Swot Analysis Of Airborne

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Industry in United States. In 1996 businesses and individuals spent approximately $16-17 billion on expedited shipments within USA. The goal of such services was to implement overnight shipping with next-morning delivery. However, for a lower price companies offered next-afternoon delivery, second-day delivery and third-day delivery. As the industry was developing, the companies started to offer logistics consulting information and guarantees of punctual arrival of shipments. Shipment volumes had risen 15-20% per year for the past decade. However, total revenues had risen only by 10-15% because of falling prices attributed to increased competition. The items shipped by express mail usually had high ratio of value to weight and were perishable…show more content…
In spite of the fact that better known rivals-UPS and FedEx- held 25% and 45% of market respectively, over the past five years Airborne had grown faster than either of them. Airborne’s competitive advantages: • Airborne was known for its low prices. • It owned the airport that was also its major hub. This fact gave a big advantage in controlling and operating cost. • The company did not pay any landing fees (did not share facility expenses with other airlines). • A status of the airport as a Community Reinvestment Act zone maximized property tax reductions. • Unlike UPS and FedEx, Airborne leased warehouse space to customers. Airborne carefully selected only those customers, which would benefit from its specific strengths and which needed transport for large-volume, high priority shipments. • Purchased used aircrafts. Their aversion to improvident spending was not only seen in the acquisition of their depreciable assets, but in their decisions regarding technology investing as well. Airborne’s corporate culture was very cost-conscious – executives answered their own telephones and headquarters were designed to be functional first. They positioned themselves so that in case an unforeseeable stimulus in the industry was to come about (such as UPS’ union strike) they would be able and ready to respond in a sufficient…show more content…
Airborne also was working on relationships with Roadway Package System (RPS). Their distribution systems remained different, which was prevalent considering the lack of international delivery at Airborne Express. In order to compare find out, how Airborne survived, and recently prospered in the industry, it is useful to analyze Airborne’s costs and customers willingness to pay and compare them with the rivals’. Let us consider the cost structure of FedEx’s overnight letter and compare it with the cost of Airborne’s overnight letter (exhibit 3). Pick up subtotal equals to $1.37, delivery subtotal – $2.05. Total = $3.42 for pickup/delivery cost one overnight letter. Airborne saved 10% of $3.42,so the savings were approximately $15,561,000 per year advantage over Fed Ex’s cost structure. Airborne also did net spend on advertising and IT . We should also consider the fact, that Airborne saved $1.00/hour less for part-time employees,than FedEx did. The cost of Airborne’s 175 (94 owned) aircrafts was $20-24 million per aircraft, comparing with average $90 million in
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