Introduction

Impact of globalisation on Fedex business and HR strategies

Impact of globalisation on fedex hr policies and hr practices
Resourcing fedex manpower needs
HRD of fedex
Employement relation in fedex
Performance and rewards in fedex
How fedex hrm practices affects the business strategy (vertical integration)
How fedex hr practices are consistent and support the overall strategy (horizontal integrtion)
Fedex best practices or best fit or RBV
How other MNC,s mediate the impact of globalisation on hrm policies
Conclusion

1 Introduction........................................................................................................ 2
2 Hr and Business strategy.................................................................................... 2
2.1 HR Strategy.................................................................................................. 2
2.2 Business Strategy......................................................................................... 3
3 Impact of Globalization....................................................................................... 3
4 Combination of HR and Business strategy of Fedex............................................3
5 HR practices and policies.................................................................................... 4
5.1 Resourcing the organisation.........................................................................4
5.2 Talent development and performance management....................................5
5.3 Recruitment Process..................................................................................... 5
5.4 Employment and Working Conditions...........................................................6
5.5 Employee relations....................................................................................... 6
5.6 Research and Development..........................................................................6
5.7 Total rewards................................................................................................ 7
6 Strategic Global HRM.......................................................................................... 7
6.1 Vertical Integration....................................................................................... 8
6.2 Horizontal Integration...................................................................................8
7 Best Fit, Best Practices and Resource Based View of Fedex................................8
7.1 Best fit.......................................................................................................... 8
7.2 Best Practices............................................................................................... 8
7.3 Resource Based View....................................................................................9
8 Changes and Actions to improve HRM policies...................................................9
8.1 Changes to be made in HRM........................................................................9
8.2 Actions to Improve HRM............................................................................... 9
9 Impact of Globalization On The HRM Policies Of Fedex ....................................10
10 Conclusion...................................................................................................... 10
References........................................................................................................... 11

Vertical integration;
FedEx is a corporation that stretched its influence over a wide horizontal plain. The same is true for their
vertical integration strategy. FedEx has FedEx Office, Federal Express, FedEx Ground, FedEx Tracking and
many other subdivisions. This shows there dominance in horizontal integration in the transportation and
office services sector. But, within these different subdivisions, FedEx has varying degrees of vertical
integration.
For example, forward vertical integration can be found with FedExs expresses services. First, FedEx picks
up the package from the customer, postal service or drop locations. FedEx then sort and ships the
packages to the necessary region. Finally, FedEx personally delivers the package to the specific location.
In this manner FedEx handles the package almost complete throughout the entire delivery process. In my
example, FedEx controls and operates of each step in the value chain thus bringing them into contact
with the end consumer giving them total horizontal integration in their delivery processes.
Due to FedExs size, they can leverage their expertise and capital to take advantage of every step in the
delivery process. But other companies do not have the size and sophistication to perform such
integrative practices and must focus on a particular part in the value chain. For example we can look at
Baskin Robins. They franchise the rights to make their ice cream to a select number of manufactures.
They then franchise the rights to sell the ice-cream to certain venders thus splitting up the value chain
between individuals. Although these are not examples of companies within the same industry, it is an
example of differing value chains and integrative and divisional strategies.

FedEx: Vertical Integration (Ch.10)

FedEx, has great control over the over most of the distribution channels for their service which has given then a large
percentage in market share. FedEx does a combination of vertical integration and outsourcing for its maintenance. Several
hubs and service center locations have shops to do preventative maintenance or repair work for their facilities, tractors, planes
etc., however all do not. As mentioned, most of the vertical integration that seems to work for FedEx is downstream. It would
be very difficult and costly for FedEx to include raw material and component part manufacturing, as well beginning to
manufacture their own truck or planes.
Based with their purchasing power and core competencies, it is not beneficial for FedEx to do so at this point in time. In
particular, an industry as such does not appear to be heavy in vertical integration.
On a side note, Amazon, a large customer of FedEx for its Smart Post operations, has decided to implement their own
transportation/logistics operations. In turn, because their core competencies could not support, they have since provided
majority of its business back to FedEx. This shows a good example of an overzealous company trying to compete where they
do not have the experience. Not to say this will not be a smart move in the long run.

