By,NikhilaSutrishnaKhizer

Presented by,NikhilaSutrishnaKhizer

What kind of Industry?

Logistics is the management of the flow of goods between the point of origin and the point of destination in order to meet the requirements of customers or corporations.

 Logistics is a channel of the supply chain which adds the value of time and place utility.

FEDEX and UPS ARE MARKET LEADERS IN THE LOGISTICS SERVICES INDUSTRY.

Why China?

5th largest in air-cargo and express market valued at $400 million in 1998 which was projected to grow by 20%.

Competitors to FEDEX and UPS..

Summary The entry and expansion strategies of the two US-based logistics companies - FedEx and UPS in the Chinese market.

Examines the contrasting strategies adopted by FedEx and UPS in their efforts to establish presence in China.

FedEx followed an aggressive, high risk, more investments approach to expand its services network in China which enabled the company to capture higher market share.

UPS followed a conservative, low risk, low investment approach to establish its presence in China, then developed a more aggressive strategy later.

Contrasting elements include services network, advertising and promotion, targeting customers and the investments made.

Changes in strategies of both companies with the improving business prospects in China.

Entry into China-Fedex And UPS

FEDEX UPS

-Invested heavily in procuring air routes, aggressive.

-Own aircrafts within and outside China.

-Its own distribution network.

-Used global advertising campaigns.

-More conservative and cautious approach, limited investments.

-Joint ventures with local companies within and outside China.

-Used partnership’s distribution network.

-Used old fashioned ad campaigns, created a local image.

Developing Service Strategies…..

•FEDEX:•High invesment.•Used HUB and SPOKES system.•Initially, as per Chinese law, partnered with Tiger Airlines and Evergreen airlines.•Later, Invested in own infrastructure.•Own distributing network.•Acquisition increased and number of HUBS and SPOKES increased, therefore efficiency ,reliability increased.•Very aggressive competitor.•First company gave the money back offer if not delivered on time.•Online tracking system.•Huge network of orange and purple trucks.•Quick customs clearance and pick-up and delivery services.UPS:Low investment strategy.Colaborated with Hong Kong Dragon airlines and China Eastern Airlines Corp. Leased transportation from local companies, China National Foreign Trade Transportation Group knows as Sinotrans.Started handling only small packages and documents.Later, developed its own infrastructure and network and increased number of spokes and hubs.

Developing service strategies…

Contd…Fedex tackled competion head on and UPS believed in partnering with them,Had acquired spaces in the airport or close proximity to reduce cost and save time.Both had same strategy in terms of expansion, but have different styles in executing it.

UPS focused on local customers and FEDEX focused on their existing multinational customers.

Later FEDEX after incurring losses had to focus on the customers.

FEDEX adpoted western-style marketing or advertising and UPS adopted the local company image.

Like FedEx, shipping companies already well established in China pose a threat. While UPS contends it will add its own airplanes in China when it becomes necessary, by that time FedEx may already be far ahead in this area

Like FedEx, UPS can build around its multinational customer base with Chinese operations.

UPS can pass on cheap cargo to target the more lucrative document and small package market, since they do not need to fill an aircraft.

Lacked its own air service in China, making them less logistically versatile than FedEx.

UPS does not have many of its own trucks and drivers in China to build further brand recognition.

Invested just a fraction of what FedEx had put into Asia.

creating an image “not American, but more worldwide.”

Sought to build relationships discreetly, on Chinese terms. S O

W T

Shipping companies already well established in China.

Very large investment in China based infrastructure including acquisition of Flying Tiger Line Inc. to establish its own air routes in Asia.

Multinational corporations with Chinese operations that already use FedEx elsewhere.

Customers who particularly value or require constant information regarding shipment status.

Lack of personal relationship building within China

In order to fill their aircraft, FedEx is forced to take on many cheaper packages with very low profit margins.

Aggressive advertising campaign

Highly controlled distribution system with constant information about the status of shipments.

FedEx has its own air service in and out of China.

S OW T

Advertising & Promotion

Heavily Advertise

Publicizing its services offering in China

Hired popular media company to create brand awareness

Less emphasis on Advertisement

Preferred to project itself as local Chinese company

Sponsor Chinese New Year celebration and Olympic games

Advertising and Promotion

UPS offered a phone card having three visuals of Sydney Olympics.

Different advertisements.

Rivalry or counter attacks, through ads like pepsi and coke.

Targeting Customers

FEDEX:•No personalisation with customers.•Standard logistics services for customers.•Focused on efficiency and providing solutions.•Explained customs clearance procedures.•Focused on Innovative and Value added services

UPS:•Focused on localisation with customers. •Built personalistaion with customers.•Customer friendly attitude.

FEDEX had captured 13% market and UPS captured 5%.

Investment made

Competion Builds….

Questions……..?

Thank you!