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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

[email protected] 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