Fedex Vietnam Strategic Annalysis Marketing Essay

Fedex Vietnam St prisegic Annalysis Marketing EssayEstablished in 1973 nether the physique Federal extinguish by fo chthonian Frederick Smith, the play a gigantic quickly became starring(p) transfer emolument provider. In 1994, the friendship changed its mane to FedEx Corp.Nowadays, FedEx Corp includes heptad subordinate companies that be FedEx Ground, FedEx Freight, FedEx Kinkos, FedEx Customs Critical, FedEx Trade Net fix and FedEx Service. These companies focus on its philia serve nonwithstanding withal support from separately one new(prenominal) in providing client with full prototype of transportation gos and logistics.FedEx is discussion more(prenominal) than 3.6 mil softw bes a day and is genuinely famous for its slender dish ups and for the innovation that it brings to the world of transportation.Eng-logo-4C.jpgFedEx Express operates with 2 sub-companies, which argon FedEx Express International and FedEx Express US Domestic, FedEx Express is providin g its dish ups to more than 220 countries and territories worldwide. d let the stairs FedEx Express International argon 3 Regional Divisions which argon FedEx LAC (for US, Canada and Latin Ameri trick), FedEx EMEA (for Euro, Middle East and Africa) and FedEx APAC (Asia peace-loving region). FedEx Vietnam get goings to FedEx APAC Division (Federal Pacific Inc) with head seat in Hong Kong.Mission and StrategyMissionFedEx Corporation go forth arrive superior pecuniary returns for its oerlap avouchers by providing luxuriously value-added logistics, transportation and related bank line work through foc officed operate companies. Customer requirements impart be met in the highest type manner appropriate to each market segment served. FedEx leave behind strive to develop mutu anyy rewarding relationships with its employees, married persons and suppliers. Safety exit be the firstborn consideration in all subprograms. Corporate activities give be conducted to the highest ethical and professional shopworns.1With this mission statement, FedEx defines the industry it develop the business, the financial returns for sh atomic outcome 18owners, relationships with shargonholders. FedEx similarly pull out for high tonus and professional standard as hearty as safety to compete and develop the business.This mission is also going with P-S-P philosophy which stand for People Service Profit sum FedEx focus and invest in People and believe that totally outflank people cigarette create valuable helping. And certainly, valued go willing bring money to the political party.StrategyFedEx also defines the objectives which must work seamlessly and concurrently on three take aimsCompetition collectivelycompete by stand as one brand worldwide. Just one FedEx brand and plow one voice.Operating must be independentby counsel on independent worldwide profits to meet client involve.Managing collaborativelyby running(a) together to constitute loyal re lationships from workforce, guests and investors.FedEx Express in VietnamBusiness autobiographyFedEx has open up its routine in Vietnam since 1994, right after US presidency lifted the trade embargo to Vietnam. Its business model in Vietnam is spot in which FedEx returnss be provided to nodes through FedExs partners. And FedEx world(a) process partner (GSP) in Vietnam was Post and Tele parley Express JSC a connection belong to Vietnam Post Corporation which has nationwide network for clopup and sales talk until 2009. Since then, the beat with this GSP was terminated and Seabornes and Danatrans were appointed to be new GSPs in Vietnam.At the uniform term of launching its table redevelopments in Vietnam, FedEx substitute authorization was opened. The office role is to carry out market research, coordinate the communication among FedEx in VN and former(a)(a)wise countries, facilitating the employation of contracts/agreements between FedEx Pacific Inc and early (a) Vietnamese organizations to a lower place the agency contract, the GSPs provide manpower, facilities, and vehicles to bring FedEx service to customers. It is also responsible for(p) for usance crystalliseance site for import and export activities. FedEx agree responsibilities of all gross sales and merchandise activities. It also supervises and supports GSPs in qualification the service meet with FedEx global standard and customers requirement. These supports include barely not limit to customer service, informatics technology, pricing, billing. soon FedEx Vietnam provides rustic wide services with 2 principal(prenominal) post in capital of Vietnam and Ho khi Minh city but subscribe to service is serious now provided to major provinces/cities.The post in Ho khi Minh City custodys all inbound and outbound shipment to and from the south of Vietnam (southern of Hue). It has its own gate for springer headroom and 4 world service centres.The station in Hanoi hand les shipments to and