Strategic Audit Current Situation. A. Research Proposal

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Although the company relies on information technology it is not at the forefront so can adapt more slowly. There are limited political-legal and societal implications. The most important force -- economic -- does vary but the North American market is by far the most important. Jet fuel prices do not vary significantly from country to country.

Industry competition is driven by overall demand levels, price and service. These forces do not vary globally. There is low threat of new entrants due to high entry costs. Buyers have average buying power due to competition. There is a high threat of substitution from electronic communications and slower shipping services. Rivalry among firms is intense. Unions, governments, interest groups have low relative power.

Customers are the only immediate factor affecting FedEx, as they have curtailed spending on shipping. A major threat is that customers will find ways to reduce shipping permanently. An opportunity for FedEx is to build out internationally to find more customers. The most important factors going forward will be the development of new customers and the global economic recovery.

IV Strengths & Weaknesses

The corporation is structural primarily on divisional (functional) lines, with sub-groups for geography. Decision-making authority is centralized. The structure is understood by everyone in the organization and is consistent with the company's strategies and objectives, including international operations. Competing organizations have similar structures.

The corporate culture is well-defined and consistent with objectives. The culture is oriented towards addressing the important issues faced by the organization. It is compatible with diversity. It is compatible with FedEx values, not the values of the different countries in which it operates.

Corporate Resources

The firm uses promotions for its customers, and also utilizes extensive advertising campaigns. Performance expectations for these programs may be stated internally but externally is only implied from the budget and financial results.

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Marketing is consistent with the firm's objectives and environment. The company is performing well, growing market share, expanding its product mix and seeking synergies between business lines. Most products are in fairly mature businesses, but overall the firm is still experiencing slow growth. The U.S. provides $25.819 billion in revenues; international revenues are $9.678 billion (2009 FedEx Annual Report, p64). The international segment is becoming increasingly important to the company. That said, the state of the economy is still a key driver. This trend will result in an increased decoupling of firm performance from U.S. economic performance. Many strategic decisions incorporate building out internationally, so strategy supports these trends.

Marketing does not provide competitive advantage; the operations side does. FedEx has strong marketing, but so does UPS. Other competitors lag these two. Marketing managers use accepted marketing concepts and adjust marketing to fit the needs of the countries in which they operate. The marketing manager is ancillary to strategic management and is expected mainly to contribute marketing solutions to the strategic directives of the company.

Finance

The corporation's current financial objectives are to restore profitability and increase market share. Cost reductions are an important element of this strategy. These objectives are implied, but they are consistent with the corporations' missions and policies.

The company has struggled in the past year, but otherwise is performing well. Margins are squeezed slightly. Revenues and profits -- the last year notwithstanding -- are healthy and the balance sheet is solid. FedEx has reduced its debt recently and once the economy resumes will see a strong upswing in financial performance. Cash flow is still largely dependent on the overnight business but the ground business is increasing its contribution each year.

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