five-Year Summary

Fed Ex five-year summary has a dip in November of 2015 and slowly making their way up to

just over 270 in November 2017. Between 2017 and 2018 it was up and down continuously, after

November 2018 is when they started to decrease dramatically. A peak did not start happening for

Fed Ex till the end of 2019 beginning of 2020 making their way back up to 283.87 in November

of 2020 [25].

In the financial reports of Fed Ex, they show the operating income at a steady number from

2017 – 2019. From 2019 operating income being 4,466 to the dramatic decline in 2020 being

2,417 quite a difference in just a year.

 Fed Ex 24

For Fed Ex net income, it is quite different, from 2017 being 2,997 increasing to 4,572 in

2018. In 2019 there was a dramatic decrease to 540, and then slightly increasing in 2020 with

1,286.

QSPM Matrix

QSPM Strategic Alternatives

Expansio Restructured
n to new
market
Key Factors Weight AS TAS AS TAS
Opportunitie

s
1. Demand for the courier, .09 3 .27  -
logistics, and freight
services/International
expansion
2. Shipping software/ Online .05 2 .10 1 .05
platform
3. Challenging competitors .05 - - - -
through merger and
acquisitions
4. Potential customers .05 2 .10  -
5. Technology advancements .15 4 .60 4 .60
6. Same day delivery .09 - - - -
7. Lower inflation rate .05 2 .10 - -
Threats
1. Fuel cost rising, and oil .05 2 .10  -
drastic drops and spikes
2. Competitors .08 3 .24  -
3. Economic conditions .05 - - 2 .10
4. Globalist policies .08 2 .16 2 .16
5. Green initiative makes it .05 - - 3 .15
costly to keep up with
 Fed Ex 25

standards
6. Current economic situation .08 3 .24 3 .24
7. Lawsuit of drivers .08 - - 2 .16
8. New rivals .09 4 .36 3 .27
9. Uncertain arrive date .08 2 .16 1 .08
Strengths
1. Developing new product .07 4 .28 3 .21
2. High level of customer .04 3 .12 - -
satisfaction
3. Reliable suppliers .05 3 .15 - -
4. Strong dealer communication .05 3 .15  -
5. Strong free cash flow .04 3 .12 2 .08
6. Variety of services .07 4 .28 2 .14
7. Brand reputation .06 3 .18  -
8. Electric Trucks .06 3 .18 2 -
9. Competitive prices .04 3 .12 2 .08
10. Diversified business .06 - - 2 .12
operations
Weaknesses
1. Limited success outside core .04 2 .08 2 .08
business
2. Delivery staff need training .05 2 .10 2 .10
3. Delivery driver’s behavior .06 2 .12 2 .12
4. Increasing transport costs .03 3 .09 2 .06
5. Claim policies .07 2 .14 2 .14
6. Poor management of .05 2 .10 2 .05
capacity-demand
7. Overdependence on US .03 - - 1 .03
market
8. High operating costs .03 3 .09 2 .06
9. Seasonality of business .03 2 .06  -
10. Transport damages .07 3 .21 2 .14
Total 5.00 3.22

Strategic Alternatives

Above is shown the Qualitative Strategic Planning Matrix (QSPM), which determines

appeal of each of the strategies considered. The Qualitative Strategic Planning Matrix takes the

opportunities, threats, strengths, and weaknesses to develop a high-level strategic management

approach for evaluating possible strategies and provides an analytical method of comparing
 Fed Ex 26

feasible alternative actions. The Qualitative Strategic Planning Matrix complied two alternative

strategies, expansion to new market, and restructured.

