DHL

External Analysis
 Company Overview
 DHL is a wholly owned subsidiary of Deutsche Post
World Net . The company offers expertise in
express , air and ocean freight , overland
transport , contract logistics solutions as well
as international mail services .
 DHL links 120 , 000 destinations in more than 220
countries and territories . The company provides
services from a network of about 6 , 500 offices ,
and it employs a fleet of nearly 76 , 200
vehicles and about 420 aircraft .
 The company operates through four business
divisions : DHL Express , DHL Freight and DHL
Global Forwarding , DHL ExelSupply Chain and DHL
Global Mail .
 1. Apply the five forces
model to the industry in
which your company is
based. What does this model
tell you about the nature of
competition in the industry?
 Porter’s Five Forces
Model
Risk of Entry by Potential Competitors

gaining Power of Suppliers Bargaining Power of Buyer

Intensity of Rivalry among established firms

Threat of Substitutes
 Risk of Entry by
Potential Competitors
Low due to:


• High cost of entry

• High existing brand loyalty amongst

consumers

• High absolute cost advantage

• Customer switching cost

• Government Regulations

•
 Rivalry among
established companies
High due to:


• Similar industry competitive structure

• High industry demand

• High cost conditions

• High exit barrier

 Th re a t o f Su b s t it u t e
Pro d u c t s
Substitute Products
are the products from
different businesses or
industries that can
satisfy similar customer
needs .
 Threat of Substitute
Products
Low due to:


 High barriers to entry

 Lesser new entrants

 Lesser substitutes
Bargaining Power of Buyers
Refers to the ability of buyers to bargain


down prices charged by companies in

the industry or to raise the cost of
companies in the industry by
demanding better product quality and
service.
Bargaining Power of Buyers
High due to:


• High dependence in consumers

• Switching cost is low in this industry,

however for DHL, the company has
high brand loyalty due to good and
consistent services in delivery.
 Bargaining Power of
Suppliers
Refers to the ability of suppliers to raise


input prices, or to raise cost of the

industry in other ways, for example, by
providing poor-quality inputs or poor
service.
 Bargaining Power of
Examples of Suppliers
 DHL suppliers:

- Planes and Transportation:

- Powerful
- Low number of substitutes due to low
number of suppliers

- Packaging and Labeling:

- Less Powerful
- High number of substitutes due to
high number of suppliers
 Nature of Competition
• Intense competition
• Competitors have similar business
nature to one another
• DHL strives to serve consumers better
in order to maintain their position as
one of the leading logistic company
in the industry
 SWOT

Source: DHL Company Profile (2009). Retrieved from www.datamonitor.com

 2. Are any changes taking
place in the macro-
environment that might have
an impact, positive or
negative, on the industry in
which your company is based?

If so, what are these changes,

and how might they affect the
industry?
 Changes in the Macro-
Environment
• Technological Forces (Positive)
• Changes: Incorporate technology
in the
operating systems

• Effect: Safely delivering goods in

a fast
manner
 Changes in the Macro-

Environment
Social Forces (Positive)

Changes: GO GREEN!
 Effect: New delivery methods to
satisfy current consumer trends
Source: Top 50 Supplier Chain Partners (2010). http://www.inboundlogistics.com/digital/top50green_digital2010.pdf
Changes in the Macro-
Environment
Social Forces


(Positive)

 Changes:
Increase trend
of online
shopping


 Effect:
Creates
business
opportunities
for logistic
companies
Changes in
the Macro-
Environme
nt
• Political
and
Legal
Forces
Source: 
DHL website.
http://www.dhl-
usa.com/resources/Prohibit
ed_Restricted_Commoditie
s.pdf
 Changes in the Macro-
Environment
• Global Forces (economic)
• Changes: Rise in fuel prices
• Effect: High operating cost

• Changes: Unpredictable natural disaster

• Effect: Disruption of transportation and
communication

 3. Identify any strategic
groups that might exist in the
industry.
How does the intensity of
competition differ across
these strategic groups?
 Strategic Groups
 Strategic Groups are groups of
companies that follow a business
model similar to other companies
within their strategic group – but are
different from that of other
companies in other strategic groups.
•
Prices Charged Strategic Groups
Market Leader
- DHL
-FedEx
-UPS
- TNT


Market Follower
- Skynet
- Kangaroo
-Gdex

Re lia b ilit y
 Strategic Groups
 Difference in intensity of competition across these
groups
 4. In what stage of its life
cycle is the industry in which
your company is based?
What are the implications of
this for the intensity of
competition both now and in
the future.
Life Cycle
 Mature Life Cycle
• Market totally saturated with
low to no growth:
• Industry consolidation based
on market share, driving
down price.
DHL is in t h e lo g is t ic In d u s t ry wh e re
t h is in d u s t ry h a d m a t u re d d e lib e ra t e ly
b e c a u s e e n t ry in t o t h e m a rke t is
d iffic u lt , ye t in it ia l c o m p e t it o rs a re
s lo wly g ro win g .
• Now
Life Cycle
• DHL is an established brand hence they fall
under the mature stage. DHL should
prevent from falling into the declining
stage by securing and increasing their
brand loyalty.
• This promotes higher entry barrier and less
new entrants will enter the market. Then,
competition is lower.
• Solution:
• Maintain as a market leader by
providing the same high quality
services to keep consumers coming
back.
• Build close long term relationship with
the suppliers.
 Life Cycle
• Future
• Keep being innovative by coming up with
more competitive advantage like
developing new technology, service etc.
• Focus more on CSR as consumers are
more concerned with global warming
and climate change.
• Ensure competitiveness by keeping track
of competitors’ actions and strategies
and also, consumers changing needs
and trends.
• Consider joint ventures project
(e.g.: currently with UPSP)
 Conclusion
By a n a lyzin g a n d u n d e rs t a n d in g t h e d yn a m ic
m a c ro - e n viro n m e n t , DHL is a b le t o id e n t ify
wh ic h o f t h e fo rc e s h a s t h e g re a t e s t im p a c t t o
t h e c o m p a n y a n d it s in d u s t ry.

By h a vin g a c le a r u n d e rs t a n d in g o f t h e
e xt e rn a l a n a lys is , DHL will kn o w wh e re it s
c o m p e t it ive p o s it io n lie in t h e in d u s t ry, t h e
c u rre n t m a rke t t re n d s a n d it s c o m p e t it o rs ’
s t ra t e g y in o rd e r t o g e n e ra t e a s u c c e s s fu l
s t ra t e g y t o s a t is fy t h e e xp e c t a t io n o f
c o n s u m e rs in o rd e r t o c o m p e t e .