{"id":4173,"date":"2015-12-08T23:18:22","date_gmt":"2015-12-09T04:18:22","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/delivering-on-the-purple-promise\/"},"modified":"2015-12-08T23:19:51","modified_gmt":"2015-12-09T04:19:51","slug":"delivering-on-the-purple-promise","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/delivering-on-the-purple-promise\/","title":{"rendered":"Delivering on the Purple Promise"},"content":{"rendered":"

Executive Summary<\/span><\/strong><\/p>\n

Today, FedEx Corporation is one of the most admired companies in the world.[1]<\/a> Founded in 1973, FedEx (formerly Federal Express from 1973-2000) has grown from a modest expedited parcel delivery company to a diversified logistics firm worth over $47 billion in annual revenue.<\/span><\/p>\n

\"Key<\/a>
Key Financial Performance Measures for FY 2015. (FedEx Annual Report 2015)<\/figcaption><\/figure>\n

FedEx\u2019s ability to create and broaden a solid business model, coupled with constant operational innovation through service expansion, acquisitions and organizational culture, has allowed the company to enjoy nearly 40 years of constant growth. The alignment of their business and operating models, enabled by the characteristics described above, gives FedEx a tremendous competitive advantage and allows the company to deliver value to its customers by providing reliable logistical services.<\/span><\/p>\n

Genesis and the Business Model<\/strong><\/span><\/p>\n

\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 Legend has it that Fred Smith created the idea behind Federal Express as a sophomore at Yale University. Writing a paper for a course on aviation history, Smith identified the lack of a credible airfreight capability. Smith argued that transporting parcels by air would only be economically feasible if carried out by a company specializing in that service. [2]<\/a>\u00a0\u00a0 Whether or not that story is true, Fred Smith would go on to join the Marines after Yale, serve two combat tours in Vietnam, where he was awarded both the Bronze and Silver Stars, and return to Memphis, Tennessee to create such a company. \u00a0<\/span><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 FedEx began as a parcel delivery service that specialized in overnight air delivery. Over time, this business has been broadened\u00a0to offer its customers a wider range of logistics solutions. FedEx Express, their core overnight delivery service, still continues to be the most profitable segment within the company, but they have expanded into other areas. In the end, FedEx seeks to provide reliable logistical solutions to its customers at both the business and retail levels. FedEx charges premium prices for most of their services, especially the traditional expedited parcel delivery service, but their customers willingly pay the price for guaranteed, on time delivery. For parcel and freight delivery, prices are based on size, weight and the time horizon for the delivery.[3]<\/a><\/span><\/p>\n

Operating\u00a0Model<\/strong><\/span><\/p>\n

\"FedEx<\/a>
FedEx Corporation Structure. From http:\/\/about.van.fedex.com\/our-story\/company-structure\/, accessed 2 December 2015.<\/span><\/figcaption><\/figure>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 The FedEx operating model directly supports their business model and allows them to deliver a great deal of value to their customers. Currently, FedEx is broken into the following operating segments:<\/span><\/p>\n