Case Analysis: Airborne Express (a), Harvard Business School.

Case Analysis: Airborne Express (A), Harvard Business School.Not so long ago, there was no such
thing as overnight express service and freight delivery. ThenFederal Express, United Postal Service
(UPS) and Airborne Express, among six second-tiercompanies, came upon the scene. In 1973,
Federal Express invented the concept of overnightexpress package, soon followed by the other two
largest express companies
–
UPS and Airborne,during the 1980s. The fast growth of the Express Mail industry was mainly due
to the success of the express delivery service. Thanks to Frederick Smith, a Yale undergraduate
back in 1965, whohad envisioned a whole different system on his economics term paper. Smith
proposed an airline
dedicated exclusively to express delivery of mail. Regardless of a “C” grade received on his
paper, Smith incorporated Federal Express in 1971and officially began operations on April
17,1973.Some of the features in the evolution of the Express Mail Industry includes but is not
limited tothe creation of the hub system and air express service. Created by Federal Express, the
hubsystem is the symbol of the modern air courier industry. It made possible the large-
scale,overnight deliveries and it has remained the standard operating method in use to this day. This
system allows air courier industry to ship all freight to the company’s central hu
b, where it issorted, and rerouted to its final destination. Also under consideration, the air express
serviceplayed an important role in the evolution of the Express Mail Industry. FedEx is the pioneer
inassembling a fleet of executive jets and modifying them to carry cargo. Integrators such
asAirborne have dominated this particular service by owning the airport that served as its majorhub,
and as a result, it did not have pay lending fee.In analyzing the Express Mail Industry structure
using Porter
’s Five Forces Model we can see
the efficiency of this model and how it shaped this industry. The five forces: Intern Rivalry,
Buyers, Suppliers, New Entrants and Substitutes are factors within Porter’s model that intensify
or weaken rivalry among direct competitors in an industry. For instance, Intern Rivalry played
afierce competition among competing service providers in the Express Mail Industry. Majorcarriers
competed by constantly cutting prices, in order to secure their market share, and byoffering
customer support, matching each other’s innovations. Airborne was known for its low
prices. It offered the lowest price of overnight, morning, afternoon and second-day
deliverycompared to FedEx and UPS, as presented on exhibit 8: List Prices of Express Mail
Carriers, onpage 21.Another significant force, Buyer Bargaining Power, also played a fierce
competition to providedelivery services for large corporations and companies. For example,
Airborne Express targetedits business customer, such as Xerox, that regularly shipped a large
volume of urgent items andneeded early arrival of its package. By customizing a service for each
Xerox package, with abarcode scanner that emits a special beep when scanned, Airborne could
make Xerox delivery asearly as 8 AM, thus developing a special relationship and winning Xerox
account in 1988.Equally important, Supplier Bargaining Power, in this case service suppliers,
particularly airport,aircraft and truck and maintenance, and airport services have strong bargaining
power. Taking
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PEST FACTORS:
POLITICAL:
 Next political elections and changes that will happen in the country due to these elections
 Strong and powerful political person, his point of view on business policies and their effect
on the organization.
 Strength of property rights and law rules. And its ratio with corruption and organized
crimes. Changes in these situation and its effects.
 Change in Legislation and taxation effects on the company
 Trend of regulations and deregulations. Effects of change in business regulations
 Timescale of legislative change.
 Other political factors likely to change for Airborne Express.
ECONOMICAL:
 Position and current economy trend i.e. growing, stagnant or declining.
 Exchange rates fluctuations and its relation with company.
 Change in Level of customer’s disposable income and its effect.
 Fluctuation in unemployment rate and its effect on hiring of skilled employees
 Access to credit and loans. And its effects on company
 Effect of globalization on economic environment
 Considerations on other economic factors
SOCIO-CULTURAL:
 Change in population growth rate and age factors, and its impacts on organization.
 Effect on organization due to Change in attitudes and generational shifts.
 Standards of health, education and social mobility levels. Its changes and effects on
company.
 Employment patterns, job market trend and attitude towards work according to different age
groups.

case study solutions

 Social attitudes and social trends, change in socio culture an dits effects.
 Religious believers and life styles and its effects on organization
 Other socio culture factors and its impacts.
TECHNOLOGICAL:
  Any new technology that company is using
 Any new technology in market that could affect the work, organization or industry
 Access of competitors to the new technologies and its impact on their product
development/better services.
 Research areas of government and education institutes in which the company can make any
efforts
 Changes in infra-structure and its effects on work flow
 Existing technology that can facilitate the company
 Other technological factors and their impacts on company and industry
These headings and analyses would help the company to consider these factors and make a “big
picture” of company’s characteristics. This will help the manager to take the decision and drawing
conclusion about the forces that would create a big impact on company and its resources.