Airborne Express Case Study

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Federal Express’ strengths include the size and expanse of its operations. Not only did it have eight hubs in the United States, it had five more overseas and a large number of employees, (p5, ¶6) trucks and planes to support business at all of these locations. Its alliances with retailers and fully integrated technological platforms also served as important resources that increased company efficiency. Despite encouraging advancements in technological undertaking, Federal express was able to put a significant amount of emphasis on the people involved in the processes, its employees and customers. The company seamlessly intertwined technological expertise with attentiveness towards its people. For example, the integration of technology and consumer awareness allowed Federal Express to implement quality improvement efforts in the form of surveys, allow customers to track packages, test employees for competencies and communicate throughout the company. The company also provides their employees a large degree of autonomy, does not layoff employees, promotes from within, and gives raises based on performance, all of which serve as motivational factors to perform at a high level. A weakness of Federal Express would be their sometimes-excessive ambition, a characteristic that led them to a great loss when they attempted to build a global network.

- Will Airborne Express’s business strategy in the Express Mail industry lead to sustained superior performance?

Airborne Express’s business strategy as of case time will most likely not lead to sustained superior performance. As of the year 1999, the Internet was developing and progressing rapidly, and more and more consumers had access to it from their homes or offices. Airborne followed a strategy of copying the technology FedEx implemented, (p12, ¶4) rather than truly innovating in the field. Furthermore, by strategizing around bigger companies rather than residential or small business express mail, Airborne was now missing out on a huge opportunity it could have cashed in on given the advent of internet connection to end users.

Whereas quality and reliability of service was once a competitive advantage for Airborne, competitors had invested significantly in these areas, and had caught up by the time of the case writing. Furthermore, FedEx had easily surpassed Airborne in the field of customer service (p6, ¶5) since it dedicated so much capital and personnel resources to that field. Good customer service is an essential intangible asset in order to retain your customers. As noted in the industry, customers were not necessarily loyal to one particular carrier, so retention rate is of huge importance to Airborne’s success.

A third issue holding Airborne back from SSP is its underutilization of airports. Whereas companies such as FedEx took a systematic and analytical approach to scheduling flights and dedicated significant assets to airport infrastructure, Airborne was hesitant to innovate in this field. They seemed to go with the “if it isn’t broke” motto, downplaying the importance of an increasingly globalized world (p11, ¶8). Whereas FedEx invested significantly in a global shipping ecosystem, Airborne was very much still a niche US carrier.

Should Airborne want to regain its trajectory to high levels of SSP moving forward, they should focus lots of resources into web development and internet services. Hiring key tech employees could result in software packages being developed and distributed quicker, while maintaining high levels of quality assurance. Furthermore, Airborne could reposition itself as a logistics carrier, focusing on a wider spectrum of internal business services, like optimization of supply chains and inventory control for its clients. This could be a way that it could use its niche standing to its advantage. Another strategy that Airborne could use to regain high levels of SSP is a merger with a carrier that focuses on international operations. This would be a lower-risk way to beef up Airborne’s international presence and capability in a relatively short amount of time.

Regardless of the method used, Airborne would need to do something quickly to regain traction. From 1985 to 1996, revenue per shipment went down from $19.37 to $8.25, (p15) and shipment efficiency decreased as well. Company ROE was down in the same time period, (p16) and investors expressed concern. Ultimately, after case time, we observed Airborne’s acquisition by DHL. DHL is a carrier known for its international logistics, so this is the path Airborne ultimately chose to take.