from north of Vietnam. Beside its own gateway in Hanoi, it also has 3 world service centres for walk in customers.FedEx is providing direct pick up and salvey service to all major cities/provinces in Vietnam. For the other areas, the pick up and deli truly is made by using home(prenominal) convey service of Vietnam Post Corp.Mission and ObjectivesMissionFedEx Vietnam together with its partners will implement FedEx philosophy People-Service-Profit. We will be market leader with the opera hat international express service at global standard. We will gain do good pes on our core business competitiveness and the qualification of the enthronization in Vietnam. We will bring customer with satisf transaction for each and invariablyy transaction. (FedEx Vietnam Mission statement)Main objectivesStandardize service in Vietnam at global standard by having its own employee to generate service to customer. travel customers flower in mind express serviceAnnual su ppuration rate at 15%In the context of current period out in developed countries, these are challenging objectives. The downturn in industrial countries will lead to a decline in export of ontogeny countries and Vietnam is not an exception. Demand for transportation of export commodities is predicted to be declined until 2014 along with a weak economy.To maintain the annual growing at 15%, FedEx needs to some(prenominal) extend the operation to new markets and expand its market share at current service area by promoting its competitive advantages.This is a hard time for all companies in air express industry, but it can be a beloved opportunity for FedEx to consolidate its locating oer the competitor. Competitive advantage is the key and more than ever a right strategy to promote competitiveness is precise critical to FedEx. shapingFedEx Representative OfficeWith the roles to support and supervise GSP in providing FedEx services to customers, FedEx voice office is organized a s operable model.Figure 9 FedEx VN representative office organization chartCountry private instructorHAN subprogram autobusHAN gross salesManagerHAN ramp managerSGN OperationmanagerHAN CSmanagerSGN CSmanagerCountry coordinatorSGN ramp managerSGN salesManagerInside salesManager revenue enhancement opsManager accountancyManagerMarketingManagerTechnology serviceManager aspire reportIndirect report inception FedEx country Review, 2011At top of the representative office is Chief Representative, Senior Manager for FedEx Indochina and Myanmar who has very good knowledge more or less market, culture and working style of Vietnamese people. He directly manages operation function and also gets indirect reports from other practicable pigeonholings.Operations This sort out includes station operation (for pick up and delivery), gateway operation (for customs head), ramp operation and customer service operation. The group is responsible for managing all operation activities in accorda nce to FedEx service standardAirport ramp This group is under operation and responsible for air cunning operation include loading and unloading of shipment on/from air fraud, landing/take off paperworkCountry Coordinator Admin the communication to all GSPs in Vietnam, Laos, Cambodia and Myanmar on policy, standard eventsSales This group report to regional sales. They are responsible for sell FedEx services to customer.Marketing Perform market research, design and implement market plan under direction of regional market way.Billing and accrual Control all GSPs invoicing and collecting activities. All customer debts are managed by this group.Accounting Control all payment transactions of FedEx in Vietnam and transact all other accounting activities.Technical service Responsible for FedEx communication network, customer technology solutions.GSP organizationGSP has two independent groups to work at FedEx agency in Hanoi and Ho Chi Minh city. They both report to Seabornes head office. and in daily operation, they are under prime of FedEx functional groups from representative office.The squad in Hanoi includes 69 GSP employees with 1 General Manager and 4 functional managers.In Ho Chi Minh number of employees is 125 with 1 General manager and 7 functional managersBusiness result overviewFigure10 FedEx Vietnam receipts from 2006 to 2011(Unit 1000 USD)Source FedEx country suss out 2011As indicated in Figure 10, FedEx had very good issue in revenue. Total revenue grew by 3 times from 2006 to 2011. The revenue change magnitude at 100% in 2008 after FedEx up gauged it feeder capacity from 3 tons to 6 tons to Ho Chi Minh city. FedExs core products International antecedence (IP) and International Priority Freight (IPF) are the main contribution. After the sharp increase in 2008, revenue of these core services grew steadily at 10-12% a year.Revenue of IXF (air port to airport) service took a relatively small part of total revenue. even so growing rate of this product has been extremely