Sample Leadership Studies Paper on FedEx’s Leadership and Global Strategy
FedEx’s Leadership and Global Strategy
Leadership embodies the essence of inspiring others. Effective leadership is founded on communicating unique and borrowed ideas to others in a manner that engages people sufficiently to perform as the leader desires. A leader encourages people to act while guiding their actions. Cho et al. (2019) argue that leaders must be charismatic enough to command people and possess critical thinking abilities to know how to use an organization’s resources effectively. Analysts praise Fred Smith- the company’s founder and former CEO, for his leadership in turning FedEx around from a loss-making firm to a worldwide logistics powerhouse with $22.5 billion in sales. Under Fred Smith’s direction, the management has developed information, technology, and extensive training, empowering employees significantly. The business is now an internet and logistics innovator.
A global strategy is a well-prepared plan of action for interconnected subsidiaries and branches spread across several nations. When executed, a well-designed global strategy helps organizations obtain a competitive edge over rivals. Economies of scale, efficiency, and diversity are the immediate competitive advantages. A global strategy comprises three dimensions: coordination of multinational business operations across nations, standardization of products and services, and ultimate integration of international firm competitive maneuvers across country markets (Cho et al.,2019; Perfenov, 2021). These dimensions can be pursued concurrently, but they do not have to be attained to the maximum degree. The firm can specify a level for the dimension it wishes to explore. FedEx was created as a technology-oriented firm. Fred Smith set three objectives that he thought would constitute the crucial success components of FedEx’s operation in the future – speed, dependability, and customer service. He spent substantially on IT to attain these aims. Fred Smith firmly thought it was essential to employ IT for an express sector to offer clients real-time information regarding the flow of their documents/packages. FedEx has developed into a market leader due to strong leadership and a brilliant global strategy.
Fred Smith’s career, which spanned more than half a century as FedEx’s CEO, has a nice circularity. He is one of the last century’s most influential businesspeople. At the launch of his delivery firm in 1971, the world faced inflation, energy instability, contentious identity politics, and issues of how to manage a nuclear-armed opponent, yet he survived (Financial Times, 2022, Par. 1). Even if history does not repeat itself, today’s tech giants will do well to examine Fred Smith’s tenure and his departure while preparing for their futures. Fred Smith’s concepts became globalization’s fundamental strength and dominance (Bigman, 2022, Par. 4). Many sectors benefited from his overnight delivery methods, including Amazon’s e-commerce boom; he also helped establish the just-in-time supply chains that drive most productivity and globalization.
FedEx’s success has been attributed to Fred Smith’s setting and reinforcing criteria for excellence in teamwork. He used his military leadership skills at the FedEx Leadership Institute, which trains managers. Thus, FedEx’s leadership style mirrors military hierarchies and centralized command systems. FedEx uses the military-style organizational structure to closely operate thousands of geographically isolated subsidiaries to facilitate uniform delivery of goods worldwide. The centralized system promotes consistent decision implementation.
FedEx uses a nine-point approach to assess employee leadership potential. These characteristics include charisma, integrity, individuality, intelligence, reliability, adaptability, judgment, courage, and respect for others. To the corporation, successful transactional leadership requires integrating all these principles. FedEx’s business model changes are rare as economic value mainly comes from repeated transactions. Some principles like individuality and intelligence constitute transformational leadership, but the organization considers them as the capacity to develop workers’ talents and thought processes.
FedEx’s transactional leadership style offers several benefits. First, it promotes daily operational excellence. The focus on short-term efficiency helps the organization process millions of transactions daily with minimal error. For a company like FedEx that relies on enormous quantities of low-value transactions, slight improvements can lead to considerable cost reductions, specifically when multiplied by millions of transactions. Besides, the transactional leadership style allows the organization to enhance efficiency, hence, profitability over time.
