Strategic Analysis of DHL International

Introduction
Organisations are increasingly keen to communicate and develop a set of corporate values
that defines the way that the organisation operates. Of particular importance are the
organisations core values. These are underlying principles that guide an organisations
strategy, and are based on an organisations overall business culture and values. Strategic
business planning involves developing the appropriate strategy that interfaces directly with
the organisations purpose and mission. An organisations strategy should provide adequately
for the development and strengthening of that organisations market position, enhance profit
maximisation, and contribute to the continuous development of the organisations product
offering (Lynch, 2000). However, implementing the wrong strategy can lead to a bad image,
which potentially affects its financial position or lead to bankruptcy.
This paper discusses the concept of strategic planning in relation to DHL Express, a wholly
owned subsidiary of Deutshe Post AG which completed a 100% purchase of the company in
2002, it is present in over 220 countries and territories across the globe, making it the most
international company in the world (Deutsche Post DHL, 2013a). According to Deutsche Post
DHL (2013a), the company employs 475,000 employees in more than 220 countries of the
world, providing a wide range of services to customers from parcel delivery to cargo delivery
targeting both Business to Business and Business to customer clients.
Task 1
a.
DHLs vision is to be The Logistics Company for the World, and it intends to achieve this
by transforming the logistics industry, and aiming to deliver beyond customer expectations.
DHL mission is to be the first choice for logistic services around the world by harnessing
scale and experience, its mission statement states:

We want to simplify the lives of our customers;

We make our customers, employees and investors more successful;

We make a positive contribution to the world; and

We always demonstrate respect when achieving our results (DHL, 2015b)

To achieve its vision and mission statements, DHLs strategy is to pursue three key
objectives, namely:

To become the provider of choice for customers;

To become the employer of choice for our staff and prospective employees; and

To become an attractive investment for shareholders (DHL, 2015a).

In 2014, the companys primary focus was to increase profitability and generate cash, and to
ensure that these objectives are achieved and that there are no digressions from these
objectives, progress on the achievement of objectives are regularly measured with the aid of
financial ratios which help to measure and control performance (DHL, 2015a).
DHLs core competencies lie in providing global air and ocean freight, customized logistics
solutions and project forwarding, backed by outstanding information technology systems and
e-business solutions (DHL, 2015c). These core competencies are based on personal devotion
and commitment, proactive solutions, and worldwide local strength, all of which are used by
the company with the objective of differentiating themselves from competitors (Musiolik,
2012). These values differentiate DHL from other organisations in the market.
DHL has four main divisions, namely: mail, express, global forwarding and freight, and
supply chain, each division formulates business strategies that are complemented by the
Group-wide strategic initiatives which enhance the achievement of these goals. Since the
organisation intends to be the first choice for international logistics and courier services, the
companys corporate strategy is based on its mission and vision, this strategy consists of six
main components that are connected with one another, namely:

To increase customer focus;

To improve on its capabilities by strengthening its local strength in countries where it

is present and driving innovation by developing new products;

To attract develop and retain talent;

To drive efficiency relentlessly: and

To be socially proactive (Deutsche Post DHL, 2013a).

DHL has four main divisions, namely: mail, express, global forwarding and freight, and
supply chain, each division has strategic priorities which contribute to the Group-wide
strategic focus. In the mail division, the mail and parcel strategy is to strategically stabilise
Earnings Before Interest and Tax (EBIT) through improved efficiency and investments in the
growing parcel business, while the express division has a focus strategy which is to grow
continuously with the time-definite courier (TDI) product and improve service, whilst
optimally utilising the network and increasing yield (DHL, 2015a). Also, in the Global and
freight forwarding division, the strategic priority is to develop a dynamic operating model
while sustainably growing in the difficult market environment, and in the supply chain
division, the growth through excellence strategic focus is grow profitably using its expertise
in outsourcing and emerging markets (DHL, 2015a).
b.
According to Mintzberg et al. (2003), strategic planning is a process in which an organization
defines its strategic direction, and makes decisions regarding resource allocation with which
to pursue the laid out strategy, it also includes control mechanisms that are used to the

implementation of the strategy. A strategic plan is a set of procedures that are undertaken with
the aim of developing a range of strategies that will contribute to the achievement of
organisational direction (Tapinos et al., 2005). In essence, strategic plans define an
organisations mission and direction, and its short and long term targets within the context of
its internal and external environments. In formulating strategic plans, it is important to
analyse the organisations environment with the aid of tools such as Ansoff matrix, SWOT
analysis, PESTEL analysis, Porters Five Forces model among others (Kim and Mauborgne,
2005).
The SWOT analysis technique helps an organisation to identify its Strengths, Weaknesses,
Opportunities, and Threats to be fully aware of its potentials for growth as well as that of
failure, and with such awareness, an organisation can develop a strategy that helps to separate
itself from competitors (Ferrell and Hartline, 2012). The PESTEL analysis technique
describes a framework of macro-environmental factors that are used for scanning the
environmental components for the purpose of strategic management; in particular it examines
the Political, Economic, Social, Technological, Environmental and Legal factors within an
organisations environment. According to CIPD (2013) the technique is an audit of an
organisation's environmental influences to derive information that can be used as a guide for
strategic decision-making, and it is based on the assumption that if an organisation can audit
its current environment and assess potential changes, it will be able to respond to changes
better than its competitors.
The Porters Five Forces model is used to analyse the competitive terrain within which an
organisation operates with a view to business strategy development which allows it to either
take advantage of the market or protect itself within the environment it operates (Ahlstrom
and Bruton, 2009). The Ansoff matrix is a business to which helps organisations to identify
the right growth strategy, it presents the product and market choices that are available to an
organisation (Lynch, 2000). Also known as product-market matrix, it helps in planning the
growth of a company, and it is a product market matrix in which the relevant market and
product are regarded as current and new, creating four combinations of product and markets
as shown in Figure 1 (Johnson et al., 2008).
Figure 1: Ansoff Matrix
Current Products

