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Team Bethoveen

Team Bethoveen. MGT 693 Spring 2008. Agenda. Value Chain Industry Analysis Airborne Strategy Recommendations Current Situation Update. Express Mail Value Chain. Express Mail Companies -Fed Ex -UPS -Postal Service -Airborne Express. Sorting Facilities -Hub & Spoke.

Mercy
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Team Bethoveen

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  1. Team Bethoveen MGT 693 Spring 2008

  2. Agenda • Value Chain • Industry Analysis • Airborne Strategy • Recommendations • Current Situation Update

  3. Express Mail Value Chain Express Mail Companies -Fed Ex -UPS -Postal Service -Airborne Express Sorting Facilities -Hub & Spoke Ground Transportation -Vans -Trucks Air Transportation -Cargo planes -Hub & Spoke Customers -Businesses -Individuals Destination -Businesses -Individuals

  4. Industry Analysis • Rivalry • Fierce Competition • Price is Basis for Competition • Threat of Entrants • Strong Brand Images • Access to a Large Fleet of Transportation Vehicles • Long-term Contracts with Customers • Threat of Substitutes • Low Threat of Traditional Substitutes • Technology is Creating a New Threat

  5. Industry Analysis • Power of Suppliers • Fuel Suppliers • Packaging Equipment • Service Suppliers • Power of Buyers • Moderate Power due to Price Competition • Dependent on Technology, Service, and Speed

  6. Airborne’s Differences & Sources of Advantage • Owns Hub Airport in Wilmington, OH • Operates nation’s only foreign trade zone in Wilmington • Less automation, more human resources • Runs aircraft 80% full • Shippers/Receivers in major metro areas • Majority afternoon & second day deliveries

  7. Airborne’s Differences & Sources of Advantage • No retail service centers • Pick-up and delivery by consultants • Pick-up and deliver more parcels per stop • Later delivery times • Lower customer service levels • Technology not always “cutting edge”

  8. Recommendations for Airborne and Robert Brazier • Strengthen its alliance with RPS • Form a similar alliance with an international partner • Follow the industry lead and move toward distance-based pricing • Continue to focus on cost-savings strategies to remain low price leader

  9. Recommendations for Airborne and Robert Brazier • Continue a targeted marketing strategy aimed at logistics managers, etc. • Maintain the niche philosophy-- “Since we can’t be all things to all people, we’ll pick our kind of customer deliberately.”

  10. Enters Fortune 500 Start of ground service Airborne@Home alliance with USPS 10:30am Delivery, Airborne.com services Shareholders approve DHL acquisition of $1 billion 1998 1999 2000 2001 2002 2003 Purchased by Van Gend & Loos Euro Express Acquires Airborne Express and begins to integrate it into DHL Deutsch Post World Net (DPWN) acquires majority shares (51%). Remaining shares purchased in 2002. Old and new DHL merge Timeline: Airborne Express and DHL

  11. DPWN and DHL today • Initial high cost to expand ground network to catch-up with FedEx and UPS • No longer expect to meet target break-even of 2009 • Struggle to integrate Airborne Express into DHL • Write down of fixed U.S. assets • $800 million in 2006, $900 million in 2007 • Annual losses of nearly $1 billion • $25 million class action settlement • Paid to contractors over payment system trouble

  12. The Future of DHL • John Allen, new CFO of DPWN (Nov ‘07) • Focus on cutting costs and pleasing investors • Rumors • DPWN may give up control of DHL • Await 2007 Annual Report (March 6, 2008) • FedEx to acquire DHL? • Anti-trust issues • FedEx 49% of U.S. Market Share • DHL 9% of U.S. Market Share

  13. Questions?

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