high since 2009 when the company sell this service to close to forwarders to explore their existing customers.Figure 11 FedEx business writ of execution from 2006 to 2011(Unit 1000USD)Source FedEx country review 2011Figure 11 shows both revenue and profit of FedEx on good growth. only with increased ratio of IXF shipment (which are low yield per kg for handsomeger shipments), expense was getting extensiver and made profit growing rate in 2009, 2010 and 2011 lower than revenue growing rate.Strategic AnnalysisInternal Factor Evaluation (IFE)Human alternativeThe philosophy P-S-P (People-Service-Profit) is cornerstone of FedEx. This can be considered a success cycles of FedEx in which the company take care of its employees and assist them in generate beautiful service to customer. That brilliant service in return brings Profit to FedEx and enables the company to take a better care to its work force. Thank to this, FedEx is many another(preno minal) times voted as most admired company by probability Magazine. In many major markets in LAC and APAC, FedEx is voted as one of the outgo companies to work for.Bring that philosophy in business, FedEx attracts a very excellent team for its representative office in Vietnam.Figure12 FedEx rep office forcefulness (Experienced and Education)Source FedEx VN HR profile.Figure 12 shows number of FedEx employee divided by work group and education/experience categories.All FedEx managers (1 senior manager and 6 managers in Ho Chi Minh city, 4 managers in Hanoi) are very experienced in express industry.Sales team is tender but very aggressive in selling with 10 for Ho Chi Minh city and 5 for Hanoi.Ramp team includes two groups with disturb number of employee, one at Noi Bai airport and the other one at Tan Son Nhat airport.Functional group include employee at marketing, accounting and billing/collectionAs reflected, 100% FedEx representative office employees are graduated with 29.31% of the employees are holding master degree. With this laborious back back end knowledge and excellent human development programs through training, couching all FedEx employees are intelligent and knowledge in the field that they are responsible. just about of FedEx employees kick in long term commitment with the company. Many of them stay with the office since it was established. The package make and the reward program at FedEx not only keep its employees commit to stay a long time with the office, but also assist them to perform their best in daily job.But in contrast, the FedEx GSP is a Vietnamese and young company so the recruitment, human resource policy is very different. This leads to poor reference of the work force and shams to the image of the company in Vietnam. Employees in many cases are not care about productivities. Their attitude in making service is not very such(prenominal) acknowledged and appreciated by customers. This hit the level of FedEx service in V ietnam.However in recent years, with the changes of GSP management and higher necessitate from customers, well-nigh positive changes have been made. The GSP frontline managers and employees attitude to customers and to the service flavour issue has been improved. Those employees that could not adapt to this change have been replaced. This in long run will have positive contribution to FedEx operation. But in short term, high turnover of employee impacts to the operation, especially when the new one deficiency of experience.Over all, the working learnings of GSP employees are met with job requirement. However their English is not so good. curiously the couriers who are directly enforce shipment for customers. This is room for improvement that FedEx can do to further standardize its service in Vietnam.FinanceFedEx Vietnam is a dependent branch of FedEx Pacific Inc. All finance planning and management is performed at division level. The two major finance activities that done at local level are customer debt management and operation damage management.Customer debt managementAt FedEx, 90% of the shipment transportation charges are billed to customer accounts and the billing options can be to shipper, to consignee or to tercet party. That makes it very commodious for customer to ship with the company. But on the other hand it brings risk to the company if the payers refuse to pay and the re-bill is done in late (Shipper must takes the final responsibility to pay transportation charge when using FedEx service. In case the charge billed to recipient or 3rd party but payer refuse to pay, then it will be billed back to the shipper).Under agency contract GSP takes responsible for collection of the debt from customer. However their limitation in managing this area makes the on time collection of the payment is not high. Bad debt at 2% and over overdue debt at about 15% lower the working swell.However as reflected in Figure 11, FedEx revenue is increased year on year and the company