New Products

Current Markets

Market Penetration

Product Development

New Markets

Market Development

Diversification

Source: Prahalad, C. K. and Hamel, G. 1990. The Core Competence of the Corporation.
Prahalad, C. K. and Hamel, Gary, The Core Competence of the Corporation (1990). Harvard
Business Review, Vol. 68, Issue 3, p. 79-91 68(3), 79-91
The component strategies of the Ansoff matrix are:
1. Market Penetration The organisation focuses on selling their existing products and
services to their existing markets with a view to achieving market share growth;
2. Market development The organisation focuses on developing new markets or
market segments for existing products or services;
3. Product Development The organisation focuses on developing new products or
services for its existing markets; and
4. Diversification The organisation focuses on the development of new products to sell
into new markets (Lynch, 2000).
Although the matrix is not a one-size-fits-all, however, it provides the outline of alternative
methods with which an organisation can achieve its growth targets or mission (Musiolik,
2012).
Applying the Ansoff matrix to DHL shows that it already operates in more than 220
countries, its market is already expanded, it is currently differentiating its services from
competitors such as FEDEX, UPS, TNT and others (Musiolik, 2012). However, according to
Musiolik (2012), DHL can still access further markets where it is not currently operating by
entering into cooperative relationships with other smaller local parcel services which can
deliver goods for DHL in hinterland areas.
Market development is a core issue for DHL; this is because it allows the company to have a
global direction that enables the company to expand further and present new customer groups
with the services it offers (Musiolik, 2012). He explained that although there are potential
markets in underdeveloped and developing countries as well as emerging markets in the
developed countries; there is also ample opportunity for DHL to expand its market in current
markets.
Product development for DHL is still quite possible for DHL; notwithstanding, it already
covers a vast area of the logistics market, and a total redevelopment of the market is not
likely at this stage (Musiolik, 2012).
Regarding diversification, DHL engage in horizontal diversification by acquiring some
service providers which offer industry-specific services such as automobile leasing, which
could extend DHLs market range (Musiolik, 2012). One such acquisition is that of Exel Plc,
a UK logistics company engaged in air and ocean freight, and logistics, which has now been
integrated into the DHL supply chain and allows both organisations to integrate and
synchronise their supply chain processes in a shared arrangement rather than as processes.

In conclusion, the most potent strategy which DHL can follow is market penetration, with
continuous innovation, such as improvement in its business processes or new service
offerings, the company beat its competitors in the market place by guaranteeing efficient
service all the time every time.
1.3 Different planning techniques
There are different techniques that management can use to aide strategy planning and they
include:
a. BCG matrix
b. PIMS
c. SPACE
d. And directional policy matrices (Bob and Ron, 2010).

Figure 2: BCG Matrix

BCG matrix is often used to analyse organisations product portfolio, as a courier and
logistics company, DHLs senior management is responsible for developing the strategy that
is used to position the business to take advantage of future business opportunities. Other
issues that the organisations managers need to establish include decisions on whether the
organisation needs to venture into new markets and to determine which product is worth
investing in and which product or market they should exit. These strategic decisions will
directly affect the logistics of the DHL as a company. The companys product and market mix
can be analysed with the aid of the four quadrants in the BCG matrix which include: Star,
Dog, Question mark and cash cow.

According to Pfohl (2004), the BGC matrix uses market growth data as its environmental
component and relative market share, comparing this with the market share of the strongest
competitor as its corporate component. A product that is regarded as dog will not be worth
investing by DHL because their mission is to be an attractive company for investors to invest
in and to be the employer of choice for the talents. However, there are many organisation that
have several product portfolio that have the presence of dog on and but many organisation
would want to keep such product, perhaps for strategic reason, maybe it the product the
organisation start with and they feel it wont be nice to discard such product.
A star is a market or service that DHL must nurture and develop these must have the prospect
of becoming a cash cow, these are products whose growth feasibility is easily conspicuous. A
product that is regarded as star if not manage properly, could turn to a dog and would become
liability to the organisation. Therefore, sufficient funding must be set aside to provide
stability for the market or service. In markets or services that are regarded as question mark,
the organisation should select only those products with potential, and adopt cost-cutting
measures in promoting them. For instance, in maintaining customer and supplier relations,
the lowest cost saving approaches should be adopted, while inventory management and
valuation must be rigorously executed.
Porter five forces: Porter five forces is used to scan the environment and to see how the
environment is conducive for DHL to operate. A market that has strong market force wont be
conducive to operate and DHL must device strategic plans to outrun these forces.
Ansoff matrix: DHL can use Ansoff matrix to quarantine which market or product or any
new opportunity to invest on. It help organisation like DHL to know where they are, where
they want to go and how to get there. There are different ways organisation could use to
expand their business plan and to meet its goals and objective in the marketplace (Lancaster
and Massingham, 2010).
LO 2 (1)
Organisation audit for DHL
Organisational audit is an independent, objective analysis of an organisation which is
intended to add value and improve an organization's operations (Houston, 2010). According
to Houston (2010), organisational audit involves the evaluation of the internal factors of the
an organisation, and it helps an organisation to achieve its aims and objectives through the
application of systematic approach for the evaluation and improvement of risk management
effectiveness, control and governance processes. An internal analysis of DHL involves the
analysis of existing strategies whether they are suitable for the achievement of the
organisations objective or whether there will be a need for an adjustment in the strategies.
Product or Service Quality: The quality of a product can be established through a
benchmarking process in which the product or service is compared with a specific standard
within the industry or that of competitors (Bergman and Klefsj, 2010). Aaker and
McLoughlin (2010), argued that the only way to evaluate the quality of a product is actually

