Geetha A/P Valaidum GM 04556 Philominah Arkappan GM 04502 COMPANY OVERVIEW Founded in San Francisco more than 40 years ago by 3 budding entrepreneurs - Adrian Dalsey, Larry Hillblom and Robert Lynn DHL is the one of the global market leader in international express, overland transport and air freight DHL offers integrated services and tailored, customer-focused solutions for managing and transporting letters, goods and information. DHLs international network links almost 220 countries and territories worldwide Around 285k employees are dedicated to provide fast and reliable services that exceeds customers expectations in 120k destinations in all continents MISSION & VISION Mission : to be the first choice worldwide
Vision : for the future is nothing less than to transform the logistic industry and to deliver beyond customers expectations. NEW MISSION & VISION Mission : enhances the business of our customers by offering highest quality express and logistics solutions based on strong local expertise combined with the most extensive global network presence.
Vision : create and promote innovative logistics solutions that aims to deliver freight services that are beyond customers expectations
"FedEx Corporation will produce superior financial returns for its shareowners by providing high value-added logistics, transportation and related information services through focused operating companies. Customer requirements will be met in the highest quality manner appropriate to each market segment served. FedEx Corporation will strive to develop mutually rewarding relationships with its employees, partners and suppliers. Safety will be the first consideration in all operations. Corporate activities will be conducted to the highest ethical and professional standards."
FedEx Mission & Vision Mission & Vision supporting the Strategies DHLs strategies : To intensify customer focus To deliver consistent service excellence To extent capabilities To attract, develop and retain talent To relentlessly drive efficiency To be proactive in social Mission & Vision supporting the Strategies Statements of vision and mission of the company are a manifestation of the commitment of achieving success as these statements drive strategy. Strategies are founded on these statements hence are considered the idea of purpose
Internal Assessment Organizational Chart Deutsche Post DHL Corporate Center CEO (Dr Frank Appel) Finance Global Business Services (Lawrence Rosen) Personnel (Walter Scheurle) Divisions Mail (Jurgen Gerdes) Express (Ken Allen) Global Forwarding Freight (Roger Crook) Supply Chain (Bruce Edwards) Market Positioning Map High Distribution Network Moderate Service Quality Service Low Distribution Network FedEx UPS DHL Nationwide Skynet City-Link TNT DHLs Marketing Strategy Aggressive promotion strategy (Promotion) Just in Time High quality service Advanced technological support Planning and scheduling Horizontal management practices Optimization of HR & OM (People) Location (Place) Product choice (Product)
DHLs Website DHLs Strengths & Weaknesses Strengths Weaknesses Strong Brand Image Not well-known globally Globalism High Tariffs Technology pioneers High Prices Innovators Not fully operational in Domestic Markets Corporate Symbiosis Customer loyalty issues Reach and Frequency No difference of the services of DHL with competitors Quick delivery due to dynamic route planning system Weak to tap and venture against its potential domestically and internationally Customers have control on what they purchase Subject to stagnate market Excellent e-commerce services Clear visibility of supply chains all the time IFE Matrix Strengths W R WS Strong Brand Image 0.12 4 0.48 Globalism 0.08 2 0.16 Technology pioneers 0.09 3 0.27 Innovators 0.09 3 0.27 Corporate Symbiosis 0.08 3 0.24 Reach and Frequency 0.15 4 0.60 Quick delivery due to dynamic route planning system 0.03 1 0.03 Customers have control on what they purchase 0.03 1 0.03 Excellent e-commerce services 0.04 2 0.08 Clear visibility of supply chains all the time 0.04 2 0.08 Weaknesses W R WS Not well-known globally 0.10 3 0.30 High Tariffs 0.08 1 0.08 High Prices 0.09 2 0.18 Not fully operational in Domestic Markets 0.12 3 0.36 Customer loyalty issues 0.02 1 0.02 No difference of the services of DHL with competitors 0.03 1 0.03 Weak to tap and venture against its potential domestically and internationally 0.04 2 0.08 Subject to stagnant market 0.03 2 0.06 TOTAL 1.00 2.67 Based on the results above, DHLs Internal Factor Evaluation is slightly above average to their internal strengths and to abstain weaknesses. External Assessment Major competitors Federal Express UPS City-Link International Nationwide Express TNT Express Worldwide Skynet Worldwide DHL FedEx UPS Less expensive than UPS or FedEx Generally more expensive than USPS or DHL Somewhat expensive but cheaper than FedEx Offers fast delivery to some locations. very quick delivery system Relatively fast delivery Offers free boxes and other shipping supplies, but only for their Air Express service (not DHL Ground). Provide boxes free of charge Insurance for valuables worth up to $100 is included free of additional charge. Provides online tracking at no additional cost, but not as detailed as FedEx Provides the most detailed online tracking system.