has a good profit ratio. In addition, with FedEx Pacific Inc as a mother company, FedEx finance is on strong institute.Operation woo managementThough most of the ground operation be are covered by GSP under agency contract, at that place are areas for FedEx to control and save cost. They includeCost for using commercial fledges (where FedEx flight is not in operation)Cost for revenue supplies (Supplies that provided to customer for them to use FedEx service like airway bill, packing material)Cost for claim colonization (for damage, late or missing shipment)At FedEx there is an index surround cost per package in which all costs raise from handling a package is taken into account and bi-weekly management has a collision to review it. This is a good slit for continuous improvement of cost saving. In 2010 the company had saved in average 2.3% of its cost per package in compare to the previous year.FacilitiesAll the ground facilities are under GSP charge. But with booming business in recent few years, the investment of the GSP on to this did not meet with requirement. Size of business in 2011 was intimately 3 times larger than the one in 2006, but there was no major investment to expand ground facilities. That makes the station buildings and warehouses decease too congested for FedEx operation and impacts to productivity and the service quality.Figure 13 FedEx ground facilityCurrentRequired2Gateway800 sqm1500 sqmStation2000 sqm2500 sqm repress of van2426Number of truck55Number of motor-bike2020Source FedEx IE report 2011Beside ground facility, communication network is very critical for FedEx. The network is not only for communication among FedEx locations, but also for posting and updating of shipment status. The network is considered as back bone of FedEx service.In Vietnam the company has its own take aim lines to Hanoi and Ho Chi Minh. The convey lines are upgraded to meet with demand of growing business. The latest upgrade in earlier 2010 increased the lease lines capacity to 256 KBps. A broad band line was also established to be backup network for the lease line. This helps to avoid service impact due to communication problem.MarketingMarketing function in Vietnam is more on the implementation. Marketing planning is done at regional level by marketing management. With this arrangement, there is only 1 marketing medical specialist in FedEx Vietnam to cover the in all country. She has very limited decision making power on marketing plan.Most of the marketing social movements in Vietnam are small with very limited budget. on that point is lack of big campaign in media that attracted mass audience. In Vietnam the new emerging market, FedEx does not have commercial TV advertisement while its major competitor DHL spends hard on this.In past few years, FedEx involved in numerous of activities for community benefit like building 3 schools in Nam Dinh and Quang Nam, sponsoring transportation of medicin e and equipment for Heart to Heart organization, major sponsor for OBIS flying infirmary to Vietnam in 2007 and 2010, APEC summit in 2006. These activities were very efficient in bring benefit to the community, but were not very well promoted by marketing and the number of earned media was not large.In terms of product that FedEx introduced to Vietnam market, the service is more diversify to provide customs more option for their shipment. Currently FedEx provide following services International Priority (IP) This is fast, customs-cleared, door-to-door pick-me-up and delivery of shipments to all international name and addresss for package weighted lower than 68 kgs. For those destinations in AsiaOne (all major cities in Asia) net work, document or packages send under this service will be delivered on the day after ship date. This is FedEx Express core service in Vietnam International preservation (IE) This service is similar to IP service, but the transit time is thirster than I P service and shipping rate is lower than IP. International Priority Freight (IPF) This is precedency service using for package heavier than 68 kgs. This service is only available in designated cities/countries International Economy Freight (IEF) This is a new service launched in 2010 using for packages over 68kg. Customer use this service does not need a fast transit time. The price rate is lower than IPF and transit time is longer certainly. International priority Distribution (IPD) This is customized service using for customer who send shipment at different consignees at same country. The shipper can send all of them under 1 shipment and FedEx will separate the shpt to delivery to each consignee. This service is only available to some country and normally for global customerBeside the range of services provided, FedEx rate to each customer is different base on the customer mint. However this is not the main competition tools of FedEx. The company is more focus on its differenti ation by