when it is used, and Bergman and Klefsj (2010) highlighted several dimensions through
which a product or service can be analysed in terms of quality.
Figure 3: Quality Dimensions of goods and service
Durability

Reliability
Access

Safety

Quality
Communication

Credibility

Environmental
impact
Responsiveness

Source: Bergman, B. and Klefsj, B. 2010. Quality from Customer Needs to Customer
Satisfaction, ed. Lund, Sweden., Studentlitteratur AB.
Brand Association: Brand association is another approach toward organisational audit, and it
is judged by customers that have come in contact with the product and have relative
experience of using the product (Ferrell and Hartline, 2012). A positive association can
contribute to the reputation of an organisation and a negative association can damage it
altogether. However, Nadin and Williams (2012) suggested that by conducting a survey of its
brand associations, an organisation can understand the perception of its product and services
from the customers perspective, which provides them with an opportunity to improve on
both.
DHL Quality of Service: DHL prides itself as the worlds largest logistics company, and its
major service is to deliver goods, parcels and mails all over the world. In facilitating the
delivery of services, DHL employ local staffs who speak the languages spoken within the
local market to ensure communication and feedback. For instance, in the European countries
in which DHL has terminal business centres, local staffs are engaged in logistics management
to ensure convenience and efficiency service delivery. According to Liu and Wen (2012), six
main factors can influence DHL service delivery: Individual skills and knowledge,
organisational system, equipments, technological processes, measurement and testing,
working condition. Over the years, DHL has made these of high importance in its strategy
implementation.
It employs high quality staff through its talent identification and management programme,
implements an efficient logistics management system, and procured a vast array of equipment
to facilitate its service delivery. It also procures cutting edge technology with the installation

of the latest hardware and software for package registration, identification and tracking
system. It also ensures the implementation of strategic human resource management
processes which will make happy employees. Liu and Wen (2012) highlighted that DHL
deployed a proactive solution which enables the company to respond faster and dynamically
to marketing and customer requirements, this has led to shorter delivery times, low cost
supply chain process and transportation improvement.
But then, DHL service is perceived as expensive compared to its competitors, and this has
been attributed to ports management and transportation facilities, urgent flight charters, its
expensive cutting edge logistics management technology, although, a positive aspect of this
technology is that mails will not get missing as long as it is logged into the computer. DHLs
Air freight logistics has assumed an important position in its supply chain management, and
this helps the organisation to keeping up with the pace of a dynamic market, while also
ensuring that there are no costly backlogs or that they are kept to a minimum (Liu and Wen,
2012). Also, Liu and Wen (2012) explained that DHLs global forwarding manages 330 ocean
freight offices around the world and it developed a long-term relationship with the different
carriers it collaborates with, this allows DHL to offer flexible delivery at competitive price.
Porters Five Forces Model and DHL
According to Porter (1980), the essence of strategy formulation is all about designing how to
cope with competition. To help companies analyse these competitive forces which are in the
market that which they have to contend with, Porter (1980) identified the five forces (figure
4) that shape the design of organisational strategy. These forces to be analysed include the
level of rivalry in the market, by examining buyer power, supplier power, the threat of
substitutes, and the threat of entry (Porter, 1980).
Figure 4: Porters Five Forces Model

Source: Porter, M. E. 1980. How Competitive Forces Change Strategy. Harvard Business
Review, 57(2), 137-145

DHL is global leader in the international express and logistics industry, it specialisation
involves the provision of innovative and customised solution through one single source.
Evaluating DHLs strategy using the Porters Five Forces involves analysing the level of
rivalry in the market, by examining buyers bargaining power, supplier power, the threat of
substitutes, and the threat of entry (Porter, 1980).
Level of rivalry in the market: These concerns the questions on how intense competition is
among the competitors in the market, and depending on the level of maturity of the market,
two types of rivalry can be identified:

Unsaturated market in this situation, there is enough space for all

competitors in a market that is relatively unsaturated, all firms develop
together (Lynch, 2000).

Saturated market in this market situation, there is intense struggle for market
share by market participants, and they engage in poaching usually through
price war.