Ground, Express, and Freight shipping services are available, as well as extra fast same-day and overnight options. Competitive Profile Matrix FedEx UPS DHL W R E R E R E Service Quality 0.13 4 0.52 3 0.39 2 0.26 Price Pressure 0.15 3 0.45 3 0.45 2 0.30 Strong consumer orientation, segmented approach 0.10 3 0.30 3 0.30 2 0.20 Completeness of service 0.09 3 0.27 3 0.27 1 0.09 Good quality for a competitive discount price 0.12 3 0.36 4 0.48 2 0.24 Reputation 0.11 3 0.33 1 0.11 1 0.11 Advertising 0.10 2 0.20 3 0.30 4 0.40 After sales service 0.08 2 0.16 1 0.08 1 0.08 Customization 0.12 2 0.24 4 0.48 2 0.24 Total 1 2.83 2.86 1.92 The result shows UPS is dominating on critical success factors because the total weighted score is higher compared to FedEx and DHL PESTLE Analysis Political Environment Europe is a stable environment where no major political changes are expected. European Union has removed border lines and has made trade and business more accessible Enable bigger exports, free movement of services.
Economical Environment companies should not stop their investment plans because of economic crisis. It is important in current situation to strengthen position in the market and expand if possible. Emerging markets represent a potential of rapid economy growth. E.g restructuring or outsourcing reduced cost
Socio-cultural Environment affect customers' needs and wants Research & Development - to respond to changes in society quickly not to loose market share and demand for services. Customer satisfaction surveys, market surveys, employee surveys play important role in building company's brand and image in the market.
Technological Environment IT is the most important technology factor for logistics business because speed and reliability are equal to success. However, there is an indisputable constant threat of falling behind. Investments to the modernist technologies are evitable and in times of economic crisis are much more important then anytime before. Company has to decide if it runs internal IT organization or if it outsources most of the services and reduce cost.
Legal Environment obligations - directives, taxes and rules that they must be aligned with to be able to operate in the market. Liberalization - Removal of border lines enabled building and strengthening of positions in the logistics market. There are no special and expensive authorizations necessary in CEP industry which is another benefit for companies
Environmental Analysis Air pollution globally transportation industry Projects have been implemented smart truck project
External Analysis Opportunities Threats Global Expansion Rules and restrictions of other countries JV with foreign countries local transportation companies Competitors improvising DHLs strategies Expansion of E-Commerce Economic and Political condition of the country Increasing number of manufactured goods Insurance costs Delivery products from city to city New Tax System Creation of new market segmentation Increase in fuel price Largest world sector Tough competitors EFE Matrix Opportunities W R WS Global Expansion 0.08 3 0.24 JV with foreign countries local transportation companies 0.08 3 0.24 Expansion of E-Commerce 0.07 2 0.14 Increasing number of manufactured goods 0.08 3 0.24 Delivery products from city to city 0.07 2 0.14 Creation of new market segmentation 0.07 3 0.21 Largest world sector 0.07 3 0.21 Threats W R WS Rules and restrictions of other countries 0.06 2 0.12 Competitors improvising DHLs strategies 0.05 2 0.10 Economic and Political condition of the country 0.06 1 0.06 Insurance costs 0.08 3 0.24 New Tax System 0.07 2 0.14 Increase in fuel price 0.08 2 0.16 