FedEx vs UPS - Competing with Contrasting Strategies in China

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Case Details:

Case Code : MKTG069
Case Length : 15 Pages
Period : 2002-2003
Pub Date : 2003
Teaching Note : Available
Organization : Federal Express Corporation, United Parcel Service
Industry : Logistics Solutions Company
Countries : China

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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"I don't know that I agree that there's a sort of Chinese way and an American way. I think there is clearly more of an entrepreneurial and establishment way ... and China at the moment is a country that is very entrepreneurial in nature. We are more consonant with the new China."¹

- Frederick W. Smith, Chairman and CEO, FedEx Corporation.

"UPS expects continued strong and robust growth in China. We take a long-term approach to any expansion and believe the opportunity in China is great enough to overcome any business cycle."²

- Jim Kelly, Chairman and CEO, UPS.

Introduction

The US based FedEx Corporation (FedEx)³, one of the world's largest logistics solutions provider, announced a money-back guarantee scheme in September 2002 for its customers in China.

Under the scheme, FedEx offered full refund of customers' money in case of late delivery of shipments. By introducing this scheme, FedEx became the first international logistics company to offer money-back guarantee in China.

Analysts were quick to comment that this measure was taken by FedEx to counter attack the move announced by its global competitor, the US based United Parcel Service (UPS)⁴.

FedEx vs UPS - Competing with Contrasting Strategies in China - Next Page>>

1] As quoted in the article, "Orient Express: Just How Hard Should A U.S. Company Woo Foreign Markets," by Douglas A. Blackmon and Diane Brady in The Wall Street Journal dated April 6, 1998.

2] As quoted in the article, "UPS begins direct service to China", in www.newswire.ca, dated March 30, 2001.

3] FedEx is one of the world's largest express transportation companies, providing information and logistics solutions services. For the financial year ending May 2003, the company generated revenues of $22.5 billion and net income of $1.47 billion.

4] UPS is one of the world's largest express carrier and package delivery company. It is also a leading global provider of specialized transportation and logistics services. For the financial year ended December 2002, UPS generated revenues of $31.3 billion and a net income of $3.18 billion.


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