There is intense rivalry between the participants in the international logistics and delivery
industry, apart from DHL, there are participants such as FedEx which has successfully
established itself mainly in the US and made a foray into the international market in 1984,
subsequently went on an expansion strategy through a series of acquisitions. UPS is also in
the market as the largest competitor to FedEx in the US and 175 other countries, there is also
TNT which is struggling to catch up with these major players.
Buyer Power: Customers want to receive value for their money, at a low price with very
high quality and functionality, however, different constraints face a market participant such as
customer satisfaction and choice of supplier (Reynolds and Lancaster, 2005). Switching
barriers notwithstanding, customers still have the liberty to choose among suppliers (Lynch,
2000). According to Lynch (2000) there are high and low switching barriers, low switching
barriers refer to those regulations which put the customer in a strong position as switching
between competitors is relatively easy with no impediments, however, high switching barriers
involve strong impediments to changing between competitors such as costs or term contracts,
however in the international logistics industry, there is intense competition among rivals in
the market, they constantly strategise to reach every warehouse and store house to retain them
as regular markets.
Supplier Power: According to Porter (1980), suppliers can exert bargaining power on
industry participants by increasing prices or reducing the quality of the good or service, hence
powerful suppliers can therefore squeeze profitability out of an industry that is unable to
recover cost increases in its own prices. Supplier in the international logistics market include
aircraft suppliers such as Boeing and Airbus, Heavy Goods Vehicle (HGV) suppliers such as
Volvo, DAF, Mercedes and Renault, suppliers of packaging materials and so on. All of these
have varying bargaining power to the logistics industry, for instance, the cardboard box
suppliers have the lowest power given that the equipment for manufacture can be easily
acquired and DHL will manufacture its own cardboard boxes. Aircraft and HGV and motor

vehicle suppliers have higher bargaining power since DHL cannot concern itself with that
industry.
Threat of Substitutes: Other products or services constitute a threat when they are
alternative products that cost lower or perform better and serve the same purpose. Substitutes
can potentially attract a significant portion of the market share and therefore reduce amount
of sales for current players, this also applies to complementary products Johnson et al.
(2008). Apart from other competitors, substitutes do not particularly pose a threat to DHL
especially due to the level of trust required to break into the international logistics and courier
industry.
Threat of Entry: The will be intense competition within an industry if it is relatively easy for
new entrants to enter the industry (Porter, 1996). A new entrant could pose a threat by
changing some major parameters in the market environment such as market shares, prices,
customer loyalty, and so on, at any time. Latent pressure for reaction and adjustment among
existing players would either result in positive or negative outcomes for participants in the
industry. The international logistics and courier industry operates on the basis of scale
economics, threat of entry can mainly occur through take-over and mergers, and this is potent
threat in any industry at any time. Other threat sources include poaching from other
competitors into the area of competitive advantage an expertise which can easily be achieved
by poaching staff or through research and development.
Environmental Audit of DHL
An environmental audit of DHL can mainly be conducted with the aid of the PESTEL
technique as DHL operates within the worldwide political, economic, socio-cultural,
technological, environmental, and legal environments (Johnson et al., 2008). According to
Goyal and Goyal (2009), three main objectives underpin environmental analysis, and these
are: (1) facilitating and fostering strategic thinking, (2) to provide inputs for strategic
decisions, and (3) to provide understanding on the changes in the environment that affect the
organisation. Hence, it is imperative for DHL recognise the potential impact of all these
external environmental forces on its business operations.
Political environment: DHL has access to several threats and opportunities available in the
political environment, and risks includes the highly regulated markets in the EU and other
countries in which it operates, liberalisation of international trade, international regulations
and restrictions, and the introduction of new technologies. The political environment is
probably the least predictable of all the external factors that a business has to operate in. DHL
has its headquarters in Europe, a relatively stable region politically, more than half of the
countries in the region are integrated within the European Union which is one of the biggest
single markets in the world for trade and investment. But despite this, DHL still has to cope
with a myriad of issues within the political environment, namely: bureaucracy, political
instability, customs tariffs, trade control, and several different laws, some of which are antitrust law, data protection law, competition regulation law, tax policies, import restrictions and
so on. All of these have ripple effect on the operations of DHL no matter the country it

operates in. The following are reasons for DHL to be concerned about political environment
because of the potential to affect its business strategy:

An unstable political system can affect market appeal;

Government always has a duty to protect public interest, and government legislations
affects the relationship between the firm and its customers;

Government actions will always affect the economic environment; and

Government is a main customer in the consumption of goods and services (Makos,

2015)

Economic environment: Several factors within the economic environment affect DHLs
operations in any of the countries it operates in. These include:

Inflation rate which affects the disposable income of consumers within the economy,
and which reduces the quantity demanded of available goods and services, a high
inflation rate leads to uncompetitive prices of goods and services, and hence poor
financial results for organisations.

Unemployment levels can affects business operations adversely, a high

unemployment rate means that fewer people than normal are working in the economy;
hence very few people in the economy can afford to purchase the goods and services
that are available in the economy.

Labour costs: A high labour cost translates to high operations costs, and this makes a
firms products to be more expensive compared to others especially imported goods
that enjoy government support in their home countries.

Low levels of disposable income can adversely affects the quantity demanded of
goods and services in any economy, and at the same time income a large disparity in
income levels can favour firms producing in the economy.

Interest rates affect the ability of businesses to borrow money from banks to finance
their business, this has potential effect on unemployment levels and disposable
income as well as a ripple effect back on the economy.

Monetary and fiscal policies refer to instruments used by governments to control the
amount of money in circulation, while fiscal policies consists of instruments used to
redistribute wealth among the population

Foreign exchange rates affect the prices of imported goods and services and the ability
of the local consumers to purchase them, a lower foreign exchange will make prices
of imported goods affordable for local consumers while government also needs to
watch out for the potential of encouraging dumping of substandard goods (Aaker and
McLoughlin, 2010, Johnson et al., 2008, Kozami, 2002).

