FedEx vs UPS - Competing with Contrasting Strategies in China
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Case Code: MKTG069 Case Length: 15 Pages Period: 2002-2003 Pub Date: 2003 Teaching Note: Available |
Price: Rs.500 Organization: Federal Express Corporation, United Parcel Service Industry: Logistics Solutions Company Countries: China Themes: International Marketing |
Abstract Case Intro 1 Case Intro 2 Excerpts
Introduction
The US based FedEx Corporation (FedEx), one of the world's largest logistics solutions provider, announced a money-back guarantee scheme in September 2002 for its customers in China. Under the scheme, FedEx offered full refund of customers' money in case of late delivery of shipments. By introducing this scheme, FedEx became the first international logistics company to offer money-back guarantee in China. Analysts were quick to comment that this measure was taken by FedEx to counter attack the move announced by its global competitor, the US based United Parcel Service (UPS).
UPS had opened two representative offices in the Chinese cities - Shenzhen and Qingdao in early September 2002. UPS had also announced its plans to open four more offices in Xiamen, Dongguan, Hangzhou and Tianjin by early 2003. For a long time, FedEx and UPS had been archrivals in China competing each other for more market share in the Chinese logistics market. According to the analysts, FedEx had adopted an aggressive approach to increase its market share in China.
The company invested heavily in procuring air routes and in deploying its own aircrafts within and outside China for shipping goods. FedEx had also developed a vast distribution network with pickup outlets across China. Till 2001, the company used global advertising campaigns to advertise in China. On the other hand, UPS followed a more conservative and cautious approach while making inroads into the Chinese market. The company made efforts to position itself as a local company, rather than building an image of a global player. Instead of investing on building its own logistics infrastructure, the company decided to depend on leased facilities. Despite acquiring rights to fly its own plane in 2000, UPS was mostly dependent on its joint venture relationships to ship goods within and outside China...
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