dhl external analysis
TRANSCRIPT
DHLExternal Analysis
DHL is a wholly owned subsidiary of Deutsche Post World Net. The company offers expertise in
express, air and ocean freight, overland transport, contract logistics solutions as well as international
mail services.
DHL links 120,000 destinations in more than 220 countries and territories. The company provides services from a network of about 6,500 offices, and it employs a fleet of nearly 76,200 vehicles
and about 420 aircraft.
The company operates through four business divisions: DHL Express, DHL Freight and DHL
Global Forwarding, DHL Exel Supply Chain and DHL Global Mail.
Company Overview
1. Apply the five forces model to the industry in which your company is
based. What does this model tell you about the nature of competition in the industry?
Porter’s Five Forces Model
Bargaining Power of Suppliers
Bargaining Power of Buyers
Risk of Entry by Potential Competitors
Threat of Substitutes
Intensity of Rivalry among established
firms
Low due to:
• High cost of entry
• High existing brand loyalty amongst consumers
• High absolute cost advantage
• Customer switching cost
• Government Regulations
Risk of Entry by Potential Competitors
High due to:
• Similar industry competitive structure
• High industry demand
• High cost conditions
• High exit barrier
Rivalry among established companies
Substitute Products are the products from different businesses or
industries that can satisfy similar customer needs.
Threat of Substitute Products
Low due to:
High barriers to entry
Lesser new entrants
Lesser substitutes
Threat of Substitute Products
Refers to the ability of buyers to bargain down prices charged by companies in the industry or to raise the cost of companies in the industry by demanding better product quality and service.
Bargaining Power of Buyers
High due to:
• High dependence in consumers
• Switching cost is low in this industry, however for DHL, the company has high brand loyalty due to good and consistent services in delivery.
Bargaining Power of Buyers
Refers to the ability of suppliers to raise input prices, or to raise cost of the industry in other ways, for example, by providing poor-quality inputs or poor service.
Bargaining Power of Suppliers
Examples of DHL suppliers:
- Planes and Transportation:- Powerful- Low number of substitutes due to low
number of suppliers
- Packaging and Labeling: - Less Powerful- High number of substitutes due to high
number of suppliers
Bargaining Power of Suppliers
• Intense competition• Competitors have similar business nature
to one another• DHL strives to serve consumers better in
order to maintain their position as one of the leading logistic company in the industry
Nature of Competition
SWOT
Source: DHL Company Profile (2009). Retrieved from www.datamonitor.com
2. Are any changes taking place in the macro-
environment that might have an impact, positive or
negative, on the industry in which your company is based?
If so, what are these changes, and how might they affect the
industry?
• Technological Forces (Positive) • Changes: Incorporate technology in
the operating systems
• Effect: Safely delivering goods in a fast manner
Changes in the Macro-Environment
Social Forces (Positive)
Changes: GO GREEN!
Effect: New delivery methods to satisfy current consumer trends
Changes in the Macro-Environment
Source: Top 50 Supplier Chain Partners (2010). http://www.inboundlogistics.com/digital/top50green_digital2010.pdf
Social Forces (Positive)
Changes: Increase trend of online shopping
Effect: Creates business opportunities for logistic companies
Changes in the Macro-Environment
• Political and Legal Forces
Changes in the Macro-Environme
nt
Source:DHL website. http://www.dhl-usa.com/resources/Prohibited_Restricted_Commodities.pdf
• Global Forces (economic) • Changes: Rise in fuel prices• Effect: High operating cost
• Changes: Unpredictable natural disaster• Effect: Disruption of transportation and
communication
Changes in the Macro-Environment
3. Identify any strategic groups that might exist in the
industry. How does the intensity of competition differ across these strategic groups?
Strategic Groups are groups of companies that follow a business model similar to other companies
within their strategic group – but are different from that of other
companies in other strategic groups.
Strategic Groups
Strategic GroupsPri
ces
Charg
ed
Reliability
Market Leader- DHL
- FedEx- UPS- TNT
Market Follower- Skynet
- Kangaroo- Gdex
Difference in intensity of competition across these groups
Strategic Groups
4. In what stage of its life cycle is the industry in which
your company is based? What are the implications of
this for the intensity of competition both now and in
the future.
Life Cycle
• Market totally saturated with low to no growth:
• Industry consolidation based on market share, driving down price.
Mature Life Cycle
DHL is in the logistic Industry where this industry had matured deliberately
because entry into the market is difficult, yet initial competitors are
slowly growing.
• Now• DHL is an established brand hence they fall
under the mature stage. DHL should prevent from falling into the declining stage by securing and increasing their brand loyalty.
• This promotes higher entry barrier and less new entrants will enter the market. Then, competition is lower.
• Solution: • Maintain as a market leader by providing the
same high quality services to keep consumers coming back.
• Build close long term relationship with the suppliers.
Life Cycle
• Future• Keep being innovative by coming up with more
competitive advantage like developing new technology, service etc.
• Focus more on CSR as consumers are more concerned with global warming and climate change.
• Ensure competitiveness by keeping track of competitors’ actions and strategies and also, consumers changing needs and trends.
• Consider joint ventures project (e.g.: currently with UPSP)
Life Cycle
ConclusionBy analyzing and understanding the dynamic macro- environment, DHL is able to identify which of the forces has the greatest impact to the company and its industry.
By having a clear understanding of the external analysis, DHL will know where its competitive position lie in the industry, the current market trends and its competitors’ strategy in order to generate a successful strategy to satisfy the expectation of consumers in order to compete.