DHL needs to be concerned with these and other factors to their minute detail in any
economy in which it operates because of their potential to derail its strategic plans, these
factors control the directions of any economy towards favourable or unfavourable economic
environment in which DHL has to operate.
Socio-cultural environmental forces: These refer to the forces and institutions that affect
the societal preferences, values and behaviours in a country (Kozami, 2002). According to
Kozami (2002), these include the various cultures which affect behaviour within the country,
gender and other connected issues, social lifestyles, domestic structures, levels of education.
According to Makos (2015), one of the most recent socio-cultural factor to e3merge in recent
times is the growing impact of social media through networking sites such as Facebook,
Googleplus, Instagram. These are powerful media that can affect the survival of any business
organisation. All of these determine the social and cultural structure of any society, especially
attitudes, opinions, and interests, and all of these affect the consumption of products and
services. Firms usually take advantage of socio-cultural factors to boost consumption, and
DHL can target festive periods to encourage families to use its services by sending gifts to
families back home, and the emerging Asian market is a potential target for the organisation.
Technological environment: The technological environment is an important factor in the
environment of a business (Goyal and Goyal, 2009). According to Goyal and Goyal (2009),
issues that a business should be concerned with in the technological environment include ICT
infrastructure and its application in e-commerce, e-shipping, energy and consumption costs,
changes in the market and so on. Technology and innovation are about the most dynamic duo
in the world of business today and DHL needs to regularly monitor these factors and how
consumers react to the changes that take place in the market.
Environmental factors: Environmental factors relate to the impact of greenhouse gases on
the atmosphere, geographical location, waste disposal, climatic conditions, energy
consumption, peoples attitude towards environment, and so on (Makos, 2015). The impact of
transportation on the environment is easily measurable, and pollution caused by increasing
human mobility and other activities continues to affect weather and other atmospheric
conditions that are important for human sustainability. DHLs activities has a high impact
factor on pollution of atmospheric conditions such as the ozone layer, it then has to be
conversant with legislations on pollution, as well as the weather condition of the countries in
which it operates and regularly assess how these impact its operations.
Legal factors: Legal factors within the environment concern the various legislative
frameworks which a firm must consider before accessing a market. In highly regulated
environments such as the European Union, legal frameworks are constantly changing and
organisations that operate in multiple countries such as DHL must keep abreast of these
changes. For instance, DHL needs to regularly consider that social costs within the society
must be weighed against its obligations to comply with taxation laws, complying with aircraft
noise laws, and emissions control standards, it must be seen to make concerted efforts
towards considering these issues always and every time.

All these factors will affect the strategic positioning, hence adequate and timely analysis of
these environmental factors is essential, since they are mainly external uncontrollable factors
that create both threats and opportunities for DHL, and there are no other alternatives than to
develop strategies for mitigating the risks arising from each one of them
LO 2 (2)
Significance of Stakeholder Analysis while formulating New Strategy in DHL
Stakeholder analysis involves the evaluation of the effect of stakeholders on an organisations
strategic direction. Weiss (2014) explained that stakeholder analysis is a pragmatic way of
identifying and understanding multiple and often competing claims of the various
constituencies surrounding an organisation. Specifically, stakeholder analysis enhances an
understanding of the relationships that exist between an organisation and these groups of
individuals and constituencies, and these relationships may be voluntary or involuntary, and
are either internal or external to the organisation, but they are all potential beneficiaries and
risk bearers of the organisations profits and losses (Post et al., 2002, Weiss, 2014). Further,
the interest of each stakeholder and their roles in are documented along with the relative
amount of influence wielded by each one of them in the affairs of the organisation, and since
such information are usually sensitive and confidential in nature, they should not be included
as part of the overall strategy formulation document but rather acknowledged.
There are diverse stakeholder groups in DHL, and these include customers, employees,
investors, suppliers, subcontractors, policymakers, administrative bodies and government
regulators, the public, opinion leaders, the media and NGOs; the organisation maintains
continuous dialogue with these stakeholders with the objective of developing deeper
understanding of their views and expectations, as well as to resolve current and emerging
social and business challenges (Deutsche Post DHL, 2013b). To sustain this objective, DHL
adopted a systematic approach toward stakeholder involvement; hence regular materiality,
inclusivity and responsiveness analyses are conducted in line with principles advanced by the
international organisation AccountAbility with the overall objective of developing a
Stakeholder Relations policy. A stakeholder map (see Figure 5) has been developed which is
used to hold determine the constituencies and individuals with who regular dialogue events
are held as stakeholders of the organisation, input from stakeholder relations activities
contribute to DHLs strategic focus in that it helps to define the thematic focus of its
corporate responsibility reporting. This activity fulfils the environmental scanning aspect of
strategic management.
Figure 5: Deutsch Post DHL Stakeholder Map

Source: Deutsche Post DHL. (2013b). Maintaining & Deepening the Stakeholder Dialogue
[Online]. Paris, France, : Deutshe Post DHL