Tough competitors 0.08 1 0.08 Total 1 2.32 Based on the results above, DHLs External Factor Evaluation is below average to the environment for exploiting opportunities and to overcome threats. Strategy Formulation SWOT Analysis Strengths Weaknesess Strong Brand Image Globalism Technology pioneers Innovators Corporate Symbiosis Reach and Frequecy Not well-known globally High Tariffs High Prices Not fully operational in Domestic Markets Opportunities SO Strategies WO Strategies Global Expansion Joint Ventures Expansion of E-Commerce Increasing number of manufactured goods Advertise new technologies and online ordering system (S2,S3, O4)
Create joint ventures with local logistics companies (W1, O1, O2) Promoting business in China and India (W1, W4, O1) Threats ST Strategies WT Strategies Rules and Restrictions Economic and Political condition Slow and stagnant economic growth Relationship with foreign countries The increase in fuel prices Promotions when using online ordering system during economic slow-down or restrictions (S2, S3, S6, T1, T3) Enhance the Smart-Truck Project to overcome fuel price increment (S3,S4,T5) Acquire small local companies abroad to catch up with competitors (W1,W4,T4)
SPACE Matrix A SPACE MATRIX RATINGS TOTAL AVERAGE Financial Strength (FS) Revenue 4.00 Cost reduction 2.00 Asset utilization 3.00 9.00 3.00 Industry Strength (IS) Technology Savvy 6.00 Large distribution network 5.00 Brand 4.00 15.00 5.00 Environmental Stability (ES) Risk in business -3.00 Increase in fuel prices -2.00 High rivalry in market -5.00 -10.00 -3.33 Competitive Advantage (CA) Innovation -4.00 Service quality -5.00 Product choice -3.00 -12.00 -4.00 CONCLUSION Directional Vector X-axis: CA + IS = -4.00 + (+5.00) = 1.00 Y-axis: FS + ES = 3.00 + (-3.33) = -0.33 Strategy to pursue is Competitive Strategies FS CA ES IS Competitive Conservative Defensive Aggressive SPACE Matrix BCG Matrix DHL has been analyzed in 3 categories of its businesslike mail, express and logistic 1) mail market growth rate
BCG Matrix indicates that DHL is placed in Cash Cow. This means DHLs market growth rate is low, but its market share is high so it should milk as much profit as possible BCG Matrix Grand Matrix Strategy Weak competitive position Strong competitive position Rapid Market Growth Slow Market Growth QSPM STRATEGIC ALTERNATIVES
Enhance & focus on innovation Expand business & acquire more logistics companies domestically and internationally Key Factors Weight AS TAS AS TAS Opportunities
Global Expansion 0.08 3 0.24 4 0.32 JV with foreign countries local transportation companies 0.08 2 0.16 4 0.32 Expansion of E-Commerce 0.07 3 0.21 3 0.21 Increasing number of manufactured goods 0.08 3 0.24 4 0.32 Delivery products from city to city 0.07 - - Creation of new market segmentation 0.07 - - Largest world sector 0.07 - - Threats Rules and restrictions of other countries 0.06 2 0.12 3 0.18 Competitors improvising DHLs strategies 0.05 - - Economic and Political condition of the country 0.06 - - Insurance costs 0.08 - - New Tax System 0.07 - - Increase in fuel price 0.08 3 0.24 2 0.16 Tough competitors 0.08 4 0.32 4 0.32 Total 1.00 Strengths Strong Brand Image 0.08 3 0.24 3 0.24 Globalism 0.07 2 0.14 4 0.28 Quick delivery due to dynamic route planning system 0.03 - - Customers have control on what they purchase 0.03 - - Excellent e-commerce services 0.04 - - Clear visibility of supply chains all the time 0.04 - - Technology pioneers 0.07 4 0.28 3 0.21 Innovators 0.07 4 0.28 3 0.21 Corporate Symbiosis 0.06 3 0.18 4 0.24 Reach and Frequency 0.09 2 0.18 4 0.36 Weaknesses
