Case Review Airborne Express

Airborne Express (HBS 798070)

1) Identify the key buyers, products and geographies that Airborne Express, FedEx, and UPS try to serve. Are they similar or different?

With regards to the key buyers, products and geographies the express mail delivery companies own, following can be drawn from the HBS article:

Airborne Express:

Key buyers: “Airborne targeted the business customer that regularly shipped a large volume of urgent items, primarily to other business locations”.

Products: Next-day afternoon express delivery service by air and ground, customized service (8AM instead of afternoon) delivery service by air and ground (Both small and large packages). Also, Airborne offered storage warehouses (at their own airport) to companies, which created synergy by quick delivery and storage in one service.

Geographies: Airborne mostly operated domestically in the United States. In 1996, it invested in overseas transportation, but invested way less aggressive as UPS and FedEx did. USA was the most profitable market for Airborne.

UPS:

Key buyers: UPS really did try to engage everybody into their service (so all segments), anyone around the globe was welcome to use UPS. They were more focused on an all-encompassing delivery service than FedEX and airborne.

Products:

Mostly traditional ground network-using envelopes and parcels. Also (but less) express delivery service (next-day morning) through air.

Geographies:

“UPS invested heavily in constructing a global distribution system”. It served over 200 countries (although I thought there are only 195 in the world, so if I’m right than this service is quite impressive). UPS is a truly global delivery service.

FedEx:

Key buyers: FedEx also focussed on all segments. However, FedEx wanted to make the target market of small packages (which were ignored by incumbents) profitable.

Products: The article states that “FedEx held roughly 45% of the domestic express mail market and was the (disputed) leader of the industry. Hence, their main product was the express service. As stated above, FedEx also tried to create an appealing service for the smaller packages.

Geographies: FedEx had 8 hubs in the US and five more overseas, spanning the globe.

With regards tot he products, it is quite homogenous. However, there are also differences between the companies. UPS and FedEx started with offering “Overnight, morning delivery” whereas Airborne started with Overnight, afternoon delivery. Also, they all offer the second-day delivery. With regards to the target market, UPS and FedEX seem to have fishing in the same pool (everybody who wants to use express mail), whereas Airborne had a more targeted tactic of choosing the business man with the larger volume. Also, when looked at the geographies, it should be noted that UPS and FedEx, again, had in a way the same vision, (go hard or go home and conquer the world) whereas Airborne seemed quite happy with their domestic profits and did not invest too aggressively in international business operations.

2) Now, identify the “activity sets” along the internal value chain for Airborne Express, FedEx, and UPS. Are they consistent to serve the buyers, products and geographies targeted?  

When looking at Porters value chain, he distinguishes between primary activities and supporting activities. I’ll give an overview of the internal value chain of the industry and then answer the question per company.[pic 1]

Primary activities:

Inbound logistics – Customers send packages (or are picked up)

Operations – Company process the packages through hubs, ground- and air transport