The transactional leadership style assumes that incentives and punishments drive followers. The transactional leader’s connection with their followers is one of exchange. A good follower will be rewarded, while the underperformer gets penalized (Cho et al., 2019). The leadership style also suits established businesses with moderate development and fierce rivalry. To be successful in such sectors, the firm must focus on cost containment rather than expansion efforts or new product releases.
Transactional leadership has significant drawbacks too. The technique is usually inferior when a company demands radical change, especially during a crisis. FedEx can lack the foresight to restructure if its main business matures beyond the “cash cow” stage. For example, the jet fuel cost can skyrocket, diminishing overnight courier service profitability. FedEx’s ability to develop transformational leaders is yet to be sufficiently tested. Perhaps that has been the case because the firm’s existing business model has endured the market without significant jeopardy to cash flow. Transactional leadership occasionally falls into the trap of reacting to unexpected change. In other words, the firm does not speculate on change; it rather responds promptly. FedEx management finds it challenging to integrate its leadership style with others’. When FedEx acquired Kinko’s, there were substantial cultural contrasts between the two companies. The problems compelled the management to discard the prior Kinko’s leadership and restructure its organizational culture to integrate it fully into FedEx as FedEx Office.
FedEx’s leadership style allows for rapid change. It has helped the company become a global leader because it closely matches the business model and product life cycle. FedEx’s strong military-style leaders can quickly disseminate changes throughout the organization with a single transformational leader at the top. Fred Smith’s leadership inspires, encourages, and promotes integrity, accountability, and commitment. As a result, the company transforms reactively rather than proactively.
FedEx’s leadership was beneficial during the COVID-19 worldwide epidemic. Kawal Preet, the president of Asia Pacific, Middle East, and Africa (AMEA), acknowledged the business’s leadership in helping her unified team achieve the region’s development objective in the middle of the crisis. In an interview with an Air Cargo News reporter, she recognized her teams’ effort in maintaining the business during the crisis. She was impressed by the team’s response to the epidemic; they were fast, efficient, and responsible. They are the firm’s success and future. FedEx’s worldwide air network kept them supplying clients despite the declining air freight capacity. (Harry, 2020, Par. 9). FedEx’s leadership style is unique in that it has withstood high-impact incidents over time.
FedEx AMEA’s success in managing the crisis relied on staff diversity and agility. FedEx was a first responder and vital service provider distributing personal protective equipment (PPE) and other medical supplies to its customers, non-profit groups, and needy communities. The firm encountered logistical obstacles when carrying out these deliveries, including cross-border restrictions and complicated customs procedures. To keep delivering to clients, the company had to adapt its services to minimize the effect of changing local legislation and norms. The team has worked hard to assist the subsidiary fight supply chain disruptions caused by airport quarantines, isolation restrictions, and airline cancellations. (Harry, 2020, Par. 13,14). FedEx staff work together with government and trade organizations to ensure that aircraft operations continue with minimum limitations.
FEDX AMEA’s expertise in healthcare logistics has proven useful in the fight against the pandemic and the search for a vaccine for Covid-19. FedEx assisted a biochemical business in Shanghai send an urgent consignment that medical rules had delayed to the US. When the team realized the cargo included Covid-19 vaccine reagents, they rushed to secure the documentation, special handling resources, and clearance needed to transfer the materials to the pharma suppliers working to flatten the curve, control the virus, and save lives (Harry, 2020, Par. 38). The company’s leadership goes beyond money-making; it strives to maintain a healthy world.
The business also introduced SenseAware, a sensor-based logistics gadget that allows precise cargo tracking. Choi & Song (2018) argue that in the healthcare industry, where shipments are typically time-and environment-sensitive, the SenseAware service will be very useful. SenseAware was recently presented in Japan, Malaysia, Hong Kong, and Singapore as many pharma firms rush to produce a Covid-19 vaccination and the air freight sector prepares for wider distribution. According to Preet, customers [in rollout regions] can now monitor data online via the device’s signals. Those in the healthcare industry rely on this level of visibility and service when transferring high-value, irreplaceable products. (Harry, 2020, Par. 41). The company’s leadership and innovation have remarkably changed logistics with modern technology.