Customer loyalty issues 0.02 - - No difference of the services of DHL with competitors 0.03 - - Weak to tap and venture against its potential domestically and internationally 0.04 - - Subject to stagnate market 0.03 - - Not well-known globally 0.07 2 0.14 2 0.14 High Tariffs 0.06 2 0.12 2 0.12 High Prices 0.08 3 0.24 3 0.24 Not fully operational in Domestic Markets 0.09 4 0.36 3 0.27 Sum Total Attractiveness Score 1.00 3.69 4.14 Recommendation Enhance & focus on innovation Make difference to have new customers and increase their half market share Making little difference on the current product or services to be better Delivery will be faster and cut cost by using less fuel Recommendation Expand business & acquire more logistics companies domestically and internationally By acquiring small local companies in different countries like China, India, USA, will give presence in that countries. Creative solution for problems and acquiring new brain Strategy Implementation EPS/EBIT ANALYSIS Earnings per share: Year 2011 1Y(Million) Q4(Million) EBIT 2436 599 EPS 0.96 0.14 (0.82 for 9 months)
Capital needed 5000 million EBIT range 2000 to 4000million Interest rate 5% Tax rate 25% Stock Price 15.20 Shares outstanding 2019 million EPS/EBIT ANALYSIS (assumption)
EPS/EBIT ANALYSIS (CHART) CONCLUSION: THE BEST FINANCING ALTERNATIVE IS 100% DEBT SINCE THE EPS VALUE ARE LARGEST; THE WORST FINANCING ALTERNATIVE IS 100% STOCK SINCE THE EPS VALUES ARE LOWEST. RATIO ANALYSIS OF DHL
Return on Asset = 1196 2386 40935 53212 2.92% 4.48% RATIO ANALYSIS OF DHL FUTURE ASSUMPTION BY DHL The group intends to generate annual EBIT growth by an average of 13to 15% through 2015 EBIT Range 2.6 to 2.7billion Dividend Payout ratio will be 40 to 60% Number of employees in 2012 ( 426,104) tend to increase by 10% in 2013
CEO of DHL Logistics, enhancing the Smart- Truck Project is going to be his first strategy. This project will allow their company to deliver faster and cut cost by using less fuel. To achieve this goal, we will follow some steps: a)Increase the budget of R&D 10%. b)Prepare an office for a new innovation team and assign a leader to work on this project FUTURE ASSUMPTION BY DHL The Financial Perspective Strategic Themes
Growth Strategic Objective Improve Market Penetration Improve Revenue Productivity Efficient use of resources Improve wallet share Improve Channel Mix Improve market share Reduce Operating Expenses Ensure Loyalty The Customer Perspective The Customer Value Preposition Strategy Product/Service Attributes Image and Reputation Customer Relationship
Growth Strategic Objectives Price/Performance Brand Image Contractual Responsiveness Ease of Use Brand Equity Flexibility Product Availability Honesty and Openness Buying Experience Customer Feedback The Business Process Perspective Types of Business Processes Strategy Innovation Operations Post-sales Service Strategic Objectives
Growth Identify emerging needs of customers Reduce order fulfillment cycle time Enhancing support centres Improve communication process between customer and company Response time for solving customer problems Learning and Growth Categories
Strategies Employee Capabilities Information System Capabilities Motivation Empowerment and Alignment
Growth Strategic Objectives Strategic skills (improve selling skills, analyst skills, technical support) Improve Intellectual Property Staff Empowerment Skill leverage (multiple product selling) Tracking privacy Personal goals alignment with corporate goals Morale Conclusion DHL already established themselves and holding the third largest logistic company in the world Based on all the strategies matrix above, will be able to aid DHL future performance and overtake their competitors