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InternationalStrategyTheCaseofFedExByAlbinPinardMscInternationalBusinessDevelopment1ContentsInternationalStrategies:StrategicChoicesReviewFedExBackgroundInformationWhyaGlobalStrategyforFedEx?Conclusion2StrategicChoiceFramework:StrategicChoicesReview4differentstrategicchoices:Multi-domesticstrategyHighlocalresponsiveness/lowcostreductionpressures/basedonDecentralization/productsandservicestailoredtolocalmarketsInternationalstrategyParticularlyadaptedtofirmswhichenjoyavaluablecorecompetencethatcompetitorsinforeignmarketsdon’thave

Transnationalstrategy

Adaptedtofirmswhichwanttosimultaneouslyachievelowcostanddifferentiationadvantages.Thisstrategyremainshardtoimplementbecausebothpressuresareofteninconflict.Globalstrategy(FedEx,TexasInstrument)3GlobalStrategyAspectsStandardisation(products/services)UniformMarketing(homogeneityofcustomerresponsetothemarketingmix)LargegeographicalcoverageBasedoncostreductionstrategies(scaleseconomies/Scopeeconomies/Locationeconomies/LearningCurves)AdaptedtolowresponsivenessdemandlocationsSource:Yip,G.S(1989)andViswanathan

&Dickson(2007)4FedExBackgroundInformationNationality:USASince1973/Internationalpresencesince1984(FedExmadetheexpressdeliveryindustry)Activity:ExpressdeliveryofpackagesanddocumentsworldwideThirdpartylogisticsprovider(supplychainsolutions)

Annualrevenue2007:$35,214(million)Presencein220countriesand375airports3,3millionpackageshippedeveryday679aircrafts(biggestfleetintheindustry),43500trucksand15internationalhubs260000employeesworldwide

Maincompetitors:DHL,UPS,TNT5Pushingthestandardisationtoitsmaximum(verylawlocalresponsivenessintheexpressdeliveryindustry)FocusingoncostreductionstrategiesCentralizedcontrol:TopmanagementtakesallthedecisionsExtendingitsgeographicalcoveragethroughacquisitionsForcingairderegulationWhyaglobalstrategyisthemostappropriatedoneforFedEx?6 TotalstandardisationServicesanddeliverymethods

Verysimilardemandworldwide/lowlocalresponsivenessISO9001certification

ReinforcethestandardisationoftheFedEx’sServicesworldwideMarketingPricing:samepricesworldwideAdvertising:globaladvertisingcampaign«

RelaxIt’sFedEx

»StandardTechnologyInternationalcompatibilityofwirelessapplicationsFedExSuperTracker:shippinginformationavailabletoemployeesandcustomersworldwideFedExe-businesswebsite(internationalstandardtechnology)

7CostReductionThroughScopeEconomies:

TheFedEx’sHubandSpokeNetwork

Theoptimalcombinaisonoftransportmodes(aircraft+train/trucks)allowsFedextoachievescopeeconomiesInternationalhub8CostReductionThroughtheExperienceCurveCostreductionachievedoverthetimethanksto:ExperienceofFedExinitsindustry(firstmover-advantage)LearningeffectsthroughlearningbydoingBetterknowledgeofinternationalroutes(gainoftime)Decreaseofthenumberoflostpackagesoverthetime2008Deliverytime1973Time9ThroughScaleEconomiesRecentacquisitionof9BoeingA380carry300,000lbsoffreight(twiceasmuchasthepreviousMD-11model)

Singlemarketingstrategy:significanteconomiesofscalethroughadvertisingandR&D10ExtensionoftheGeographicalCoverageThroughAcquisitionsofLocalFreightCompanies2recentexemples:2006:acquisitionofHLCHoldingsLtd(UK)FedExgainsthecoverageof80UKcities+2200vehicules2006:acquisitionofDTW(China)allowedFedExtotouch300newcitiesinChinaAcquisitionsoffreightcompaniesallowFedExto:Increaseitscustomerbase/fleet/resourcesEnjoythebeneficeofanalreadyexistingbusinessquickeraccesstomarket11ByForcingAirCargoDeregulationLeadingroleinLobbyingairderegulationU.SAirCargoDeregulationAct1977EncouragingU.SgovernmenttoincludeaircargorightsinitsnegotiationswithcountriesinwhichFedExwantstooperateOpenSkiesAgreementwithChinain2005

12MatrixStructurePros:Speedupthedecision-makingReducebureaucracyMoreinterdepartementalcommunicationCons:GenerateconflictsDoesnotallowlong-termworkingrelationships13ThroughCentralisation

FedEx’sWorldwideAreaStructureTightcontrol:FacilitatecoordinationConsistencyofdecisionsAvoidsDuplicationEasiertomakechange14Pros:First-moveradvantageinitsinternationalexpansion(since1984)Core-compentencesbasedathome(nooutsourcing)SignificantE-businessadvanceofFedExKEYstrenghasInternetreinforcesstandardisationCons:Crossculturalproblemsincreasewithglobalstrategym

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