The pandemic has exposed business vulnerabilities across industries. It has also accelerated new working methods, technology adoption, and diversification opportunities (Twentyman, 2022, Par. 27). Shipping companies will be more aware of border regulations and customs procedures that can cause unexpected delays, backlogs, and other issues. Small and medium-sized exporters benefit the most from trade facilitation reforms because they are the most affected by global customs procedures. Long-term trade agreements can help foster international risk management cooperation and facilitate goods movement. FedEx will continue to help smoother clearance processes by providing the right hardware, expertise, and technology solutions.
FedEx is working on a global strategy. They are looking for expansion prospects in China, Brazil, India, and Mexico, where shipments are increasing. Long-term, cargo quantities will increase as globalization enables developing markets to expand globally. FedEx’s goal is to serve increasing consumer needs to compete successfully and profitably. According to Parfenov et al. (2021), expanding global market needs increased delivery of tiny goods from maker to customer. FedEx uses its fleet’s unique advantages for nonstop flights and long-distance packages every day. The corporation aims to match better the global demand for air freight, which is not consistent.
The global market increases high-tech items that can be sent directly to consumers or as part of a larger manufacturing process. FedEx customizes its fleet to give adaptable circumstances for various cargo types based on weight, size, total dimensions, delivery periods, route length, and transportation conditions. It has the world’s biggest all-cargo fleet. Besides, trends suggest FedEx expands its freight-forwarding network continuously. There were 47 locations open globally between 2008 and the end of the 2012 financial year (MarketScreener, n.d.). In 2012, few transit firms were established in Brazil, France, and Poland. These methods help clients gain better local services and access to global markets.
FedEx currently has 640 airplanes, 45000 ground vehicles, and 43000 drop-off facilities in 210 cities. FedEx processes 3 million shipments every day, thanks to technical advancements that have allowed it to grow to its current size. Fred Smith’s principal goal was worldwide growth and servicing many people, but he also stressed service quality. Customers were a priority; FedEx’s motto is ‘People-Service-Profit.’ The firm debuted online in 1994, allowing customers to connect and track their shipments.
Fred Smith’s single notion has now been expanded to several delivery choices. FedEx currently caters to a wide range of customer demands. FedEx Same Day and FedEx First Overnight are two new delivery services. The firm delivers and serves additional roles in the value chain- storage and urgent delivery. These are the company’s subsidiaries: FedEx Freight, FedEx Ground, FedEx Services, FedEx Trade Networks, FedEx Custom Critical, and FedEx Express.
FedEx investigates new markets to obtain an edge over the competition by developing a mental picture in the minds of consumers. It focuses on generating brand loyalty, a strategy that has helped it establish its particular skills. As customers say, it has become a verb, ‘FedEx it,’ meaning to deliver things quickly. FedEx has employed the product differentiation approach, the key instrument to separate competitors and obtain an edge over the competition. It offers the same services to consumers, but there are certain key distinctions, such as on-time delivery promises, efficient customs clearance, global customer support, simplified paperwork, and real-time tracking information. FedEx tries to distinguish its product by using new technology and providing ‘controlled and secure delivery’ to clients of high-tech and-value items (Parfenov et al., 2021). It strives hard to provide superior service, which has landed it second among express shippers in the US market. Its market share is 27%, whereas DHL has 32% and UPS has 21% (MarketScreener, n.d.). Like other businesses, FedEx is innovative. It was the first firm to create a website for its clients, allowing them to place orders instantly, learn about their services, and find delivery destinations. The key point of differentiation is that it has created a solution for real-time parcel tracking, saving time for customer care and reducing consumer anxiety.
