There are government regulations that affect all kinds of organizations. For Faded, it mess that the most government regulations they have to abide by are for export shipments out of the United States. Exports from the United States are controlled by Export Administration Regulations (EAR), International Trafficking in Arms Regulations (ATARI) and regulations from other government agencies (AGO), such as the Drug Enforcement Administration and the Department of Commerce. Additionally, every other country has its own set of rules and regulations for importing that must be considered (Faded, 2010).
Government regulations are always changing in the shipping business; each country including the USA has their own set rules. The impact of these rules can put great strain on the Faded Corporation by not allowing certain items to be shipped within a certain country. For each country there is one common trend and that is to keep their own people safe, as well as take away money from local businesses. In the shipping industry it is changing all of the time, mostly because the world has changed in the way we all do business with one another.
The world has become more of a global business, rather than a domestic business. More and more companies have built stronger relationships with people outside of their own government. With this fast hanging trend, local governments need to make the change themselves to secure a stronger future. Faded plans to expand their international network and is banking highly on this international shipping network. This will cost the company a great deal at first and their success will depend on how quickly they can attract customers to this expanded their profits as well as salaries for their employees.
The operating income of the organization has continued to fall because of the current state of the economy. The profits of Faded come in cycles and depend largely on the strength of the U. S. And world economies. The better the economy the better profit they will make through high package volumes. A lot of businesses use Faded as an indicator of rather or not the economy is rebounding or if it is slowing. This is largely in part because of the logistical advantage that Faded has throughout the world. Delivery of products all over the world can create fierce competition among freight carriers.
Feeder’s competitors are United Parcel Service, DEL, and the United States Postal Service. Faded is constantly in competition with the three companies to have express delivery service, air cargo service, and freight forwarding services for all nonusers. UPS and Faded are main competitors with each other for services from manufactures to consumers. UPS offer shipping services close to Faded by offering shipments from country to country with global tracking. Global tracking will be beneficial to people looking to ship packages from Missouri to London England.
Tracking the products from the point of drop off to arrival help keep companies in business by offering timely delivery. Faded offers discounts that cannot be matched by the competitors but the competitors will look to make a different offer that Faded might not offer. Faded must look at the competitors pricing to make sure the price can be matched or better to keep consumers coming to Faded. In today’s market having the best possible customer service is what will continue to grow the future of the Faded organization. Faded needs to stay consistent in the way business is handled on a daily basis.
Faded is a global leader in package delivery, and as I said the current market is changing. Customers want to ship and receive their personal packages at a faster, cheaper rate. Delivery of products all over the world can create fierce competition among freight carriers. Faded is constantly in intention with the three companies to have express delivery service, air cargo service, and freight forwarding services for all consumers. UPS and Faded are main competitors with each other for services from manufacturers to consumers.
Faded offers discounts that cannot be matched by the competitors, however the competitors listed above are becoming more strategic to capitalize on market share that Faded was is unable to take advantage of. PRICES The sales have declined for Faded and reduced revenue by 6. 5% from $37. 953 billion to $35. 497 billion. The only segment that made money was its ground segment and heir operating income and net income fell from $747 million to $98 million that represented 64% and 91% in declines for Faded. The economy has continued to have with increases in operating income from $196 million to $209 million.
Faded has become the world’s largest transportation company in the United States as well as over 220 countries around the world. They have international trade lines or express parcel services throughout the world and have grown by more than 14% over the past eight years. This growth accounts for 63% of the company’s revenue which is an increase of 23% from eight years ago. Faded continues to acquire smaller carriers and negotiates contract with others so that they can cover a large network of emerging markets. In 2009 Faded earned $1. 77 billion in revenue and owns and operates more than 1,700 storefront business centers around the world. Since the current state of the economy Feeder’s book value will fall by $2. 22 a share. For now they have stopped expanding and went from adding 300 hundred stores in 2008 to adding only 70 stores in 2009. The future remains unpredictable and will be challenging for the organization to remain profitable but Faded is optimistic because f Feeder’s vast portfolio in different segments that will carry them through the current declining market. The U.
S economy continues to evolve and Faded continues to represent the introduction of new forces that will affect their competitive advantage and sources of supply and demand through their logistical system. These forces will affect all industry standards from traditional sectors like agriculture, to manufacturing, to information sectors. Faded logistics and supply chain management tools allow businesses and customers to focus on their core competencies. This results in Faded Ewing more involved in small business acquisitions and spurring on more competition with other businesses while using Faded as their resource.
This will also help keep the prices of goods down because of this competition. COST STRUCTURE The cost structure of Faded can be defined by how many packages are sold at a given time. Faded employees are dependent on location of Job with in the country and within the Faded establishment. Faded handlers start out at income from about $10,000 to $25,000. Feeder’s ramp agents and truck driver’s salary average anywhere from $30,000 to $40,000 a year. Ramp agents are employees who work in an airport and help load and unload planes. The location of Jobs can also create a lower pay rate or a higher pay rate.
Faded cost structure keeps changing with the change of the current economy wages may increase of decrease with the demand of shipments going in and out of the Faded facilities. Employees who work for Faded receive benefits for employment with a full time status. About. Com (2010) states, “Faded company benefits include health and life insurance, disability insurance, 401 (k), stock purchase plan, educational assistance, and a large variety of additional employment unifies” (Para 4). In late 2009, Faded instituted a hiring freeze to eliminate a lot of the compensation benefits to its employees.