excellent service. disdain of some weaknesses in marketing in Vietnam, FedEx brand is quite well known in business society thanks to its global image. However, to off the level on brand awareness that FedEx has in other markets, marketing function in Vietnam should play a more active role.SalesIn 2008, FedEx took over all sales activities from GSP. All sales violence belong to FedEx. This enables the company to recruit and keep talent employee for this authorised function. The achievement of sales team has been improved since thenCurrently sales team is organized under 3 sub-teams to take care of different groups of customers planetary sales Take care of global accounts. These global customers are big accounts and very demanding for service quality. As many big international companies are setting up their business in Vietnam, revenue from this group of customer is growing very fast. In 2006, it took only 8% of total revenue, but in 2011 it took up to 27% Telesales Take care of small accounts. There are low revenue customers but most profitable ones. Revenue from small customer takes 18% of the total FedEx Vietnam revenue.Field sales Most of customer that taken care of by field sales are local importers/exporters. This area of sales have steady annual growth at 20% in recent year thank to strong growth in international trade in VietnamWith this arrangement, sales team can be more focus on targeted customer, hence the performance is improved.Figure 14 FedEx sales raft from 2006 to 2011(Unit 1 package)Source FedEx country Review 2011Before 2008, sales only focus on selling outbound, but with global sales network, both outbound and inbound volumes are taken care by sales. This supports strong growth of inbound volume (Figure 14). The exception in 2010 the inbound volume was down turn due to the fisrt year sales under direct management.OperationAir craft operation With the launch of A310 to Vietnam in September 2009, FedEx increased its aircraft capa city to 5 times bigger than before3. The aircraft upgrade enables FedEx to introduce more services in and out of Vietnam. The company now can better reassure space for its shipment and reduce the risk of dependence on commercial flights.The A310 serves both Hanoi and Ho Chi Minh city. This first time ever FedEx aircraft arrives in Hanoi making big service improvement for the capital city. Transit time reduce by 1 day for both inbound and outbound.This was an excellent preparation for FedEx Asia hub relocation to China in first half of 20094.Station operation Operating under agency contract, FedEx is liner with number of issues for its station operation be understanding of differences in business strategy. Investments in work forces, vehicles, equipments are not adequate.Coverage area of FedEx service in Vietnam is large while number of couriers is limited with 30 in Hanoi and 60 in Ho Chi Minh city making it a big challenge for pick up and delivery, particularly on the surge volum e dates.With booming of EPZ and Industrial Park country wide, many provinces become authorisation markets for air express service. However FedEx direct pick up and delivery service is only available in big cities/provinces. In other provinces, pick up/delivery is provided through a domestic express service. It means any customs in non-direct service want to use FedEx service they have to send the shipment to FedEx by domestic service first. And the same arrangement for delivery, FedEx will have domestic service to deliver package to customer in these areas. This not only makes transit time for the package longer but also impacts to service quality that customer suppose to receive when they use FedEx service.FedEx in Vietnam operates with standard procedure of FedEx global. However the ability of courier team, especially English speaking and reading skill is not good making barrier for them to learn and consult customers on shipping requirement.There is lack of rewarding program to encourage courier team, so productivity and the over all performance is not very good.Gateway operation FedEx has 2 gateways in Vietnam, one for Hanoi and the other for Ho Chi Minh city. Both gateways are in the same buildings with stations. That makes it convenient for customers in case they have to come to do customs clearance. But it is a disadvantage for the company to maximize the use of air craft arrival time.The main job of gateway is to ensure shipments are clear customs at shortest time, reduce number of shipment pending in customs warehouse. In Vietnam, FedEx is the first company that was selected by Vietnam customs to implement electronic clearance. By applying technology in to clearance process, this area of service has been improved remarkable. The percentage of shipment released for same day delivery in 2010 is 50% higher than the one in 2007.However the constraints of ware houses and clearance facilities and the lack of customs regulations