LO2 (3)
Present a new strategy for the chosen business based on organisational audit and
stakeholder analysis
Based on the above analysis, a strategic direction is suggested as follows:
To steer the organisation in a new strategic direction, it is suggested that DHL from this point
into the future increase its strategic agility using a three pronged approach, namely:
systematic simplification and reduction of complexity, flexibility in internal structures and
processes, and innovation and continuous orientation to changing market requirements
(Karlshaus and Reckling, 2012). The concept of strategic agility refers to the ability to

continuously adjust and adapt strategic direction in a core business, as a function of strategic
ambitions and changing circumstances, and create not just new product and services, but also
new business models and innovative ways to create value for a company (Doz, 2014).
According to Doz (2014), the core capabilities which facilitate strategic agility include three
main strong points: the first is strategic sensitivity which refers to both sharp perception, and
the intensity of awareness and attention; second is resource fluidity which is about the
internal capability to quickly reconfigure business systems as well as redeploy resources
rapidly, and collective commitment which is about the ability of top teams to make bold
decisions.
The systematic simplification and reduction of complexity involves the simplification of
structures processes and systems since complexity in these areas of operation reduces
response to unstable changes in the market, hence reduction of complexity enhances
adaptability in strategic positioning which creates new challenges and opportunities in
strategic planning (Karlshaus and Reckling, 2012). According to Karlshaus and Reckling
(2012), flexibility enhances adaptability to continuous change and volatility, and this is an
essential for strategy formulation and implementation. When strategy is flexible, scenarios,
stress tests and continuous forecasts enhance strategic planning and risk management, and the
output is a robust strategy that allows the organisation to constantly realign resource
allocation, and thus be able to face whatever situation arises in the market and the economy
in general (Doz and Kosonen, 2008). Lastly, continuous innovation enhances an
organisations market power; in addition, a rapid and flexible supply chain boosts an
organisations competitive edge since it is able to adjust its operations according to changing
market dynamics and requirements (Karlshaus and Reckling, 2012). This is further enhanced
by the continuous identification and confronting of potential risks and opportunities that have
been identified from relevant trends (Karlshaus and Reckling, 2012, Kotter, 2014).
DHLs previous operating performance has been based on strengthening its performance in
three main areas, namely increasing customer satisfaction rates, developing share price
values, and motivating employees all over its four main divisions: mail, express, global
forwarding and freight, and supply chain. Through a strategy of combining operational
growth, market developments and harnessing global trends, the organisations has witnessed
positive growth in these divisions in the past years (Deutsche Post DHL, 2012b). According
to Deutsche Post DHL (2012a), through a sustained outlook towards strengthening its supply
chain to further its competitive advantage in this aspect of the industry, DHL has adopted a
close cooperative management of its divisions, and the increasing growing online market
place continues to present strong opportunities since this avenue has continued to drive
demand, thus increasing turnover in its parcel network. Through increased understanding of
its environment, DHL has been able to assess its position with regards to economic, political,
socio-cultural, legal, technological and environmental factors, and the company see no
foreseeable risk from the perspective of best case and worst case scenarios (Deutsche Post
DHL, 2012a).
Although, the organisation does not envisage any risk in the foreseeable future (Deutsche
Post DHL, 2012a), it is important for DHL to prepare for any unforeseen circumstances since

nobody expected the 2007/2008 global recession at the time it landed or its enormity and
ripple effects. That crisis sent several organisations and countries into a red balance with their
creditors, and DHL was not left out, hence DHL needs to stabilize its operational and
financial performance to bring itself back to pre-2007 performance which means it has to
optimise profitability and productivity by adopting the three pronged approach of strategic
agility in managing its four divisions and its supply chain. Thus, the organisation can embark
on a restructuring program which will aim to improve cooperation across its divisions,
standardize process workflows, establish new cooperation channels among units in its
organisation structure, and provide for redundancies where appropriate (Dooms, 2010). In its
geographic operations, since it already covers much of Europe, DHL can further reposition its
DHL Express division in emerging markets with a view to increasing market share, Asia and
the Pacific region can be targeted for this purpose as the growth potential here is enormous.
New networks of partnerships and cooperation in these two regions can enhance an
aggressive but cautious growth strategy for the organisation. In the area of IT, it is suggested
that DHL keep abreast of trends in the IT industry with a view to updating and upgrading its
software and hardware as necessary.
LO 3 (a)
Appropriateness of alternative strategies relating to market entry
Organisations will usually apply different strategies under different environmental conditions
based on its forecast of the future, the key alternative strategies for market entry are:
substantive growth, limited growth, and retrenchment strategies (Thompson, 2001).
Substantive growth: This strategy consists mainly of horizontal and vertical integrations,
and related or unrelated diversification. Horizontal integration refers to a merger with a direct
or indirect competitor with a view to increasing market share, while vertical integration refer
to the strategy of linking with another organisation in the same supply chain (De Wit and
Meyer, 2004, Thompson, 2001). According to Thompson (2001), related diversification
involves moving into an area where there are similar marketing or technology issues, this
usually occurs through acquisition, merger or via strategic alliance; on the other hand
unrelated diversification is a high risk strategy involving new markets, new products and new
technologies. These strategies are generally favoured for the following reasons: The
substantive growth strategy is usually favoured due to the potential for the organisation to
grow exponentially since it will have access to new resources such as capital, technology and
human capital (De Wit and Meyer, 2004). According to De Wit and Meyer (2004), another
reason for which it is favoured is the potential gain an increase competitive advantage over
other competitors in the market. There is as well an increased capacity for wealth creation
with the adoption of a substantive growth strategy, while they also enhance the prioritisation
of goals based on the extent to which the substantive growth can be achieved (De Wit and
Meyer, 2004). Perhaps the major disadvantage of the adoption of substantive strategy is the
possibility of violating governments anti-competition regulation, in which case where the
substantive strategy will create an organisation that is so big that it potentially the outcome of