FedEx being largely a service industry most of vertical integration is in downstream direction. FedEx has enormous infrastructure like
cargo planes, delivery trucks and shipping hubs. Vertical integration would be difficult considering huge implementation, maintenance
and bureaucratic costs involved for raw material and some component parts manufacturing. FedEx neither has the capability nor the
need to begin manufacturing their own truck or airplanes. FedEx uses independent suppliers along with some company owned suppliers
for maintenance services like airplane repair, facilities and trucks maintenance. Based on their core competencies is not beneficial for
FedEx to do upstream vertical integration.
FedEx has great control over its distribution channels, packaging capabilities and tracking functions. This allows FedEx to be able send
packages on time as promised to the customers. FedEx has a strong commitment to its customers and is constantly able to meet their
needs by innovation in technology. FedEx has global presence is seeking to grab global market share by developing new technologies
and improving their service.

Case Study: FedEx Co.

Introduction:
FedEx has emerged as a company that is involved into various shipping regions in
different parts of the world and is aggressively pursuing a solid foundation for the future.
It has recently added a new hub in the Philippines. FedEx is innovating with the products
to match with the needs of customers. FedEx has been successful in providing various
features and benefits.
FedEx has added website features that generate unique and customized shipping labels.
It has leveraged upon wireless technology by its sophisticated tracking system.
FedEx is a leading global provider of logistics and solutions and is one of those successful
companies that have made their way into FORTUNE magazine list of Best companies to
work for. It also has won the accolades of Largest employer in 2008 and is considered
a tycoon of logistics.
FedEx has been able to differentiate its service by leveraging on information. It has
enabled the customers to know about the point of origin of product destination,
estimated time of arrival, present whereabouts, price and cost, and destination etc. it has
created stare of art technology which keeps track of shipments.
FedEx has been able to sustain its competitive advantage in shipping industry. It has
invested heavily in development and integration of its supply chain by investing in
aircrafts and airline hubs around the world. Its extensive networks, resources and
infrastructure are quite impressive and have enabled it to sustain a competitive
advantage in international market of shipping industry. Over the time period, it has
added several optimum hubs to its network to increase its accessibility and outreach in
developing economies. FedExs continuous innovations in shipping industry and its
extensive infrastructure have enabled it to create value for its customers and sustain its
competitive advantage.
Porters
five
forces:
Rivalry
among
competitors:
Firms in transportation industry face tough competition on the basis of price. The
industry is marked by a tendency to cut prices with a goal to increase market share. The
established firms are continuously striving for the improvement in the service to the
customers by offering best quality at affordable prices through innovation. Switching
costs are low for customers which make the rivalry among competitors more intense.
Also, the exit barriers are huge which make rivalry more intense. Fixed costs and
investment in express delivery system makes the exit barriers huge.
Competitors of FedEx are;
UPS:
With its huge worldwide network in more than 175 countries, UPS is the largest
competitor of FedEx in the domestic market of U.S.A. UPS has aggressively faced the

