1

Sales force integration at FedEx

5C Analysis 2

Company:
 Started by founder and entrepreneur Fred Collaborators:
Smith with a funding of $90 million at
 Corporate investors who funded $40 million
Memphis, Tennessee
  Banks and friends and relatives who funded a
After 2 years, company passed the breakeven
point in 1975 total of $52 million
  Memphis airport management who agreed to
In 1976, FedEx earned $3.7 million profit and
achieved $1 billion in revenue in 1983 make needed improvements and have
additional hangar space available
 FedEx acquired Caliber Systems in 1998 to
 Regional air cargo companies which were
improve both, its air and ground offerings
acquired to support expansion
 By 1999, FedEx had 2200 account executives
and 1.5 million customers
5C Analysis 3

Customers:
 Corporate clients from globalizing industries who needed support for their business
 General public who relied on FedEx for emergency work
 Medical patients who needed urgent medicines
 E-commerce firms who were on the rise
5C Analysis 4

Competitors:
Context:
 United Parcel Service or Big Brown founded in  Emails and other forms of communication
1907 worked in US and 200 countries &
were replacing express delivery needs
territories
 Overnight package delivery market had
 Airborne Freight in US in 1999 which was a low
become increasingly competitive
cost provider
 Business shippers were becoming more savvy
 US Postal Service was another low cost option
with improvement in supply chain and JIT
for consumers
 Rise of internet commerce necessitated the
 USPS offered priority mail that shipped a
need of FedEx
product anywhere in US within 3 days
Decision Problem 5

Implement project ARISE and

redesign the compensation
plan for the sales unit force
Existing Strategic Areas 6

Delivery

Express (Overnight) Express (Deferred) Ground

Priority Overnight 2Day Deferred

Standard Overnight ExpressSaver

Project ARISE 7

 Achieving Revenue and Information technology Synergies across the Enterprise

 This was the most critical internal initiative at FedEx in 10 years
 Express and ground executives had to make joint sales calls to coordinate customers

 Purpose: To create a well balanced and single sales organization for existing Express and Ground sales
organizations
Change in compensation plan of salesforce 8

 Compensation of average account executive be comprised of 80% salary and 20% incentives
 Goal setting for incentives and bonuses to be performed every six months
 Revenue goals would be set for three areas Express, Ground and International
 The base bonus of executives would be determined by yield factor
 In addition to base bonus, the account executive was eligible for a Balanced performer incentive
multiplier
FedEx Corporation Structure 9

FedEx Corporation

FedEx Express FedEx Ground FedEx Services

Marketing and Sales for

Priority Overnight 2Day Deferred Express

Standard Overnight ExpressSaver Marketing and Sales

for Ground

FedEx Solutions
Revised Compensation Plan 10

 Even after implementation of BPI, it did not encourage executives to sell across business lines, i.e.
Express, Ground and International
 To fix that, new compensation plan was put into action which ensured higher bonuses when executive
achieved objectives for all business lines
Benefits 11

 Gained several market share points in Express and Ground

 Improved Shareholder value
 FedEx got a big competitive advantage
 Numerous accolades from business communities pre and post ARISE
 12

Thank you