VIDEO

AIRBORNE EXPRESS

MIM F2
Group - F
Amel Atie
Pulkit Ganjoo
Victor Honrubia
Maeva Mandard
Sebastiano Peroni
Maximilian Tempel

INTRODUCTION
A I R BO R N E E X P R E S S I N T H E 1 9 9 0 S

Founded in
1946

rd largest
3rd
industry player

Fastest
growing
company in
the past 5
years

Private airport
hub in
Wilmington,
Ohio

Industry
Express mail delivery
Customer target
B2B with large volume of urgent
recurrent mail items
Challenge
Catch up with the
competitors, FedEx

largest
and UPS

EXPRESS MAIL INDUSTRY

ANALYSIS

Market
Structure
Oligopoly

Concentra
tion
3 main
firms,
multiple
smaller
competitor
s

Entry &
Exit
barriers
Entry: High
Exit:
Moderate

Product
Differentia
tion
Homogenou
s product

Informati
on
Perfect
informatio
n flow

THE BIG THREE

45% market
share

25%
25% market
market
share
share

2,8m parcels

16%
16% market
market
share
share

12m
12m parcels
parcels

608 planes

0,9m
0,9m parcels
parcels

529
529 planes
planes

175
175 planes
planes

PEST ANALYSIS
POLITICAL FACTORS

Government regulations
Increasing pressure from labor
unions

ECONOMICAL FACTORS
$16-17 billion spent on expedited
shipments in USA
Increasing disposable income
Government subsidies

SOCIAL FACTORS

Decreased customer loyalty

Stressed, fast-paced lifestyle
Globalization

TECHNOLOGICAL FACTORS

New tracking and CRM systems

Customers demand for
improved online service

PORTERS 5 FORCES
ANALYSIS
Supplier Power
High Threat of Substitution
Low Threat
of New
Entrants
High
Buyer
Power
Facsimile and electronic mail are faster
Rivalry
Low attractiveness
- decreasing
High
Industry
High
Supplier
Power
and
High-volume
customers
expect
high
cheaper
Industry
Threat Of
volumes,
prices
The Big Threeon
- 85%
market share
Dependence
hub facilities,
Threat of
discounts
Low
product
differentiation
Potential
Competito
High
capital requirements
warehouses,
cargoimprovements
planes, fuelSubstitutes
Competitors
copy

Price
sensitive
Entrants
rs
Low customer loyalty

High
risk of
by employees
Economies
ofstrikes
scale
Declining
profit
margins
Use
more
than
one
supplier
Similar
price & quality of service

Regulatory
constraints
Require customized
service
Buyer
Power

KEY SUCCESS FACTORS

What do customer
want?

Reliability & speed

Low price
Tracking packages
Customized
services

How do firms
survive
competition?
Strong financial
resources
Scale
Competitive
pricing
Long term
contracts

Key success factors

High quality &

reliability
Cost efficiency
Operational efficiency

AIRBORNES SWOT
ANALYSIS
STRENGTHS
B2B focus
Low cost strategy
Operational efficiency
Non-unionized workers

OPPORTUNITIES
International markets
Partnerships

WEAKNESSES
Focus on niche market
97% on time vs markets
99%
No brand recognition
Lower margins

THREATS
Fax and e-mail
Competitor matching pricing, service and
reliability
US Postal Service

STRATEGIC GROUP MAPS

E X P R E S S D E L I V E RY

High

Quality

Service
Differentiation

High

Low

Low

Low

Market
Share

High

Low

Price

High

AIRBORNES STARTEGY: TO FOCUS IN COST LEADERSHIP

VALUE CHAIN ANALYSIS

Supporting
Activities
Firm Infrastructure
Airport hub & warehouse
facility
175 airplanes
Human Resource
20,700 employees
50% unionized
Inflexible environment
Technology
FOCUS platform
Call Center Automation
Procurement
High volume & recurrent

Primary Activities
Inbound Logistics
Customers send out packages
Driven/flown into airport
Contractors handle 60-65%
volume
Operations
900,000 packages/day
Reliance on hub/airport
Outbound Logistics
3rd party delivery by
subcontractors
Next morning delivery
Marketing & Sales
No mass media marketing
Large sales force

Service

Service
On time delivery
Lower cost, same price
regardless distance
Customers are able to
track packages
Improved Customer
service
Tailored service

FINANCIAL PERFORMANCE
Revenues in bn USD
FedEx

UPS

Operating Margin in %

Airborne

25
20
15

FedEx

UPS

Airborne

16%
14%
12%
10%
8%

10
5
86.0 87.0 88.0 89.0 90.0 91.0 92.0 93.0 94.0 95.0 96.0

UPS & FedEx are larger

UPS & FedEx have higher
growth

6%
4%
2%
0%
86.0 87.0 88.0 89.0 90.0 91.0 92.0 93.0 94.0 95.0 96.0

Competitors show higher

margins

STRATEGIC CHALLENGES
Niche market strategy but cost leadership
approach
Smaller margins than FedEx & UPS
Small size and inability to scale
Market growing in volume with decreasing
prices
No international expansion strategy

RECOMMENDATION
Merge or get acquired by a bigger competitor

THANK YOU