2. How have changing industry conditions shaped FedEx's strategy? What changes created opportunities for the company?
In the early-1990s, Federal Express was confronted with increasing competition and the need to assure high levels of customer service and customer satisfaction. Federal Express implemented an organizational design that included a shift to team-based organization and the empowerment of team members to make decisions on the spot for customers.
Federal Express initiated its structural reorganization from a position of strength, as the firm since its inception had achieved high levels of customer satisfaction. Management at Federal Express realized, however, that the company's past accomplishments would not assure its future success. Thus, a service quality program accompanied by organizational restructuring was implemented as a part of a long-term strategy to retain market-share dominance.
To establish its marketing service quality program, Federal Express determined what was most important to overnight shippers. The company found that sureness of delivery and the timeliness of delivery were of greatest concern to customers. While customers were concerned with costs, Federal Express found that they were willing to pay a higher fee to assure both delivery and timeliness. Thus, the marketing service quality program at Federal Express was born. To implement this program successfully and to maintain the effectiv