challenges of the industry in the international market and has adapted well against
changing needs of customers.
DHL:
In contrast to FedEx strategy to focus mainly on domestic market, DHL is expanding its
foothold in the arena of international market. It has secured a large network of
international customers around the world. It has entered into strategic alliances with
international freight companies and international airlines while investing heavily in aircargo fleet. Its focus is on developing markets like India, China, and Pakistan etc. In
2003, DHL acquired Airborne Express and is coping up the challenges of rivalry in the
transportation market of U.S.A.
TNT:
TNT offers a number of transportation solutions to customers that are similar to those
offered by UPS and DHL. It is a major and formidable competitor of international
transportation market. It has stepped boldly in the competitive market of U.S and is
competing against UPS and DHL.
Threat
of
new
entrants:
In the transportation industry the barriers to the entry are high as fixed costs are huge.
Establishing an international network of transportation requires high fixed costs and
heavy investments in both human and financial capital. Establishing hubs,
transportations system equipped with vehicles, air fleet etc requires huge costs. Also, the
new entrants cannot exploit the advantage of economies of scale enjoyed by existing
players by achieving large volumes of shipments. (Porter, 2008)
FedEx is strongest in overnight delivery market while UPS is dominating the ground
parcel delivery market. The existing players have diversified their services to offer onestop shopping to customers. Thus new entrants have less chances of securing a
competitive position by specializing in any of delivery markets.
It should also be noted that the strong brand name and brand loyalty of customers puts
significant barriers to entry. FedEx, DHL and UPS have been operating over 30 years and
have successfully established a strong brand name and customer loyalty. Brand name
and brand image are so strong that it is impossible even for existing companies to
capture the market where rivals are strong.
Long term contracts and commitments also pose issues to new entrants. Existing players
have strategic alliances with giants like Amazon, Home Depot etc. Also the threat of
retaliation from existing players is very huge. (Abraham, 2007)
Threat
of
Substitutes:
The substitutes for air-freight are ground or ocean freight. Threats of substitutes are not
significant to the transportation industry as the existing players are adopting new
techniques and solutions to different needs of customers. People need to send parcels
from one place to another place whether it is raw material or final product. However, the
market where FedEx has strong foothold- overnight documents delivery is facing
significant threat of substitutes by emails, dot-com companies etc. Internet companies
are spending heavily to attract customers to digitalize their documents, and online forms.
Organizations are accepting digitalized signatures to cut time and money. (Porter. 2008)

Supplier
Bargaining
Power:
Supplier power is very strong in the transportation industry as the fluctuating fuel prices
affect the profitability of the industry severely. Thus oil suppliers are at a strong
bargaining position. There is a tendency in transportation to store fuel to hedge against
fluctuating prices.
However, the suppliers of boxes and packages dont have high bargaining power. Also,
because the rivalry in vehicle manufacturing in very strong and the firms are highly
fragmented this brings down their bargaining power. (Abraham, 2007)
Other suppliers such as aircraft maintenance providers and catering are in a position of
strong bargaining power due to high switching costs
Transportation firms are investing heavily in automation technology to reduce the
bargaining power of service providers. This automation technology helps automate the
package sorting process and makes the system more time and price efficient. Such
factors are very important for competitive advantage. It should be noted that the supplier
of information technology dont have sufficient bargaining power due to internal rivalries
and low switching costs. (Rainer and Turban, 2009)
Buyer
Bargaining
Power:
The switching costs for the buyers are low therefore they have sufficient bargaining
power. The high bargaining power of customers has created a fierce competition in the
industry to expedite their efforts to reach warehouses, storage houses and spare-parts.
Most of the firms are still unable to give the freedom to customers to choose their
transportation providers. They prefer to have contract with a transportation company in
diversified business to provide the shipping solutions.
Even for firms the switching costs of transportation firms is very low which places them in
position of strong bargaining power. It should be noted that with the help of aggressive
advertising the brand image of a transportation firm can be boosted to create personal
associations among buyers. Some firms are providing customized options such as open
account option which provides more benefits to the customers. (Porter. 2008)
Porters five force analysis for FedEx:
Value
Chain
analysis
of
FedEx:
The value chain for FedEx begins with the pick-up of packages where its employees
collect packages from different locations. Customers get value by getting ensured that
their packages are picked-up from anywhere and anytime. Customers get a money back
guarantee from FedEx if their packages are not arrived on time.
The packages are then transported to a central location called hub from where their
packages are sorted and sent to relevant destinations via trucks or planes.
For FedEx, the delivery of packages is of greatest value creating activity. The value of
these activities depends on the efficiency of drivers of trucks and planes and their ability
to deliver packages on time. (Rainer and Turban, 2009)
The final activity in the value chain is customer service. After sale service and support is
very important differentiating factor. FedEx provides tracking service to customers to
know about the route of their package and thus enables them to know the status of their
parcels and creates a sense of security.