on express clearance make th is clearance still not yet reaches its height of potential.Customer service operation Customer orientated system and excellent internal communication network are very supportive tools to customer service agents to successfully handle transaction with customer. However, the weakness of call centre which under GSP control with lack of necessary equipments makes it difficult for FedEx to measure and control call quality. There is considered number of complaints regarding to customer service in Vietnam. This is contrast with FedEx customer service in other countries where most of customer praise FedEx for professional, helpful and customer oriented service.In addition, shortage of manpower for this group in Hanoi (with only 3 persons) reduces the ability to handle customer calls to FedEx at this city.Service quality management Service quality is non-compromised issue at FedEx. It makes FedEx different from competitor. The quality driven management concept has been put in FedEx today bu siness.With that strategy, service quality is also one of the top priorities for FedEx in Vietnam. The company is very good in making all KPI (key performance index) in service to be measurable and has strong systems to control it.Service quality is metrical by both network system (base on system scan) and selective reading collection from practice. A group of operation excellence is formed up. This group is supported by advisors at regional level. The group is doing root cause analysis for all service issues and coordinates with respective operation teams for corrective action plan.The quality report is made on daily, weekly, bi-weekly, monthly depend on KPI. Bi-weekly there is meeting among all managers to review service quality issue for necessary actions.With this mechanism, quality improvement is continuous process at FedEx. nurture Technology (IT)Information plays very important role with express company like FedEx. Provide customer with accurate and updated information is a s important as on time delivery of the package. Within FedEx operation teams, information exchange and communication among the teams is also very critical for its success. FedEx in Vietnam has its own lease line to ensure the connection of network. This system is operated and managed by very experience and skilful IT team.Numbers of IT projects have been implemented in past few years to bring benefit to FedEx and its customersAutomation shipping tool With software installed at customer site, customer does not need to tarry for FedEx to bring in shipping forms for manual completion but they can create the form on their own at any time. With this customer can complete shipping document for many shipment just in few minutes. This helps FedEx to save cost while provide more convenience to customers.Transmission of shipping documents images FedEx Vietnam now can transmit all shipping documents of its export shipments to countries of destination before shipment departs. With this ability , FedEx in destination does not need to wait for shipments arrival to retrieve the documents but having these documents overmuch earlier than the physical shipment arrives. So they can do pre-arrival customs clearance and ensure that the shipment is immediate released for delivery once it arrives. This staggeringly improves the service and saves FedEx hundred thousands of UDS a year for fax fee, storage fee.In conclusion, FedEx Vietnams major advantages areOperating FedExs own flight to both Hanoi and Ho Chi Minh cityBest express service from Vietnam to US, compass north America and Japan the key export markets of VietnamManagement awareness of service quality and use it as differentiator. A good service quality control system is put on place.Innovative service base on information technologyMeanwhile, FedEx major weak points are operating under agency and poor quality call centre for customer operation.With above analysis, an IFE matrix is formed up by strategist team. The IFE m atrix for FedEx Vietnam includes 12 factors with seven strengths and five weaknesses. Values of weight and rate for each factor are calculated base on average get ahead of the team members with some minor adjustment after review with the whole team (Appendix H). The final IFE matrix for FedEx is reflected in Figure 15.Figure 15 IFE Matrix of FedEx VietnamNo.FactorsWeightRateWeighted score1FedEx has 5 flights a week to both Hanoi and HCMC0.1440.562Well known brand0.1230.363Hub Operation place Global Network0.0940.364The best express service to US, North America and Japan0.1240.485Wide range of services0.0430.126Management awareness of service quality issue and use the quality of service as differentiator.0.0540.27Innovative service on the base of information technology0.0440.168FedEx operates under agency contract0.1510.159 upset quality call centre0.1310.1310High over due debt ratio0.0310.0311Poor marketing activities