The first strategic alterative presented in the Qualitative Strategic Planning Matrix is the

opportunity of Fed Ex expanding to new market. The market is increasing by day and, the

demand for the courier, logistics, and freight services, is increasing quickly in rising economies

in Middle East, Europe, and Africa regions, this opportunity offers a strong growth potential for

the company. This would be a great opportunity, to take advantage of the demand and expand to

the new market. Fed Ex has learned over the years there is a big growth in the transportation of

goods to, from and within this market. The trade between the United States and Mexico has been

slowly increasing, and will have potential in the years to come for Fed Ex. The trade between the

United States and Mexico is almost two-thirds of Mexico’s GDP [28]. The total attractiveness

score is 5.00.

The second strategic alterative presented in the Qualitative Strategic Planning Matrix is

the restructured of Fed Ex, with an attractiveness score of 3.22. Fed Ex is the world’s second-

largest package delivery company plans to cut jobs and eliminate aircraft. Fed Ex has big plans

for the next three years, boosting profit by $1.7 billion. The restructure for Fed Ex is response to

a shift by customers to slower, less expensive means of delivery as the global economy struggles

to grow [29].

Recommendation

The strategic alternative with the greatest attractiveness score is the expansion to the new

market. With Fed Ex expanding globally, Fed Ex will increase in profitability, access, have a

competitive advantage, and risk mitigation. Exporting for Fed Ex can be profitable by growing
 Fed Ex 27

sales, increasing jobs for individuals, and employees earn more than in non-exporting firms.

They are increasing daily on the internet and trade agreements and growing fast accessing to

markets worldwide.

Implementation Plan

Fed Ex will have a strong implementation plan, starting to become more global and

competitive, it is their number one priority to satisfy from entrepreneurs to big companies for

flexible and innovative solutions. Each network operates independently, keeping each network

on top of their game. Fed Ex will need to construct companywide meetings with each network to

discuss the strategic market, potential marketing strategies, growth strategies, and the operation

and financial impacts. Fed Ex delivers worldwide and must take precautions of the different

policies and government laws. Frederick W. Smith, Chairman of the Board and Chief Executive

Officer, will hold the meetings between the networks. There are six different networks: Fed Ex

Express, Fed Ex Services, Fed Ex Ground, Fed Ex Freight, Fed Ex Office, and Fed Ex Logistics.

Smith will focus between the networks the components of the implementation dealing with

innovation, consistent and sustainable growth.

The meetings Smith will be holding would include Vice Presidents of all the

independently operated networks, Donald F. Colleran President of Fed Ex Express, Robert B.

Carter and Rajesh Subramaniam Co-Presidents of Fed Ex Services, Henry J. Maier President of

Fed Ex Ground, John A. Smith President of Fed Ex Freight, Brian Philips President of Fed Ex

Office, and Dr. Udo Lange President of Fed Ex Logistics. In the meetings held they will discuss

the financial and operating planning for each team at each network.
 Fed Ex 28

Meetings held by Chairman, Frederick W. Smith will be held quarterly, to speak on

behalf of the current issues, budget plans, and any negative or positive implications with each

network. Brainstorming will take part in these quarterly meetings to think of ways to better each

network.

Fed Ex having multiple different networks it could be tricky, the tasks will be given to all

networks and then divided within that network. Fed Ex will produce an organizational structure

to help the company stay on track. The tasks will be divided into three different departments

within each of the networks: Marketing, Finance, and Operation.

Marketing:

 Obtain a partnership with an oil and gas company with the next few years.

 Identify potential customers and launch an advertisement on social media, offer discounts if

using Fed Ex as their shipping company so many times within a week, or month. A reward

program would be very eye catching for companies.

Finance:

 Preserve financial development measurements to monitor the status and success.

 Produce superior financial returns for its shareholders by providing high value-added

logistics, transportation, and related business services through focused operating

companies.

 Grow within the core package business, internationally, their supply chain capabilities,

through e-commerce and technology, and through new services and alliances.

Operation:
 Fed Ex 29

 Employees and networks clearly understand the objectives, make communication and

transparency always open on the table. All employees and presidents need to be on board,

fully understanding the tasks that are being given. All employed by Fed Ex must be

skilled and educated.