Overall, the support activities such as infrastructure, information systems, buildings,

vehicles etc are very important for an effective value chain. Thus the primary activities in
the value chain, referred to as logistics are very crucial component.
The competitive advantage for FedEx in its value chain lies in the companys
infrastructure and information systems which allow package tracking offered by very few
companies. The enormous infrastructure of FedEx allows it to a have a very reliable
delivery service.
Development
of
Strategy
at
FedEx
Corporation
from
1973
to
2000
In the early beginning of this period i.e. in 1973, Federal express relocated its operations
at Memphis, by introducing the modern express industry. It started with the delivery of
186 packages to U.S. with the help of 389 and 14 airplanes. In the next year this firm
introduced FedEx Drop box. At was also noted as the first package delivery company to
serve almost every person in 48 States in the U.S. federal express also headed a lobby to
enable itself to use larger aircrafts without geographical restrictions and it succeeded to
get it passed from congress. It further expanded its services to 50 states and got listed in
on NYSE. Federal Express expanded its services further to Canada and opened its Super
Hub near Memphis International Airport. It announced to have earned one billion dollars
in 1983 without merger and acquisition. (Rainer and Turban, 2009)
During 1980s major strategic focus of FedEx was on expansion of its services to
Asia and European countries. The expansionary strategies involved mergers, acquisitions,
integration and purchasing of other business areas. The well-known acquisition of Gelco
Express international was a key step to enter in Asia Pacific. Later this unit was known as
FedEx Power ship. Technological improvements like SuperTracker bar code labeling and
scanning systems also helped FedEx to perform effectively. Moreover air services started
in six European countries also helped FedEx to step in European countries. International
purchases like Flying Tigers were also a part to expand its services outside U.S.
International accolades like Malcolm Baldrige National Quality Award, also helped
Fed Ex to boast its moral among international service providers. As United Parcel
Systems expanded its services to Asia using its own crafts, FedEx also got a chance to
expand the business in Asia and 200 other countries and territories. During 1990s
company focus was to make regular and loyal customer base outside U.S. One of the
greatest achievements was the delivery of 11.5 million packages to more than a million
customers in a single day and recorded $1 billion in a short time of nine years. This
growth was known as the fasted among the transportation companies. Further FedEx also
emphasized on the International Supply Chain Management, and started to provide
solutions to the global supply chain issues. (Abraham, 2007)
During mid 1990s one of the strategic focus was to brand Federal Express in
international markets. The introduction of word FedEx in 1994 helped this firm to mark
its recognition in international markets. Federal Express also introduced online websites
to enable customers to carry out business using personal computers. Using software
known as FedEx Ship was a technological development towards customer facilitation.
Other strategic focus involved stepping inside China. It also introduced its services in
Philippines by creating an Asia Pacific Hub and launched FedEx Asia One Network. FedEx
Ground marked its 100 percent success by assuring its services in North America. This
firm also acquired Caliber Systems and introduced a new channel known as FDX
Corporation. During the year 1988, United Parcel Services got the permission to operate
its own aircraft to operate the business across national boundaries. Further acquisitions
involved purchasing of Caribbean Transportation Services and in the mean time FedEx
announced to reach more than 175 countries globally. In 2000 services of FedEx were
divided into small independent business units to make the decision making easier, these

small business units involved FedEx Express, FedEx Ground, FedEx Global Logistics,
FedEx Custom Critical and FedEx Services. (Kotler, 2007)
Application
of
the
two
Classical Approach at FedEx

