Federal Express (FedEx) Corporation – 2015

A. Case Abstract
Headquartered in Memphis, Tennessee, and founded in 1971, FedEx is one of the largest express
freight delivery companies in the world, having about 57,000 drop-off locations, 700 aircraft, and
62,000 vehicles. FedEx does business in over 220 countries and employs over 220,000 workers. The
company is comprised of subsidiaries: FedEx Ground, FedEx Express, FedEx Freight, and FedEx
Services. FedEx’s revenues for fiscal year-end of May 2015 were $47 billion, or about $11 billion less
than top rival United Parcel Service (UPS). FedEx provides customers and businesses worldwide with
a broad portfolio of transportation, e-commerce, and business services. FedEx is consistently ranked
among the world’s most admired and trusted employers; FedEx’s 325,000 team members are
“absolutely, positively” focused on safety, the highest ethical and professional standards and the needs
of their customers and communities.

B. Vision Statement (actual)

Leading the way

C. Mission Statement (actual)

FedEx Corporation will produce superior financial returns for its shareowners by providing high value-
added logistics, transportation, and related business services through focused operating companies.
Customer requirements will be met in the highest quality manner appropriate to each market segment
served. FedEx will strive to develop mutually rewarding relationships with its employees, partners,
and suppliers. Safety will be the first consideration in all operations. Corporate activities will be
conducted to the highest ethical and professional standards.

D. External Audit
Opportunities

1. E-commerce is becoming more popular.

2. Global air cargo traffic is expected to grow at a rate of 5.2% per year over the next 20 years.
3. Tracking systems, such as bar coding, have been increasingly used as a competitive tool in
providing high customer service needs.
4. Fuel expense decreased 4% during 2014. Lowering fuel prices make air and land cargo
more effective and cheaper.
5. Self-employed individuals and those that work from home use courier services to deliver
documents and parcels. Households make up just 10.0% of industry revenue.
6. Projected population growth for 2010 - 2030 in China, Brazil, Mexico, and India is expected to
grow 4%, 14%, 19%, and 24% respectively.
7. 95% of the world’s consumers live outside of the US.
8. According to the American Trucking Associations’ US Freight Transportation forecast to 2023,
revenue of the freight transportation industry is expected to increase by 21.00% by 2023.
9. The Courier and Local Delivery Services Industry in the US is expected to grow at an annual rate
of 2.8% over the next five years to 2019.
10. The USPS is closing smaller stores in rural locations to reduce costs.
Threats
1. Debt concerns in the USA and the Euro Crisis have significantly dampened industry growth
in recent years.
2. Increasing regulation of greenhouse gas emissions.
3. The world price of crude oil is expected to increase at an annual average rate of 0.2% in the
next five years.
4. Industry depends on consumer spending/seasonality.
5. UPS holds 23.6% of the market share in global and courier delivery services.
6. Severe weather forecasts affect freight transit.
7. The Postal Regulatory Commission recently approved lower rate changes proposed by the US
Postal Service for its Priority Mail Product, which caters mostly to e-commerce business. This will
take customers from both FedEx and UPS.
8. UPS has a volume share of approximately 54% in the e-commerce package delivery business.
9. Economic uncertainty and sluggish growth of the world economy.
10. The express package and freight market is highly competitive.

EFE Matrix
Opportunities Weight Rating Weighted Score
1. E-commerce is becoming more popular. 0.05 3 0.15
2. Global air cargo traffic is expected to grow at a rate of 5.2% per
0.07 3 0.21
year over the next 20 years.
3. Tracking systems, such as bar coding, have been increasingly
used as a competitive tool in providing high customer service 0.04 4 0.16
needs.
4. Fuel expense decreased 4% during 2014. Lowering fuel prices
0.07 3 0.21
make air and land cargo more effective and cheaper.
5. Self-employed individuals and those that work from home use
courier services to deliver documents and parcels. Households 0.01 2 0.02
make up just 10.0% of industry revenue.
6. Projected population growth for 2010 - 2030 in China, Brazil,
Mexico, and India is expected to grow 4%, 14%, 19%, and 24% 0.07 3 0.21
respectively.
7. 95% of the world‘s consumers live outside of the U.S. 0.08 1 0.08
8. According to the American Trucking Associations‘ US Freight
Transportation forecast to 2023, revenue of the freight
transportation industry is expected to increase by 21.00% by 0.04 2 0.08
2023.
9. The Courier and Local Delivery Services Industry in the U.S. is
expected to grow at an annual rate of 2.8% over the next 5 years 0.05 3 0.15
to 2019.
10. The USPS is closing smaller stores in rural locations to reduce
0.06 4 0.24
costs.