 Always keep Fed Ex executives up to date with all new updates that may affect the plan.

 Look into reward programs to increase consumers and may increase already Fed Ex

consumers to use more frequently.

The cost that will be incurred by Fed Ex Corporation to ensure that all employees involved

are kept up to date, will cost approximately $1 million, based on the required quarterly meetings,

discussed materials, and anything else needed for the quarterly meetings. Frederick W. Smith

will lead these tasks with the help of his Presidents from each network. Bob Henning, Executive

Vice President and Chief Financial Officer, will incur substantial financial requirements to

successfully implement the plan. Bob will have to develop and research the following tasks to

make this plan successful by recruiting and hiring employees of the most skilled, determining the

talented and educated tasks force.

EPS/EBIT Analysis (In Thousands)

Tax Rate 34%

Interest Rate 5%

Stock Price 279 per share

Shares Outstanding 263 million

 Fed Ex 30

Common Stock Financing

Recession Normal Boom
EBIT 50,000,000 100,000,000 200,000,000
Interest - - -
EBT 50,000,000 100,000,000 200,000,000
Taxes 21,000,000 42,000,000 84,000,000
EAT 29,000,000 58,000,000 116,000,000
Shares 263,896,057 263,896,057 263,896,057
EPS 0.11 0.22 0.44

Debt Financing
Recession Normal Boom
EBIT 50,000,000 100,000,000 200,000,000
Interest 12,500,000 12,500,000 12,500,000
EBT 37,500,000 87,500,000 187,500,000
Taxes 15,750,000 36,750,000 78,750,000
EAT 21,750,000 50,750,000 108,750,000
Shares 263,000,000 263,000,000 263,000,000
EPS 0.08 0.19 0.41

70% Stock – 30% Debt

Recession Normal Boom
EBIT 50,000,000 100,000,000 200,000,000
Interest 3,750,000 3,750,000 3,750,000
EBT 46,250,000 96,250,000 196,250,000
Taxes 19,425,000 40,425,000 82,425,000
EAT 26,825,000 55,825,000 113,825,000
Shares 263,627,240.14 263,627,240.14 263,627,240.14
EPS 0.10 0.21 0.43

70% Debt – 30% Stock

Recession Normal Boom
EBIT 50,000,000 100,000,000 200,000,000
Interest 8,750,000 8,750,000 8,750,000
EBT 41,250,000 91,250,000 191,250,000
Taxes 17,325,000 38,325,000 80,325,000
EAT 23,925,000 52,925,000 110,925,000
Shares 263,268,817.20 263,268,817.20 263,268,817.20
EPS 0.09 0.20 0.42
 Fed Ex 31

As you can see, it is extremely close for common stock financing, debt financing, majority stock,

and majority debt financing.

Projected Financial Statement

Fed Ex Pro Forma Projected Income Statement

Fiscal Year 2017 2018

2019 2020

Values in Millions

Total Revenue 60,319,000,000

65,450,000,000 69,693,000,000 69,217,000,000

Cost of Revenue 16,403,000,000

18,475,000,000 20,543,000,000 20,622,000,000

Gross Profit 43,916,000,000

46,975,000,000 49,150,000,000 48,595,000,000

Selling General & Administrative 28,061,000,000

30,220,000,000 31,438,000,000 32,063,000,000

General and Administrative Expense 5,614,000,000 5,983,000,000

6,194,000,000 6,605,000,000

Selling and Marketing Expense 21,989,000,000

23,795,000,000 24,776,000,000 25,031,000,000

 Fed Ex 32

Research and Development - -

- -

Special Income/Charges - -380,000,000

-320,000,000 -435,000,000

Operating Expenses 55,753,000,000

61,178,000,000 65,227,000,000 66,800,000,000

Operating Income 4,566,000,000 4,272,000,000

4,466,000,000 2,417,000,000

Net Income 2,993,000,000 4,566,000,000

539,000,000 1,284,000,000

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 Fed Ex 34

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