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Team Bethoveen. MGT 693 Spring 2008. Agenda. Value Chain Industry Analysis Airborne Strategy Recommendations Current Situation Update. Express Mail Value Chain. Express Mail Companies -Fed Ex -UPS -Postal Service -Airborne Express. Sorting Facilities -Hub & Spoke.

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team bethoveen
Team Bethoveen

MGT 693

Spring 2008

  • Value Chain
  • Industry Analysis
  • Airborne Strategy
  • Recommendations
  • Current Situation



Express Mail Value Chain

Express Mail Companies

-Fed Ex


-Postal Service

-Airborne Express

Sorting Facilities

-Hub & Spoke

Ground Transportation



Air Transportation

-Cargo planes

-Hub & Spoke







industry analysis
Industry Analysis
  • Rivalry
    • Fierce Competition
    • Price is Basis for Competition
  • Threat of Entrants
    • Strong Brand Images
    • Access to a Large Fleet of Transportation Vehicles
    • Long-term Contracts with Customers
  • Threat of Substitutes
    • Low Threat of Traditional Substitutes
    • Technology is Creating a New Threat
industry analysis1
Industry Analysis
  • Power of Suppliers
    • Fuel Suppliers
    • Packaging Equipment
    • Service Suppliers
  • Power of Buyers
    • Moderate Power due to

Price Competition

    • Dependent on Technology,

Service, and Speed

airborne s differences sources of advantage
Airborne’s Differences & Sources of Advantage
  • Owns Hub Airport in Wilmington, OH
  • Operates nation’s only foreign trade zone in Wilmington
  • Less automation, more human resources
  • Runs aircraft 80% full
  • Shippers/Receivers in major metro areas
  • Majority afternoon & second day deliveries
airborne s differences sources of advantage1
Airborne’s Differences & Sources of Advantage
  • No retail service centers
  • Pick-up and delivery by consultants
  • Pick-up and deliver more parcels per stop
  • Later delivery times
  • Lower customer service levels
  • Technology not always “cutting edge”
recommendations for airborne and robert brazier
Recommendations for Airborne and Robert Brazier
  • Strengthen its alliance with RPS
  • Form a similar alliance with an international partner
  • Follow the industry lead and move toward distance-based pricing
  • Continue to focus on cost-savings strategies to remain low price leader
recommendations for airborne and robert brazier1
Recommendations for Airborne and Robert Brazier
  • Continue a targeted marketing strategy aimed at logistics managers, etc.
  • Maintain the niche philosophy-- “Since we can’t be all things to all people, we’ll pick our kind of customer deliberately.”
timeline airborne express and dhl

Enters Fortune 500

Start of ground service

Airborne@Home alliance with USPS

10:30am Delivery, services

Shareholders approve DHL acquisition of $1 billion







Purchased by Van Gend & Loos Euro Express

Acquires Airborne Express and begins to integrate it into DHL

Deutsch Post World Net (DPWN) acquires majority shares (51%).

Remaining shares purchased in 2002.

Old and new DHL merge

Timeline: Airborne Express and DHL
dpwn and dhl today
DPWN and DHL today
  • Initial high cost to expand ground network to catch-up with FedEx and UPS
    • No longer expect to meet target break-even of 2009
  • Struggle to integrate Airborne Express into DHL
    • Write down of fixed U.S. assets
      • $800 million in 2006, $900 million in 2007
  • Annual losses of nearly $1 billion
  • $25 million class action settlement
    • Paid to contractors over payment system trouble
the future of dhl
The Future of DHL
  • John Allen, new CFO of DPWN (Nov ‘07)
    • Focus on cutting costs and pleasing investors
  • Rumors
    • DPWN may give up control of DHL
      • Await 2007 Annual Report (March 6, 2008)
    • FedEx to acquire DHL?
      • Anti-trust issues
        • FedEx 49% of U.S. Market Share
        • DHL 9% of U.S. Market Share