Schools

of

Thought

to

FedEx

Corporation

As according to the theory proposed by Whittington, the major focus of the firm adoption
the Classical approach is to earn profit through planning. During the early stat of its
business FedEx always wanted to have a return on its capital. I can conclude that as an
international business FedEx was focusing more to earn profits for short terms, and also
did its planning to capture more markets and improving the deficiency areas. Then after
some years FedEx started planning to earn profits in long terms through expansion and
acquisitions.
As the industry in which FedEx was performing, was very risky because of the huge cost
incurred in transportation and supervision. Therefore increasing profitability and
incentives were the major drivers to develop competition. Therefore FedEx started to
grow its business outreach across globe. Acquisitions and mergers helped this firm to
compete rivals and maintain profitability. Among many other transportation companies
FedEx was having a strong position and had a bargaining power, due to these
characteristics FedEx had a good reward for mergers and acquisitions. Horizontal and
vertical integration helped this firm to earn more profits without competition. An example
of Horizontal acquisition was of Flying Tires air fleet that was one of the greatest
successes for the firm. This firm also covered its profit inefficiencies by applying more
resources and capital to its operation. Huge investments were done in Asia and European
countries to carry out its business. All of these activities were targeted to earn a good
return
or
profit.
(Kotler,
2007)
Evolutionary Approach at FedEx
As the evolutionary approach never believes that only top managements skills
can contribute to earn more profits, FedEx also focused on the individual market
performances to do batter business and hence these individual market driven business
units contributed more in profits. FedEx adopted this approach in the late 1990s when
this firm decided to break its business into individual business units that will work under
the parent company FedEx. Therefore this firm was further divided into five sub units that
were enabled to work independently in international markets. This Evolutionary Approach
was based on the Cost Benefit Analysis on individual performances of business units in
different markets and geographical areas. (Abraham, 2007)
These days the firm is facing tough competition while performing in the
international perspective. Therefore the evolutionary approach is more suitable for the
firm to manage its strategic operations and implement key decisions. This is because of
the fact that choices are being narrowed down and bargaining power of this firm is
decreasing day by day and moreover FedEx has grown its business across different
international markets. So the firm has to perform as a best service provider to beat the
competition and survive in the changing technological environment.
Using
Processual
Approach
As this approach is base on the perspective to perform business in a way in a way that is
more applicable, we should make ideals and try to copy them but at the end business
can face difficulties in the variable environment. Thus the firm can make the business
and its services more competitive and ideal. Therefore FedEx has to cover many areas
where its operations are ineffective. The industry is affected by many factors most of
them are out of control, and the firm has to perform as a rational individual. FedEx has

not overlooked the factors that can vary the firms performance but it has tried to
decrease the human errors while performing the operations worldwide. (Kotler, 2007)
As a rational player in the variable environment FedEx has worked closely with the
changing environment to cope up with the competition. It has acquired many business
competitions and developed partnerships with several air transportation firms. While
playing in the international business environment this firm has also faced head-on
competition and took many bold decisions to acquire its competition and mergers. There
are few strategic areas; this firm has play covert politics such as the opening of its Sub
unit at Philippines to cater the vast demand in the Asia pacific. This firm also had
adopted the cultural variance as its core business value to deliver the best of its services
to the customers.
Conclusion:
Federal Express is one of the top service providers in the industry; this firm has to cover
its deficiencies in a very short time and has to adopt the leading technological trends in
introduced by the competition. Federal Express has to adopt a Strategy that is broader in
terms of its specifications and carry out its business by following the modern needs and
requirements both from customer and industry. It has to be very quick in availing the
opportunities across the globe as there are already competitors. A good suggestion
FedEx could be to expand its business and engage into luggage industry while other
opportunity could be of providing solutions for the other air traffic supply chain
businesses also, because this firm has a very good infrastructure as compared with its
competition. It has to work to develop itself as a strong business among the other strong
developing countries like China, Brazil and India.

HR Best Practices at FedEx, a Best

Company to Work For
Jan 8, 2010
January 26, 2008 Business Management Article

FedEx (NYSE: FDX), is among the 100 Best Companies to Work For in the US announced by FORTUNE
magazine and the Great Places to Work Institute. FedEx (the largest employer in 2008 list and only shipping
company included) now figures in this list in 10 of the past 11 years after being named to the Best Companies to
Work For Hall of Fame in 2005. FedEx was ranked as 97th overall. FedEx already has a reputation of being one
of the most employee-friendly companies in the world.

