FedEx Description And Valuation Essay

Submitted By wangli31
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Pages: 6
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Company description:
FedEx Corporation (FedEx) provides a portfolio of transportation, e-commerce and business services under the FedEx brand. The Company operates in four segments: FedEx Express, FedEx Ground, FedEx Freight and FedEx Services. Federal Express Corporation is an express transportation company, offering time certain delivery within one to three business days and serving markets.
The growth of ecommerce is the biggest driver for package and express services. Thought it comes at the cost of intensifying client demands for speed and improved tracking systems, a weakened U.S. Postal Service leaves more opportunity for private sector players. Express carriers like UPS, FedEx, and Deutsche Post are looking to expand their businesses in emerging markets like China and India, where a newly minted middle class promise opportunity.
In its mission, Fedex strives to produce superior financial returns for its shareholders by providing high value-added logistics, transportation, and related business services through operating companies. They also strive to meet customer requirements in the highest manner possible with regards to the appropriate market segment. Fedex strives to develop rewarding relationships with its suppliers, partners, and employees. At Fedex, safety is the number one consideration in all of their current operations, and corporate activities will be conducted at the highest ethical, moral, and professional standards. FedEx’s operating strategy works on three levels:
Compete collectively by standing as one brand worldwide and speaking with one voice.
Operate independently by focusing on our independent networks to meet customer needs.
Manage collaboratively by working together to sustain loyal relationships with our workforce, customers, and investors.
FedEx has its network stationed in more than 220 countries, with more than 290,000 employees worldwide. They also have the best use of technology, dependable knowledge in the delivery business, high investment in IT systems, and more than three decades of experience with logistics services. FedEx has many strengths that help secure its position in the market. However, there are a few weakness that the company must deal with. FedEx as a company is heavily dependent on the US market for its business. Also, since this is a very competitive market, there is a very limited growth in market share. Some opportunities do rise for FedEx as well. They challenge their competitors through their mergers and acquisitions and deal with local competitors that have poor service and products. There are also some threats that can affect the stability of FedEx’s prices. Rising fuel costs could impact the company’s profits. There is also a fluctuation in market demand in this industry depending on the time of year. FedEx is also vulnerable to increasing reach by major competitors.
FedEx is found in the logistic industry that is determined by the Porter’s five forces model. The supplier’s power is low because the products are supplied to the industry. There is a low threat of entry due to high start-up costs. The threat of substitutes is also low because there are a limited amount of services available for large freight and air freight. The buyer’s power is low-medium due to shipping choices.
In Fiscal 2014, FedEx Express accounted for 60% of total revenues; Ground 26%; Freight 13%, and Services, 1%. FedEx expects the global economy to improve in calendar 2015. Its performance is heavily influenced by global and domestic GDP growth. The economists are calling for U.S. and World GDP gains of 2.2% and 2.7% respectively in 2014. In 2015, both of these estimates stand at 3.1%. Management had reported that although global trade is improving, it still remains below historical norms. The company issued upbeat guidance for fiscal 2015. The continued growth of retailers' e-commerce platforms does bode well for FedEx and its Smart Post operation. FedEx shares are favorably ranked
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