Five Competitive Forces Defined By Porter

Five Competitive Forces Defined By PorterPorters five forces analysis is an absolutely fundamental technique in strategy. Using this framework to map out environmental forces bear oning the FedEx Corporation would result in the discovery of what the briny sources of competitive pressure argon and how strong each competitive force is in the deportation industry world. This analytical step is essential because we cannot create a successful strategy without in depth understanding of the industrys competitive character.Porters five forces model FedEx CorporationPotential CompetitorsLOWExisting Rivals highBuyers PowerHIGHSuppliers PowerLOWSubstitute ProductsLOWprproductsppppThe potential entry of new competitorsEstablished companies had managed to effectively raise the barriers to entry bringing it to a high and reservation it punishing for potential new competitors to enter the market. This is so due to the fact that these companies have taken competitive advantage of cost by achie ving large quite a little of shipment and economies of scale. In addition, there is a high fixed cost associated with entering the International transportation network. For example, fleet of aircraft, ground handling, vehicles etc.Extent of tilt between established firmsThere are both local and global competitors in the shipping industry i.e. UPS, FedEx, DHL and TNT. Although these companies competed vigorously for a market share in the industry, FedEx and UPS quickly gained prominence by responding to the changing environment through with(predicate) the use of technological advances. These companies competed by strictly focusing on lower pricing, customer segmentation, lumber of service and innovation. This has caused rivalry to be intense among competitors because customers could easily switch to preferred companies with better offers.Bargaining power of buyersThe bargaining power of large buyers in the shipping industry is high. This is because buyers can easily switch to lar ger shipping providers for a lower price and faster service. For example IBM which provides large volume of shipment at a lower price.Bargaining power of suppliersThe supplier power within this industry is fairly low. Large shipping service provider can affect prices of supplies by placing better offers on packaging materials. This is because they buy in large quantities and can turn to different suppliers easily.Threat of substitute productsThere are no substitutes to shipping. In this day and age where many businesses have a strong online presence and a small physical presence, it would be difficult to find a substitute in delivering their product. Shipping services are very much similar to a commodity, in that it is not easily replaced with another service or even a similar service.Porters Value Chain AnalysisThe use of Porters value chain analysis will help to better understand the activities through which FedEx can develop a competitive advantage and create shareholder value.In bound logisticsThe FedEx value chain begins with same day collection of packages. FedEx employees collect the packages from several(a) locations that are convenient to the customers such as businesses or at their homes. Customers can comfortably request pickups via the internet or telephones.OperationsAfter the packages have been picked up, they are transported to one of FedExs regional hubs for onward distribution. A hub is a central location where FedEx employees sort the packages according to their destinations. The packages remain at the hub until they are collected and shipped either by aircraft or truck.Outbound LogisticsThe efficient distribution of the packages by the aircraft and truck drivers to their various locations are integral to the value of the service. The packages must get to their destinations on time at anyway.Marketing and SalesSupport activities such as company infrastructure e.g. truck aircraft etc provide the enabling environment for the primary activities to function properly. Other classic support activities include information systems, which allow customers to place their orders on- line and track their products.ServicesFedEx further facilitates customer comfort and security during the use of its service by allowing customers to track their packages while on route. Customer service is usually seen as a final primary activity and provides after sales support and service, however, it is an all important(p) part of the FedEx process.FedEx over a number of years had improved its core competencies and capabilities through the use of infrastructure, a stronger brand secernate than rivals and embracing new technology. groundworkFedEx realized that by acquiring its own transportation fleet e.g. regional hubs, trucks and aircraft would set them apart from its competitors. By doing this, the company had managed to achieve over one meg dollars on revenues making it difficult for potential and existing competitors to imitate since it took a lot of capital needed to compete with this company.Brand NameFedEx brand name was considered to be one of its greatest assets the name had placed an image of reliable service and fast delivery in the mind of its customers. This had also made it difficult for other entrants in the market to compete because FedEx had a lot of trucks and aircraft to back them up.Innovation and New TechnologyTechnological breakthrough and application of innovation promoted substantial advances for customer ordering, package tracking and process monitoring. Example FedEx was the first company in the shipping industry to introduce the use of new technology that allows millions of community to connect via the World Wide Web through its website www.fedex.com. FedEx had also made it possible for people to track their package at the point of picking up to the stage of the delivery. Finally FedEx had built a small warehouse in Memphis. This was it first attempt at multi- client warehousing where customers c an call up and place an order and the said order will be picked up on the same day.