the strategy is to create a monopoly, then government will consider overriding public interest
and block the strategic move.
Limited growth: This is also known as stability strategy in which the organisation attempts
to hold and maintain its present size or to slowly grow (Lussier, 2014). Limited growth
strategy, an organisation will engage in activities such as market penetration which involves
deliberately increasing market share by targeting new customers, promoting the product,
consolidating the business to protect the market, repositioning the brand or changing it
entirely with a view to increasing revenues, but the product basically stays the same (De Wit
and Meyer, 2004). Also De Wit and Meyer (2004) stated that the organisation can also engage
in market development by opening up new opportunities with different customers by
extending the range of products with a view to expanding the business with existing
customers. Product development is another area the organisation can foray into, and here it
extends the range of products in order to expand the level of business with existing
customers. A limited growth strategy will be favoured by an organisation because growth is
regarded as a primary indication of success, because a growing organisation increases it share
of the market and is usually expected to apply this increased volume to increase revenue and
greater profits as well as return on equity, however, some managers hesitate, and avoid
growing too quickly but rather prefer to adopt a more limited growth strategy (Johnson et al.,
2005).
Another advantage of limited growth strategy is that organisations avoid the high debt profile
that characterise rapid growth strategies
due to the fact that some managers go borrowing to finance organic growth (Mayer, 1994).
Most managers often find rapid growth to be quite burdensome since they have to balance
existing operations while they also have to manage expansion into new markets and regions
(Johnson et al., 2005). Also, enormous financial and logistical challenges involved in rapid
growth are rather complicated for skilled managers and much more for those with average
skills to efficiently manage, hence an organisation that was once lean and agile is forced to
adopt a business model with higher cost profile than it is used to (De Wit and Meyer, 2004).
Limited growth strategy discourages economies of scale as well as the savings that accrue
from a more elaborate growth strategy, and restricts the organisations ability to take
advantage of quantity discounts (Pun and White, 2005). Also, Pun and White (2005)
suggested that organisations adopting a limited growth strategy may face high daily operating
costs which could have been spread over bigger expense items had the growth been more
aggressive. Another disadvantage of limited growth strategy is that competitors may acquire
the proposed market share with their own rapid growth strategy before the organisation
makes its own move (Pun and White, 2005).
Retrenchment Strategy: Retrenchment strategy is basically a divestment strategy which is
aimed at reducing investment levels or market share (Lussier, 2014). According to Thompson
(2001), retrenchment strategy begins with the consolidation of an organisations operations,
either as a basis for turnaround of an organisation facing difficult times, or it is linked to the
divestment of non-core activities. It can also be a liquidation of the organisation or a part of it

or a bankruptcy option (Lussier, 2014) Lussier (2014) provided the reasons for which an
organisation will go into retrenchment strategy, namely:

Restructuring the organisation;

Eliminating businesses or branches that contribute insufficient value to the business;

Eroded markets; and

Evading the exposure of assets to political risks (Lussier, 2014).

Organisations adopt the retrenchment strategy due to various symptoms being noticeable
within the organisation, these include but are not limited to reducing profitability, falling
sales, reducing market share and increasing debt profile, (Kozami, 2002). According to Jauch
and Glueck (1988), an organisation will adopt a retrenchment strategy in the following
situations: The firms performance has reduced drastically such that it will be a waste to inject
any more funds; the firm has failed to meet its objectives implementing or attempting one or
all the other grand strategies in turn, and stakeholders are mounting pressure for the
organisation to improve performance; the environment is regarded as volatile, and its internal
strengths are insufficient to meet the problems; better opportunities in the environment are
perceived elsewhere, where a firm's strengths can be utilized.
LO 3 (b)
An Appropriate future strategy for DHL
The presence of DHL in 220 countries of the world has been supported by an aggressive
acquisition strategy with which it was able to boost its presence in the marketplace. To
support this strategy, the organisation intensified customer focus, delivered consistently
excellent service, extended capabilities, became attractive to talents, socially proactive and
relentlessly pursued efficiency in its entire operations (Liu and Wen, 2012). Thus far DHL has
been able to sustain its competitive advantage with the combination of resources and
development of competencies and capacities. With this, DHL is able to harness and apply its
resources by differentiating itself from competitors, operate more profitably through increase
in market share, this it has been able to achieve through its lean supply chain which is
concentrated on value delivery. In view of these achievements, the limited growth strategy is
suggested for DHL. This strategy is appropriate for DHL in view of its Strategy 2015 as
presented by Deutsche Post DHL (2012b), which focused on becoming a provider of choice
for customers, be an attractive investment for shareholders and the employer of choice for our
staff (Deutsche Post DHL, 2012b).
In implementing the limited growth strategy, should concentrate on market penetration and
development, innovative product development, forward integration all combined into a stable
growth strategy which are based on a strong approach towards divisional focus towards it
main divisions: mail, express, global forwarding and freight, and supply chain. It should also
implement enterprise wide initiatives that are applied to harness operations along the four

