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
Excerpts
Fedex - Developing the Services Network
FedEx commenced its operations in April 1973 in Memphis, US. In 1984, FedEx entered China after acquiring Gelco Express International, a UK-based courier company which had operations in Europe and Asia Pacific. During the first decade of its operations in China, FedEx focused on establishing the required infrastructure and distribution network to provide reliable express freight and documentation services...
UPS - Developing the Services Network
In 1907, Jim Casey (Jim), a 19-year-old messenger boy, started American Messenger Company (AMC) below a Seattle sidewalk in the US to offer bicycle messenger service with an initial investment of $100. His intention was to offer messenger service of the highest quality at the lowest price to the customers. In 1913, Jim and Evert McCabe, who led rival Motorcycle Delivery Company, agreed to merge with AMC and a new company was formed. It was named as Merchants Parcel Delivery Company (MPDC). In 1919, MPDC was renamed as United Parcel Service (UPS)....
The Contrasting Strategies
Analysts felt that FedEx and UPS established themselves in China till the late 1990s following different corporate styles. Both the companies followed a significantly different approach, providing different alternatives for companies that are planning to globalize...
Advertising and Promotion
Till the mid 1990s, the focus on advertising and promotion by both FedEx and UPS was relatively less. However, during the late 1990s, as the competition in the logistics business in China intensified, both FedEx and UPS started emphasizing on promotion to attract the Chinese customers. However, till the late 1990s, there was a marked distinction in the approach of FedEx and UPS towards advertising and promotion of their services in China...
Targeting Customers
While targeting customers in China, FedEx offered standardized logistics services as it offered to customers in other foreign countries. However, FedEx seemed to have annoyed few companies in China that expected personalized approach from the company. Li Ping, an executive at Chinatex Cotton Yarns & Fabrics Import & Export Corporation in Beijing commented, "I know they"re (FedEx) one of the biggest companies in the US, but that doesn‟t matter here (in China). The personal relationship matters most here. You have to talk to customers and make them feel good.... They haven‟t sent anyone here; so, we don‟t do business with them."...
The Investments Made
Since its entry into China, FedEx had invested heavily on building its services network in China with a long-term approach. Wilson Chung, general manager of FedEx China said, "China is one of the most important markets for FedEx...
Logistics Industry in China - Improving Prospects
China was viewed as the logistics industry's most important emerging market. According to an industry analyst at Merge Global Incorporated, an Arlington, US-based research company, China's air-cargo market was the world's fifth-largest and its emerging express market was valued at $400 million in 1998...
Status in 2003
By 2003, the competition between FedEx and UPS was at its peak. Both the companies had been aggressively pursuing the Chinese market by regularly announcing new and better services, agreements and tie-ups. Both the companies continuously revised their strategies according to the moves announced by their counterpart. In January 2003, FedEx announced an agreement with Kodak to offer self-delivery services in 28 Kodak Express Shops in Shanghai...
Exhibits
Exhibit I: A Snapshot of the Logistics Industry in China (2002)
Exhibit II: Revenues of Top Five Logistics Companies Operating in China
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