A History of Employee Commitment at FedEx

The history of FedEx goes back to 1971, when Frederick W. Smith felt the need for an airfreight system which
could deliver documents overnight. He decided to setup his own company to effectively serve this need. Smith
always believed that since FedEx was essentially a service organization, employees were largely responsible for
ensuring success.
FedEx was incorporated as Federal Express Corporation in June 1971 at Little Rock, Arkansas, US. Since it
began in 1971, its management focused on providing a suitable work environment that encouraged employees to
come up with innovative solutions. Such was the commitment of the employees to the company that, when FedEx
was going through severe financial difficulties during the first couple of years, the employees were prepared to
sell their personal belongings. They were also prepared to use their own credit cards to purchase fuel to deliver
the packages to the customers. Even when the employees didnt receive their salary on time, they continued
working with FedEx.

Human Resource Management (HRM) Best Practices at the FedEx Corporation

FedEx has developed several innovative human resource programs over the years. These programs have served as
a benchmark for many companies.

FedExs People-Service-Profit (PSP) philosophy

In 1973, Founder and CEO, Smith had developed and implemented FedExs People-Service-Profit (PSP)
philosophy. This philosophy was based on the fact that if FedEx took proper care of its employees, they would
provide efficient service to the customers. This in turn would benefit the company by generating more profits.

Survey-Feedback-Action Program or SFA Program at FedEx

The SFA program (a key employee relations and satisfaction program) helped management take decisions
regarding romotions. From its inception, the SFA was administered manually, but that changed in 1992 with the
introduction of online survey system in the US and other automations. Each April, every employee is asked to
participate in the on-line survey. After the results are gathered, managers hold feedback sessions with their
employees to discuss the survey findings and identify problems within and outside of their department.

Leadership Evaluation and Awareness Process (LEAP)

In 1988, FedEx devised a program known as Leadership Evaluation and Awareness Process (LEAP) to encourage
non-managerial cadre employees to move to the managerial level within the company.

Employee Communication Program

The employee communication programs implemented by FedEx included the SFA program, Guaranteed Fair
Treatment Procedure and Open Door Policy. FedEx also devised a mechanism to address and resolve employee
grievances. This was apart from employing a formal communication system to inform employees about the major
events taking place in the company.

Job Change Applicant Tracking System (JCATS)

JCATS is an on-line computer job posting system that allows hourly employees to post for any available job.

Recognition and Reward Program

FedEx rewards employees for their work with awards such as the Bravo Zulu and the Golden Falcon Award.
FedEx is an example of an organization that has created an effective HR strategy that supports productivity and
profitability.
Read related post on UPS: A bit of UPS history, some UPS and some downs
FedEx, HR Best Practices

Fedex's HR Practices
Since its inception, FedEx's management focused on
providing a suitable work environment that encouraged
employees to come up with innovative solutions.
Employees responded positively to the faith reposed in
them and displayed exemplary commitment towards their
work. The extent of the commitment of the employees
could be gauged from the fact that during the first couple
of years, when the company was going through severe
financial difficulties, the employees were prepared to sell
their personal belongings and use their own credit cards
to purchase fuel to deliver the packages to the customers.
Even when the employees didn't receive their salary on
time, they continued working with FedEx.
Smith believed that since FedEx was a service organization, its success depended heavily on its employees. Hence, in 1973,
he developed and implemented FedEx's 'People-Service-Profit' (PSP) philosophy. According to this philosophy, if FedEx took
proper care of its employees, they would provide efficient service to the customers, which would in turn benefit the company by
generating more profits. This philosophy formed the basis of all management decisions taken at FedEx...

Growth Opportunities
FedEx believed in promoting people from within for higher
management cadres. The SFA program helped
management take decisions regarding promotions,
though its utility was confined to evaluating the
performance of the managerial cadre employees only.
FedEx also provided opportunities to employees from the
non-managerial cadres to move up to the managerial
level. In order to encourage non-managerial cadre
employees to move to the managerial level within the
organization, FedEx devised a unique program known as
'Leadership Evaluation and Awareness Process' (LEAP).
This program was conceived in 1988, when FedEx observed that 10% of the non-managerial cadre employees who were given
managerial level tasks for the first time quit the organization within 14 months of taking up their new tasks. Under the LEAP
program, these employees got the opportunity to assess their ability to take up managerial responsibilities...