Cost leadership

Cost leadership strategy involves gaining a competitive advantage by

reducing cost price. Cost leadership is the main generic strategy that
companies in various consumer markets.
FedEx cost leadership strategy
The main objective of using this strategy is to preserve the market leadership
position through efficient value chain management.
This strategy allows FedEx to expand the market share by targeting the
Certain class, which makes the largest proportion of overall market mix in most
of the countries.
Middle class consumers generally place high importance to the pricing factor
and cost leadership is the best strategy to cater the needs of this customer
segment.
FedEx focuses on affordability and easy accessibility of its produce across the
globe, which leads towards high brand awareness and high Service growth and
provides a strong competitive advantage basis.
Along with charging low prices by lowering servicing cost and maximizing
supply chain efficiency, FedEx frequently offers discounts and coupons to
achieve sales targets and handle the competitive pressure by its closest rival.
Due to cost Leader ship strategy has outlined many benefits offered by this
generic strategy, such as- gaining quick brand recognition, expanding the
customer base, encouraging service consumption and achieving sales targets
affordability and accessibility.

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 Differentiation
Differentiation is another most important strategy to build a
competitive advantage. FedEx uses differentiation in combination with the cost
leadership strategy to achieve growth objectives.
The adoption of differentiation as a secondary generic strategy allows
FedEx to expand the customer base by emphasizing over the unique product
features.
The combination of the differentiation and cost leadership has helped
FedEx build a strong and loyal customer base.

FedEx's strategic objective of using this strategy is to differentiate by

embedding the innovation and address the consumers’ growing health
concerns. FedEx has extended its product line after studying the consumers’
changing interests to differentiate itself from competitors and expand the
scope of opportunities within the industry.
Through differentiation strategy, FedEx positions its product offerings in a way
to stand out and be different from the available alternatives. As the
experienced brand with strong foothold, the company uses differentiation as a
tool to reduce the pressure by other companies.
The unique and distinctive brand logo has established a strong brand image in
consumers’ mind.
Moreover, the company offers a wide variety of flavours to match the
unique taste needs of consumers. It uses innovation as a tool to offer
differentiated services that may delight the customers and increase their
preference of FedEx over other brands.

Conclusion:
When doing research on the business strategies of FedEx, cost
leadership is not the strategy they possess. According to the book cost
leadership is defined as a strategy that focuses on gaining advantages by
reducing its economic costs below all of its competitors. Even though FedEx
prices are generally lower than those of competitors that is not their main

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strategy. Categorize this company as having a product differentiation business
strategy. FedEx prides themselves on having many different services around
the world. UPS may have more trucks on the ground, but FedEx has an
enormous fleet of planes to service many countries.
As mentioned before, FedEx offers Home Delivery, Smart Post, Same Day
City, Express Saturday delivery, and has over 1,800 office locations and over
600 service centres. They put a lot of effort and resources into making services
and products easier for their customers to use, not necessarily the cheapest.

Additional information:

1. Porter’s Generic Strategies: There are four strategic options given

by Michael E. Porter, based on the two dimensions, sources of competitive
edge and competitive scope.

Low Cost Leadership: it is the strategy, where the source of competitive

advantage is lowest cost but not the prices, which gives profit margin. The
FedEx has high fixed costs due to its investment in capital, so this strategy is
not the FedEx existing strategy.
Differentiation: In this strategy, the company is competing on the basis
of differentiation from its rivals, either in terms of unique product/service, or
unique brand image etc. This also includes extra costs and premium pricing
due to differentiation. The above analysis suggests that FedEx is pursuing the
differentiation strategy.