Capacity control is based on a company’s ability to employ diverse delivery (air, ground, ocean) and transport units (hubs and warehouses) to carry a particular quantity of goods. A better choice of transport unit to delivery can also improve the carrier’s cost efficiency. FedEx began as an overnight air delivery company but gradually developed a ground network for postponed delivery, following UPS, the leading ground carrier in the USA. According to Dovbischuk (2021), FedEx now wants to enhance its maritime shipping capabilities to save money on gasoline. Delayed delivery became popular during the global economic crisis as a solution for customers who were not in a rush to get their orders. Matching network capacity to projected cargo quantities is also critical for capacity management. The delivery system must balance capacity and demand, while the organization must strive to offer the same quality of service, regardless of the demand. Competition is fierce, especially when the US market is mature; thus, switching service providers is free. The organization must perform well since any error can cost it substantial funds.
FedEx is simpler to run worldwide since it follows widely established standards that do not need global customization. The new approach allows them to work with a broader range of criteria tailored to each country’s requirements. The fundamental objective is to participate in local shipping utilizing local resources. The approach also affects emerging nations like Brazil and Indonesia. FedEx can gain market share and profit by supplying local transportation to such countries. FedEx can help them globally with its skills, resources, expertise, and innovation as a local service provider. In the long run, gaining local market share can lead to global market share.
FedEx does a remarkable job supporting its transactional leadership style by recruiting from the military and incorporating military leadership principles into its training facilities. The key flaw with the existing leadership style is that FedEx can not be ready for rapid changes. Although it has the resources to handle change, the organization has not generated strong transformational executives capable of leading major change. FedEx has become a successful firm nationally and internationally; it has the biggest fleet and second-place market share. It was the first business to provide next-day delivery and create a website to serve customers better. The current company-level strategy enables them to optimize their capabilities, but it fails to provide a competitive edge to reach global leadership. If it wants to survive in these bad economic times, it must cut down on capital assets investment. After exhausting its existing market, FedEx should next consider expanding into other areas. New distinguishing capabilities can provide it an edge over its competitors if they are developed via extensive research.
References
Bigman, D. (2022, March 28). FedEx’s Fred Smith: Conversations on leadership and innovation. ChiefExecutive.net. https://chiefexecutive.net/fedexs-fred-Fred Smith-conversations-on-leadership-and-innovation/
Cho, Y., Shin, M., Billing, T. K., & Bhagat, R. S. (2019). Transformational leadership, transactional leadership, and affective organizational commitment: A closer look at their relationships in two distinct national contexts. Asian Business & Management, 18(3), 187-210. https://doi.org/10.1057/s41291-019-00059-1
Choi, D., & Song, B. (2018). Exploring technological trends in logistics: Topic modeling-based patent analysis. Sustainability, 10(8), 2810. https://doi.org/10.3390/su10082810
Dovbischuk, I. (2021). Sustainable firm performance of logistics service providers along maritime supply chain. Sustainability, 13(14), 8040. https://doi.org/10.3390/su13148040
Financial Times. (2022, March 30). FedEx’s Fred Smith delivers a lesson in leadership. https://www.ft.com/content/2c1f35d4-a3b7-4e9d-b990-4c454e6b4fdd
Harry, R. (2020, November 18). FedEx: Seeking potential beyond COVID-19. Air Cargo News. https://www.aircargonews.net/people/interviews/fedex-seeking-potential-beyond-covid-19/
MarketScreener. (n.d.). FedEx Corporation. Stock Market Quotes and News : Equities, Indexes, Commodities, Forex on MarketScreener.com. Retrieved April 15, 2022, from https://www.marketscreener.com/quote/stock/FEDEX-CORPORATION-12585/company/
Parfenov, A., Shamina, L., Niu, J., & Yadykin, V. (2021). Transformation of distribution logistics management in the digitalization of the economy. Journal of Open Innovation: Technology, Market, and Complexity, 7(1), 58. https://doi.org/10.3390/joitmc7010058
Twentyman, J. (2020, August). FedEx: Leaping to future points on the innovation curve. Thought leadership and management best practice for CIOs | I-CIO. https://www.i-cio.com/strategy/digitalization/item/fedex-leapfrogging-to-future-points-on-the-innovation-curve#!