divisions, as well as leverage operations in a unified manner. The advantages of the limited
growth strategy far outweighs its disadvantages, hence, it should embark on positive
adaptation of market networks to changing market conditions while ensuring that costs are
flexible enough to compete with alternatives in the market. There should be regular review of
its IT architecture with a view to regular updates to support free flow of sorting equipment
and make the parcel delivery networks more fluid. Its IT architecture should also synchronise
the World Wide Web to enhance customers access and facilitate interactive services that have
been developed for their use which patronising the company on the internet.
Within the limited growth strategy, the organisation should engage in employee motivation
strategy since employees constitute the industrys main competitive advantage, regular
training programmes that help employees to improve their skill set must be made available
and appraisals must be geared more toward talent development rather than assessing
productivity. To guarantee sustained profitability, strategies geared toward customer loyalty
should be adopted and first hand customer opinion must be regularly collected and updated,
especially their opinions on newly developed and deployed customer solutions. For its freight
forwarding division, DHL needs to continuously expand its network with a view to
optimising its operations across the 182 countries it serves; regular reviews must have the
objective of optimising the networks. Also, its supply chain division needs to be structured in
such a manner that the organisation continuously improves its business with a view to
achieving profitable growth throughout the organisation. Finally, the organisation needs to
develop a database of customer experience with which new employees can be trained so that
the culture of customer service excellence can be sustained
LO 4 (1)
Responsibility and roles for strategy implementation
The various levels of management within an organisation are engaged in different roles and
responsibilities during the implementation of strategy within an organisation. According to
Sadler (2003), there are three key roles in strategy implementation, namely: envisioning the
future strategy, structuring the organisation toward delivering the strategy and embodying
change. Envisioning the future strategy refers to the focus of the strategy and the objectives it
is intended to achieve, these are then communicated to everybody concerned with the
implementation of the strategy on an enterprise-wide basis. Basically, the strategy is
communicated the stakeholders concerned with its implementation both within and outside
the organisation. The second role is that of structuring the organisation toward delivering the
strategy, this involves influencing everybody within the organisation by motivating them to
be committed to the successful implementation of the strategy. They must all embrace the
needed change that is necessary for the strategy implementation to achieve the pre-defined
objectives. The third key role is embodying change, this involves the implementation of
change programmes that are needed for the organisation to be able to implement the
strategies that have been formulated, hence the management of the organisation has a duty to
prepare the entire workforce in the organisation and prepare them towards the achievement of
the objectives of the strategy.

Sadler (2003) identified top and senior management, middle level managers and operational
managers as having responsibility for strategy implementation. The top management is
responsible for setting the long term vision and setting the strategy, they are involved in
making sense of the strategy, making adjustments where necessary, interpreting the strategy
and communicating it down to senior management who supervise the deployment of
resources that are necessary for the strategy implementation. The middle level management
set medium term strategies that are necessary for achieving the long term strategies and
monitor the operational managers during strategy implementation. Operational managers are
the lower level management and are responsible for operational implementation that support
the strategies, supervise lower level staff and communicate implementation progress back to
middle level management who then pass same to senior management. External stakeholders
such as government, suppliers, resellers and consumers all have their roles in strategy
implementation. Communication and feedback are both essential aspects of strategy
implementation.
LO 4 (2)
Resource requirements needed for strategy implementation
Specific resources are usually required for strategy implementation; they usually differ
among organisations and are based on the nature of business, organisational requirements and
the business environment Johnson et al. (2008). Resource requirements for strategy
implementation in DHL are financial, human, organisational, and environmental resources:
a. Financial resources: Strategy is usually supported by a budget that shows the
financial outlay over a specific period of time. Without finance, a strategy will just be
a mere piece of paper, and cannot be converted to physical activities. Financial
resources can involve using retained earnings, issue of shares or obtaining bank loans.
With its vast operations in 182 countries, DHL requires vast amounts of financial
resources to implement its varying strategies in its four divisions.
b. Human resources: Human resource is important for strategy implementation since
they are in charging of converting strategy into actions through their acquired skills
and competence. DHL is in an industry that is human resource intensive, and it will
need to regularly asses its current workforce to know if they need training or whether
new employees are needed.
c. Organisational resources: These are infrastructure which includes warehouses and
other mobile assets including other physical assets such as ICT framework which
support the operations of the company, and buildings that are used for administrative
support works. There are also inter and inter-organisational relationships and
alliances.
d. Environmental resources: Environmental resources include the immediate
community within which the organisation operates as well as earth-based resources.
LO 4 (3)

Contributions of SMART targets to the achievement of strategy implementation

Targets or goals are an important aspect of the strategic planning and implementation process
since they help organisation managers to highlight the connection between strategic visions
and achievable reality (Cassidy and Kreitner, 2009). According to Cassidy and Kreitner
(2009), to be realistic, targets need to foster commitment, and enhance motivation, hence they
must be SMART (Specific, Measurable, Achievable, Realistic, and Time-bound). In essence,
a strategy must be SMART for it to be implementable, and the objectives realisable,
according to Bogardus (2006), SMART goals are a basis for measurement, and help managers
to confirm whether or not strategic goals are achievable. This means that a strategy must be
Specific, in which case it is clear, concise, and its objectives must be laid out in detail
(Bogardus, 2006). Bogardus (2006) also explained that measurable strategic goal should
concentrate on specifying the end result of the strategy, such as work completed and this can
be compared with preset strategic objectives. Achievable strategic objective means that goals
can be difficult yet can be accomplished, while relevant strategic objective highlights that
targets must be suitable for the role and the individual to perform the tasks within the
objective, and time-bound means that targets must provide key points at which particular
targets must be met as well as the deadlines for the achievement of the whole strategy
(Bogardus, 2006).