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Air borne Ex press. Group Presentation by: The Braves Spring 2008. Agenda. History & Background: Jennifer Smith Industry Overview: Jennifer Smith Business Strategy & Analysis: Ryan McNulty Competitor Analysis: Pete Marcus DHL Today!: Ryan McNulty

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air borne ex press
AirborneExpress

Group Presentation by: The Braves

Spring 2008

agenda
Agenda
  • History & Background: Jennifer Smith
  • Industry Overview: Jennifer Smith
  • Business Strategy & Analysis:Ryan McNulty
  • Competitor Analysis: Pete Marcus
  • DHL Today!: Ryan McNulty
  • Conclusion & Recommendation:Pete Marcus
air borne ex press an overview
AirborneExpress-An Overview
  • Headquarters-Originally Seattle, with a hub in Wilmington,OH
  • Formed by merger of 2 airfreight carriers (in 1968-Airborne Freight Corp)

1. The Airborne Flower Traffic Assoc. of

California

2. Pacific Air Freight

air borne ex press an overview continued
AirborneExpress-An Overview Continued……
  • Service Offerings
    • Letters and Packages
      • Less than 1lbs to over 50 lbs.
      • Overnight, morning, afternoon, and 2nd day deliveries
  • Target Customers-(Prior to the 1980’s)
    • Business customers-EX: Xerox, IBM, & catalog companies
    • Specifically ignored residential deliveries and infrequent shippers
air borne ex press an overview continued5
AirborneExpress-An Overview Continued
  • Shipments-900,000 packages & documents daily
  • Employees-12,700 full-time & 8,000 part-time employees
  • Fleet
    • 13,300 Vans
    • 175 aircraft (primarily purchase used aircraft and refurbish them)
industry overview
Industry-Overview
  • Competitors-mergers and consolidations common (suppliers saturated market)
  • Technology-constantly changing
  • Market
    • Products & Services-dynamic and easily imitable
    • Customerpreferences-non-loyal, price consciencious, convenience, habits
    • Growth Opportunities
      • Domestic markets saturated, global opportunities increasingly important.
industry revenues
Industry Revenues
  • Trend-Revenues declining
    • 1985-Revenue per shipment
      • Airborne-$19.37
      • Fedex- $19.19
    • 1990-1991
      • Airborne- $11.43-10.78
      • Fedex- $16.76-17.33
    • 1992-1997
      • Airborne- $11.43-10.78
      • Fedex- $16.76-17.33
air borne ex press business strategies
AirborneExpress- Business Strategies
  • Corporate
    • Dominant Business diversification
  • Business Level Strategies
    • Focused Cost Leadership
  • Strategy Analysis
    • External & Internal Factors
      • Technology
      • Market Share
      • Global Expansion
      • People/Culture
      • Marketing/Sales
corporate strategy
Corporate Strategy
  • Dominant-business diversification
    • Single Business
      • Majority of business

Shipping-95+%

Warehouse Space Rentals-Less than 10%

business level strategy
Business Level Strategy
  • Owned Airport Hub-Wilmington OH
    • Reduced costs in landing fees, rental space
    • Increased revenues renting & landing fees from other airline business customers
  • Aircraft-filled to 80% capacity vs. Industry
    • 65-70%
  • Focused Cost leadership -
    • Lowest costs-Used airplanes, outsourcing, pickup & delivery rates
    • Different geographic markets- metro areas only
focused cost leadership
Focused Cost Leadership
  • Pricing
    • Overnight, morning delivery rates
      • Airborne-$10.95-80.70
      • Fedex- $13.86-86.86
      • UPS- $12.54-90.18
    • Overnight, afternoon delivery rates
      • Airborne-$9.25-80.70
      • Fedex- $12.04-82.54
      • UPS- $10.82-77.68*
    • Second-day delivery rates
      • Airborne-$6.25-58.00
      • Fedex- $8-54.89
      • UPS- $6.50-57.11
core competencies resources
Core Competencies & Resources
  • External
    • Technology
    • Market Share
  • Internal Factors
    • People & Culture
technology
Technology
  • Airborne selectively invested in technology, and let its rivals be forerunners
  • Customers could trace packages on their own, utilizing Airborne’s Freight On-Line Control and Update System (FOCUS)
  • Airborne’s website was not as sophisticated as it’s rivals
    • Customers could only track packages, but not schedule pickup or create shipping paperwork
market share
Market Share
  • Airborne was often overlooked
    • Many people used Fed Ex or UPS
  • By 1997, market share grew faster than Fedex and UPS
    • Up to 16% of domestic express mail market
people and culture
People and Culture
  • Employees described Airborne as “Straight-laced,” “frugal,” and “very conservative”
  • Top executives answer their own telephones, shield away from interviews, and discourage fringe benefits
  • Company statements reflected modesty
growth trends 1986 1997
Growth Trends-1986-1997
  • Airborne Express-Revenues
    • 1986-1989: $2573-5167
      • 101% increase
  • Airborne Express-Revenues
    • 1990-1991: $7015-7688
      • 9.6%*
  • Airborne Express-Revenues
    • 1992-1997: $7550-11,520
      • 50%
global expansion
Global Expansion
  • Only 6% ($78 Million) of Total Assets were invested internationally
    • Fed Ex -19% and UPS-12%
  • “There are no significant service advantages which would justify the operation of our own aircraft on international routes”
    • Airborne used commercial airlines and local partners for international shipping
today dhl
Today- DHL
  • DHL acquired Airborne Express August 14, 2003
    • Global company-headquartered in London (Deutsche Post World Net)
  • World’s largest international air express network
  • Available to over 220 countries worldwide
  • They own and operate the majority (2/3rds) of offices worldwide
    • This is far greater than their competitors
  • Faster transit times, smooth customs clearance, simplified billing, and effective shipping tracking are a result of dedicated personnel
competitor analysis strengths
Competitor Analysis Strengths
  • Concentration in metropolitan areas
  • Owns airport
  • Product Differentiation: 3 Ways
    • No Retail Service Centers
    • Used Independent Contractors
    • Cheaper but later delivery
slide24
OOPS

“ When it comes to technology, Airborne doesn’t add on bells and whistles. We use our competitors as guinea pigs. Let them try out the new stuff and see what works”.

strengths
Strengths
  • Concentration in metropolitan areas
    • Exploited Core competencies
    • Owns airport
  • Product Differentiation: 3 Ways
    • No Retail Service Centers
    • Used Independent Contractors
    • Cheaper but later delivery
weaknesses
Weaknesses
  • Technology
  • Wages to their Employees
  • Efficiency and Reliability
  • Globalization
conclusions
Conclusions
  • Weaknesses counter-acted strengths
    • Metropolitan areas vs. Efficiency
    • Owns Airport vs. Globalization
    • Product Differentiation vs. Efficiency
recommendations
Recommendations
  • Be a leader not a follower
    • Stay ahead of the competition
  • Know customers and what’s important to them
  • Keep low price differentiation but not at expense of efficiency
  • Continuous Improvement & Growth
    • Avoid being comfortable
    • Search for different markets/geographic locations
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