FedEx Porter Model and Analysis 1

FedEx: Porter Model and Analysis

Student Name

Pace University

Subject Code: Subject Name

Professor Name

20-02-2023
FedEx Porter Model and Analysis 2

Porter Five Forces Model

Porter’s competitive analysis model is used to analyze the competitive impact on an organization. It

helps to determine the organization’s positives and negatives. With this analysis, we know the

structure and suggest new strategies. This analysis never tells what exactly to do. But it uses the

organization’s cyclic process to reach its goals. Porter’s analysis has some basic forces to apply for

businesses to earn long-term profits. The basic forces are new market entrants, substitute products,

suppliers, and customers (Goyal, 2020).

New market entrants, a company entering the first-time market needs to identify the present

competitor in the market. And is also need to know the strategies that they are applying for their

businesses. As it is a new business has to provide new services than other competitors. It has to

follow different policies to be on the market. It is necessary to identify whether it is a large

organization or a small organization. If it is a small organization then it has less impact on the existing

organizations. Otherwise, the existing organizations have more impact. A new business gets

successful in the market when it invests more, consider other brands, and compares the cost of the

other product (Hol, Pawar, & Bhaskar, 2019).

Substitute products, this is the major factor for every business. This is a big threat to existing

organizations because they may drag the customers with a low-price strategy or provide more

services. The customer has many alternatives to choose from the substitute services. It provides

strong competition in the market. The substitute service affects the profit of an organization. In some

cases, substitutes may increase the cost of products in the market when any established organization

failed to provide its services (Goyal, 2020). Demand for the alternate product has a negative impact

on the business.
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Supplier is another force in the business analysis. To make products it is necessary to choose the right

supplier. A supplier has more power if it has no competitors in the market. It is a reflection of the

bargaining power of a buyer. To satisfy customers, suppliers need to compromise on some factors.

The supplier’s existence minimizes the profit of an organization. Sometimes supplier increases the

prices and reduces the quality of material because of competition (Isabelle, Horak, McKinnon, &

Palumbo, 2020). When you are having multiple businesses and you are receiving goods from the

same supplier then reduce the supplier bargaining power by centralizing procurement. Reduce the

bargaining power of suppliers by using substitute goods.

Customer bargaining power is one of the porters five forces. It brings more force into the business

and it affects the cost of products. If the customer is able to get the services from other suppliers,

then the customer has high bargaining power. A customer has less bargaining power when the

number of suppliers reduces in the market. The customer-bearing power makes you know threats

and provides new opportunities and strategies to be in the market for the long run.

FedEx: Introduction

FedEx Corporation is an American multinational organization. Initially, it has a name federal express

corporation, and later changed to FedEx. FedEx has different services but the organization

concentrates on transportation and e-commerce and company services in Memphis and Tennessee.

The FedEx headquarters is located in Memphis, Tennessee in the United States. Fredrick W Smith is

the founder of this organization on 1971 May 5 th in Little Rock, Arkansas United States. The FedEx

organization’s present CEO is Raju Subramaniam. It has 1950 branches. It has 547000 employees

(Baertlein, 2023). Its website name is www.fedex.com. In the year 2022, Its revenue is US$93.512

billion, its net income is US$3.826 billion, and the value of its total assets is US$85.994 billion. It
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provides many services like business services, express delivery, freight transportation, and logistic

services.

FedEx: Application of the porter model

New market entrants:

FedEx is a well-established organization. Provides its services to more than 220 countries. It is

recognized because of its services and best quality. It is at top of the Courier and delivery services in

the world (Eddin & Ahmed, 2020). The main barrier for new entrants is a large investment because

the competitors like FedEx have a high ability to provide services. But FedEx is an expert and has real

experience and knowledge of Courier service. It has less impact on new entrances into the market. It

has its own strategies to provide services to customers.

Substitute products:

Recently, so many advanced technologies came into existence. These technologies became an

alternate threat to the FedEx Courier service. Like fax machines and the Internet. It affected FedEx’s

profit mainly in document delivery. Not only this fax machine, but many other technologies like the

cloud also show an impact on the profit of FedEx. Still, they are unable to stop the growth and profit

of FedEx organization. Because it has large customer trust and hardworking employees.

Bargaining power of suppliers:

Many companies in air delivery and freight services use different suppliers for their raw materials. A

powerful supplier decreases the potential profit of an organization. The FedEx suppliers have less

bargaining power. Because FedEx provides better operations. FedEx always needs huge packing

material from the suppliers it is a big deal for the suppliers. So, they have very less bargaining power

with the FedEx organization. Even its employees also have less bargaining power over their salaries.
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The only demand in FedEx is the pilots they have high bargaining power because they became part of

the organization.

Bargaining power of customers:

The customer wants better services at low prices. This factor brings pressure on FedEx corporation’s

long-run profits. When customers have higher bargaining power then FedEx has more capacity to

provide discounts and offers for their services. The customer has great bargaining power because it is

a competitive market it has different services at different prices. The customer changed their services

to shipping services. Because it takes a long time to deliver and reduces the cost of service. From this

situation, FedEx changed its strategies to gain customers.

Industry rivalry:

FedEx has many competitors because of its secure and express delivery services. The main

competitors of FedEx Courier service are the United Parcel Service (UPS), DHL Express, and United

States Postal Services. The United Parcel Service is the main competitor because it provides services

at low costs throughout the world. The United Parcel Service (UPS) gets subsidies from the

government so it provides the services at a low cost to customers. DHL Express is also one of the

competitors of FedEx. It provides competition between all the service providers and it impacts the

overall profit of every organization.

Conclusion:

FedEx provides a great Courier service throughout the world. In order to lead the market, it

implements several strategies against the competitors. It always updates and makes new strategies

to implement. It improves customer and organization growth and profit. It gives a standard service so
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that the customers always trust the organization. It has a positive growth from the past years. It has

enough strategies to lead the market.

References

Baertlein, L. (2023, 02 02). https://www.reuters.com/. Retrieved from FedEx to cut senior jobs as part
of larger staff reduction: https://www.reuters.com/business/fedex-cut-officer-director-team-
part-larger-staff-reduction-2023-02-01/

Eddin, S., & Ahmed, S. (2020). Critical Reflections on the Strategic Management of FedEx
Corporation. The Bartlett School of Construction and Project Management, 1-10.

Goyal, A. (2020). A Critical Analysis of Porter’s 5 Forces Model of. Journal of Emerging Technologies
and Innovative Research (JETIR), 1-4.

Hol, Y., Pawar, S., & Bhaskar, M. P. (2019). Porter's Five Forces Model Gives You A Competitive
Advantage. Jour of Adv Research in Dynamical & Control Systems, 1436-1444.

Isabelle, D., Horak, K., McKinnon, S., & Palumbo, C. (2020). Is Porter's Five Forces Framework Still
Relevant? Technology innovation management review, 1-14.