Threats Weight Rating Weighted Score

1. Debt concerns in the U.S. and the Euro Crisis have significantly
0.02 1 0.02
dampened industry growth in recent years.
2. Increasing regulation of greenhouse gas emissions. 0.04 3 0.12
3. The world price of crude oil is expected to increase at an annual
0.06 2 0.12
average rate of 0.2% in the next five years.
4. Industry depends on consumer spending/ seasonality. 0.07 3 0.21
5. UPS holds 23.6% of the market share in global and courier
0.06 2 0.12
delivery services.
6. Severe weather forecasts affect freight transit. 0.05 3 0.15
7. The Postal Regulatory Commission recently approved lower rate
changes proposed by the U.S. Postal Service for its Priority Mail
Product, which caters mostly to e-commerce business. This will 0.05 2 0.10
take customers from both FedEx and UPS.
8. UPS has a volume share of approximately 54% in the e-commerce
0.04 1 0.04
package delivery business.
9. Economic uncertainty and sluggish growth of the world
0.02 2 0.04
economy.
10. The express package and freight market is highly competitive. 0.05 3 0.15
TOTALS 1.00 2.58
 FedEx is performing around average addressing external issues. The overriding key opportunity
that is not being addressed sufficiently is not fully taking advantage of customers outside the US,
especially in emerging markets.

E. Internal Audit
Strengths

1. FedEx Express is the world’s largest express transportation company.

2. FedEx has introduced Windows-powered pocket PCs, or PowerPads to its courier operations.
3. Reached 27% cumulative improvement in fuel economy since 2005.
4. FedEx Ground revenue has grown over 60% (FY 2015) in over the past five years alone.
5. Operate more than 660 aircraft at more than 375 US Airports and over 65,000 vehicles.
6. Fiscal year 2015 revenue was $44.4 billion; up from $44.3 billion for fiscal year 2013.
7. Annually invest millions of dollars in equipment and technology to prevent injuries and accidents both
on the ground and in the air.
8. Reduced transit times.
9. Connecting markets that comprise more than 90% of the world’s gross domestic product.
10. FedEx won 1st place in the category of Productivity Innovation and ranked No. 14 overall on the 2014
Information Week Elite 100 list which is a compilation of the top business technology innovators in
the US.

Weaknesses

1. FedEx has a smaller fleet of ground vehicles than UPS.

2. Current assets decreased to $10.9 billion in FY 2014 from $11.3 billion in FY 2013.
3. The current ratio declined from 1.96 in FY 2013 to 1.83 in FY 2015.
4. No close monitoring of the contents of the packages they deliver to customers daily.
5. FedEx has 10% market share in Europe.
6. Lower profit margin than rival UPS.
7. FedEx Ground involved in numerous lawsuits and other proceedings (such as state tax or other
administrative challenges) where the classification of its independent contractors is at issue.
8. The company’s decreasing cash reserves may affect their ability to capture business opportunities.
9. Strict weight requirements: Envelopes must weigh less than 10 ounces and FedEx Paks and
Boxes must weigh less than 150 lbs.
10. FedEx has $3.8 billion in goodwill.
IFE Matrix

Strengths Weight Rating Weighted Score

1. FedEx Express is the world‘s largest express transportation
0.07 3 0.21
company.
2. FedEx has introduced Windows-powered pocket PCs, or
0.05 3 0.15
PowerPads to its courier operations.
3. Reached 27% cumulative improvement in fuel economy since
0.04 4 0.16
2005.
4. FedEx Ground revenue has grown over 60% (FY 2015) in over
0.08 4 0.32
the past five years alone.
5. Operate more than 660 aircraft at more than 375 U.S. Airports and
0.06 4 0.24
over 65,000 vehicles.
6. Fiscal year 2015 revenue was $44.4 billion; up from $44.3 billion
0.03 3 0.09
for fiscal year 2013.
7. Annually invest millions of dollars in equipment and technology
to prevent injuries and accidents both on the ground and in the 0.03 4 0.12
air.
8. Reduced transit times. 0.06 4 0.24
9. Connecting markets that comprise more than 90% of the world‘s
0.05 4 0.20
gross domestic product.
10. FedEx won 1st place in the category of Productivity Innovation
and ranked No. 14 overall on the 2014 Information Week Elite 100
list which is a compilation of the top business technology 0.02 3 0.06
innovators in the U.S.

Weaknesses Weight Rating Weighted Score

1. FedEx has a smaller fleet of ground vehicles than UPS. 0.05 1 0.05
2. Current assets decreased to $10.9 billion in FY 2014 from $11.3
0.07 2 0.14
billion in FY 2013.
3. The current ratio declined from 1.96 in FY 2013 to 1.83 in FY 2015. 0.07 2 0.14
4. No close monitoring of the contents of the packages they deliver
0.04 2 0.08
to customers daily.
5. FedEx has 10% market share in Europe. 0.05 1 0.05
6. Lower profit margin than rival UPS. 0.07 2 0.14
7. FedEx Ground involved in numerous lawsuits and other
proceedings (such as state tax or other administrative
challenges) where the classification of its independent 0.03 2 0.06
contractors is at issue.
8. The company‘s decreasing cash reserves may affect their ability
0.06 1 0.06
to capture business opportunities.
9. Strict weight requirements: Envelopes must weigh less than 10
0.02 2 0.04
ounces and FedEx Paks and Boxes must weigh less than 150 lbs.
10. FedEx has $3.8 billion in goodwill. 0.05 1 0.05
TOTALS 1.00 2.60

Much like the EFE Matrix, FedEx is performing around average on addressing internal issues as well.