Airborne Express Case
1. From the point of view of the industry incumbents, is the express mail industry attractive? How has Airborne survived, and recently prospered, in its industry? Is its success attributable to its capabilities, its position, or industry attractiveness?
The express mail industry can easily be considered an inherently tough industry to operate within given the myriad of factors that come into play, such as unions, government regulations, cost of technological advancement, and international borders to name a few. Despite this, the industry could be seen as offering opportunities, which could be seized by attracting customers based on the quality of the service being offered. Consequently, this also encouraged mimicking between competitors to a certain degree, were they would endeavor to secure growth and market share by eliminating the competitors competitive advantage. This was highly contrasted in the services that Federal Express (Fedex) and United Parcel Service (UPS) provided and developed in the 80’s and 90’s. Once a competitor came up with a formula that attracted the attention of potential customers, other incumbents were compelled to follow suit with similar services, or better yet, an improved version. The industry required service providers to invest in a complex and expensive infrastructure to be competitive in the express mail market. To achieve sustainability and a numerable market share, high volumes were important regardless of the high cost of “fedexing”. However, since the items being shipped normally had a high ratio of value to weight, the rates were accepted by customers, making the industry attractive for its high turnover. The attractiveness of the industry can however be carped when on-time delivery guarantees, alleged US Postal Service market manipulation, and emergence of fax and later email technology are taken into consideration.
Airborne Express (ABX) found its niche amongst the major players (Fedex and UPS) by identifying
The express mail industry can easily be considered an inherently tough industry to operate within given the myriad of factors that come into play, such as unions, government regulations, cost of technological advancement, and international borders to name a few. Despite this, the industry could be seen as offering opportunities, which could be seized by attracting customers based on the quality of the service being offered. Consequently, this also encouraged mimicking between competitors to a certain degree, were they would endeavor to secure growth and market share by eliminating the competitors competitive advantage. This was highly contrasted in the services that Federal Express (Fedex) and United Parcel Service (UPS) provided and developed in the 80’s and 90’s. Once a competitor came up with a formula that attracted the attention of potential customers, other incumbents were compelled to follow suit with similar services, or better yet, an improved version. The industry required service providers to invest in a complex and expensive infrastructure to be competitive in the express mail market. To achieve sustainability and a numerable market share, high volumes were important regardless of the high cost of “fedexing”. However, since the items being shipped normally had a high ratio of value to weight, the rates were accepted by customers, making the industry attractive for its high turnover. The attractiveness of the industry can however be carped when on-time delivery guarantees, alleged US Postal Service market manipulation, and emergence of fax and later email technology are taken into consideration.
Airborne Express (ABX) found its niche amongst the major players (Fedex and UPS) by identifying