Business Analysis: Federal Express Corporation

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Background FedEx also known as Federal Express Corporation founded in 1971 by a former Marine pilot, Frederick W.Smith who born in Memphis, Tennessee. The concept of overnight delivery service was written by him in his term paper for Yale University economy class. He had a distinct view on air services business where he sees air freight service is more profitable than air passenger service. In his business, smaller cities were essential because the main concern in his view is speed more than cost. His plans is to set up a single hub and building a private fleet for shipping all packages because he knew that the company would able to deliver packages to the destination overnight if they owned planes and single hub. Moreover, the hub was built…show more content…
This is because the start-up cost for FedEx is very expensive due to advertisement and direct mail campaigns and despite it is required to create an entire system before the company’s first day of business. In 1975, the sales alone were $43.5 million against an $11.5 million loss. However, the company’s volume increased to the point where it was profitable by late 1976. They were able to deliver 19,000 packages overnight and by year’s end the profit was $3.6 million. In 1977, the company regular customer increased up to 31,000 and their services expand wider to 75 airports and 130 cities. Thus, their profit hit to $8 million on sales of $110 million. In 1977, airline deregulation allowed the company to use larger aircraft such as Boeing 727s and McDonnell-Douglas DC-10s. These changes are important as it fuel up the growth of the company. By 1980s, the growth rate was about 40% annually and their competitors such as Emery, Airborne Freight and Purolator Carrier were trying to catch up. Yet, FedEx main competitor was DHL Worldwide Courier Express Network after FedEx started building their own foreign network. The company was announced as the first company in the United States to reached $1 billion in annual revenues without mergers or acquisitions in…show more content…
FedEx Express offers fast, reliable and time-definite delivery to more than 220 countries and territories, link markets that include more than 90% of the world’s gross domestic product within 1 to 3 working days. FedEx Ground provides ground small-package delivery services and also provides ground delivery services which specially dedicated to residential with no additional charge on Saturday delivery. While FedEx Freight provides less-than-truckload freight services across all length of haul. As for FedEx Services, they are the provider of sales, marketing, and administrative and information technology functions in shared services operations that support the transportation businesses and allow obtaining synergies from the combinations of these

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