Airborne Express Harvard Case Solution & Analysis

ProblemStatement

An Airborne Express is facing problems while developing the business strategies in order to compete with its main largest market players Federal Express (45%) and UPS (25%). As the Airborne Express is the third largest player with the market share of 16%, they want to increase their market growth by targeting more customers.

airborne express case solution

airborne express case solution

Case Analysis

The current situation of an Airborne Express is evaluating internal and external factors, which impact the success of the company and by analyzing the financial and competitive position of the company.

Internal Analysis

Operations

The company delivered each day around 900,000 packages and documents to its customers. Airborne also operate, the only privately owned foreign trade zone that is located in Wilmington. The company had purchased an Abandoned Strategic Air Command Base in the year 1980 for an amount $875,000 also located in Wilmington. The Contractors handle 60-65% volume of an Airborne. Furthermore the company does not keepep retail service centers, it only manages and owned part of its delivery vans. An Airborne Express has adopted the variable cost approach to international shipments by using the local partners as well as commercial airlines to complete their shipments. The company has less international presence as compared to its rivals, Federal Express and UPS. Furthermore, the company had invested in assets around $78millions in the year 1996 for its international operations (Exhibit 2).

Marketing and sales

Like Federal Express and UPS, the company did not invest in the mass media advertising rather it focused to target logistic managers of major shippers.

Technology

An Airborne Express invested selectively in the technologies as compared to the Federal Express and UPS that devoted largely to technological developments. Moreover, the major software system of the company such as Freight On-Line Control and Update System (Focus) provides many features that are comparable to the COSMOS software of Federal Express. The website of the company allows the customer to track the site, but not permissible to ship a paperwork and schedule a pickup (Exhibit 2).

SWOT Analysis

Strengths

Airborne Express is the fastest growing company in the industry. The company owns an airport that served as its major hub as compare to its rivals. This allows to tailor the facility to its needs without any obstacles as well as it did not pay any landing fees. Another strength of the Airborne Express is its relationship with Roadway Package System. This relation has created strong appeal with the capabilities of RPS on the ground and Airborne in the air. Courier of an Airborne picked up and delivered more parcels per stop as compared to its main rivals Federal Express and UPS.

Weaknesses

The Airborne iconsiderer as an overlooked company in the express mail industry, than Federal Express and UPS. Furthermore, about  96-97% shipment of the  arrived on time as compared to the Federal Express and UPS that were 99% or higher. The company did not advertise heavily as compared to the rivals. The company has selectively invested in technology and do not offer as many functions as its competitors. Airborne, also has less presence in the international market as compared to the Federal Express and UPS.

Opportunities

An airborne Express has an opportunity to expand, due to the increasing global demand. However, the company can also invest in the latest technology in order to gain the competitive advantage over its competitors. The relationship with Roadway Package System provides the company with an opportunity to target large volume of business customer and enhance the growth of the company. The company can also target the market segment that is not served by the rivals.

Threats

The distance-based price offerings of the rivals and increase in the competition are the threats of the company. Additionally, the availability of substitute in the market such as Email, Fax is the major threat for an Airborne Express. The Fluctuation in the prices of fuel is another threat for the company in the industry (Exhibit 3).

External Analysis

Porter’s Five Forces Analysis

Competitive rivalry within the Industry (Moderate)

The Competitive rivalry within the Industry is moderate as there are mainly three competitors in the market that include Federal Express, UPS and Airborne Express. While others are small players such as BAX Global, DHL, TNT Express in the industry.

Threat of substitutes (High)

The threat of substitute in the industry is high as there are many alternatives available in the market such as Email..............

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Following a very successful quarter, executives Airborne Express, the third largest player in the industry by express mail, review of the competitive position of the company. Airborne survived, and recently prospered in the industry with significant economies of scale, although it is much smaller than the industry giants Federal Express and United Parcel Service. The case challenges students to understand the unusual position in the airborne. Detailed data allow students to analyze the relative cost of the airborne position, the fit between their work, the differences between airborne and its competitors, and the development of its industry. With these tests, the students advice on pricing policy of the company, its efforts globalization and partnership with the company. Designed to be taught in courses on business unit strategy. "Hide
by Jan W. Rivkin Source: HBS Premier Case Collection 23 pages. Publication Date: Feb 05, 1998. Prod. #: 798070-PDF-ENG

 

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