The part-time employees were no longer allowed to work over 30 hours a week and the full-time employees were only allowed to work overtime once a month at the maximum. Faded Freight reduced their salaries down 7. 5 to 10%. And because Faded believes so much in their employees and knows they are nothing without them, even the executives took a pay cut. CEO Frederick W. Smith took a 20% base salary cut in 2009 showing that he believes the cut backs are only temporary. But because of these cut backs Faded has been able to continue growing in new areas and stay the successful parcel shipping company that we have today.
FIXED AND VARIABLE COSTS Besides the hiring freeze, pension plan freeze, and pay cuts, Faded has also put a freeze on the purchase of new vehicles and airplanes, as well as the opening of the new Faded Office locations. There are certain variable costs that Faded cannot really control, like the cost of fuel. By making other cost cutting, Faded is somewhat sustaining control on the effects that the economy has had on the industry. Faded expects these cuts to save the company $200 million through 2009 and $600 million by 2010 (“Faded cuts cost despite growth in earnings,” 2009).
PRICE ELASTICITY OF DEMAND Feeder’s demand of service is based on the demand of consumers for the delivery of the products all over the world. Quickens. Com (2010) is defined as, “The price elasticity of demand measures the responsiveness of quantity demand to a change in price, with all other factors held constant,” (Para 1). The more that consumers demand the service of Faded the more competitive the pricing will become with the competitors of Faded. When the demand of Faded decreases the price of the services offered by Faded will increase the prices to cover the fixed cost of the company.
The price of Faded services are affected by the demand of the services of Faded consumers. In 2008 Feeder’s profits fell two quarters in a row because of the soaring fuel costs and the economy going into recession reduced the demand for U. S. Package shipping. With lower demand for express package shipping the earnings will result in a limited growth if any. TECHNOLOGY Technology is the future that all business is leaning more and more on the importance of technology. Faded is committed to be the first on the market with new technology which will help streamline the overall daily process.
Faded developed a technology center to devote time and research for increased technology needs. These are a few example of what the Faded culture has come up with. (Retrieved 3-1-10) corporate mailing services and developing tracking capabilities and software. In 1994, we were the first to offer package-status tracking for improved customer service via faded. Com. Offering shipping for improved customer service and convenience via faded. Com Pioneering the use of wireless technology for shipping over 25 years ago with the introduction of the Digital Assisted Dispatch System (DADS).
Faded is currently lowering its inventories and costs because of the recent decline in the U. S. Economy where inventory to sales have declined by almost 20% in the past 18 years. Faded hopes that their recent technological innovations will help them remain profitable through the current economic conditions. They have served as a continuous test bed of innovations and have adapted and demonstrated the usefulness of their technology. Faded has pioneered technological innovations and applications like the “hub -and- spoke” logistical system pioneered by Fred Smith.
There are many other technologies that have helped them become a world leader like COSMOS, DADS, and Super Tracker which have helped them consistently employ new technologies both internally and among its customers. PRODUCTIVITY It is clear that Faded wants to stay ahead of competitors such as UPS, USPS, and DEL. In today’s market it is about having the best people, the best technology, and having the strongest customer service attitude. With these three key elements Faded will continue to grow the business in the now, but more importantly is strengthen the true business.
Faded has identified the importance of employee relationship, which in the short and long run improves overall customer service. If the employees are happy with Faded than overall productivity will increase. “The Employee Loyalty Index (ELI) at Faded Express complements spic’s core focus of leveraging human capital as a driver for increased market performance. The ELI is a tool that gauges multiple indicators of employee loyalty – and other critical factors that drive this commitment- on an ongoing basis. The information is then used to develop proactive processes and forward-thinking initiatives.
The index is not designed to simply measure loyalty for loyalties sake, but to act on the premise that loyal employees help to build customer loyalty, and, in turn, greater profits. ” (Retrieved 3-1-2010) Because of the decline in shipping trends in late 2008 and 2009, Faded had to make cuts within the company during the fiscal 2010 year which ended May 31, 2009. The company chose to freeze the pension plans for their employees for a one year period and reduced the company match benefits as well. The corporate revenues declined 6% to $35. 5 billion in the 2010 fiscal end period.
However, the revenue decline was Mathew offset by the cost control efforts and share gains in the parcel market to avoid major layoffs with other cost control efforts. The operating results were drastically affected by the global recession and the destruction of goodwill related to acquisitions of Kink’s, Inc. And Watkins Motor Lines (Faded, 2010). SUPPLY AND DEMAND ANALYSIS Because of the constant increase in globalization with companies, there is a global trend where businesses across national boundaries to capture new markets and outsource of production.
Because of these increases in global companies, there is a emend for global transportation, which Faded supplies. With increasing inflation and competition, businesses need to reduce operating costs internally and externally. One of the major areas of reduction is the logistics of the goods, hence the demand for a more efficient logistics company that provides the Just-in-time delivery, Faded. The well-known Faded Corporation has a financial portfolio of over $1. 9 billion in 2009 with over 2. 4 million shipments in over 230 countries.
The demand for excellent customer service with a decent price point for shipping Just-in-time to customers is something that Faded can successfully supply. The demand for excellent customer service with a decent price point for shipping just-in-time to customers is something that Faded can successfully supply. For the demand of excellent customer service is exactly why this trend will continue to change at a high rate. To maintain a strong growing company, a company needs core customers, and strong business relationships.
Feeder’s competitors are UPS, DEL, and the USPS. Faded is constantly in competition with the three companies to have express delivery service, air cargo service, and freight forwarding services for all consumers. UPS and Faded are main competitors with each other for services from manufacturers to consumers. Faded provides many benefits to its customers. The shipping industry, however, is one of extreme competition. Not only are customers confronted with the choice of carrier, they are also confronted with a choice of means of shipment.
It is further complex, as the pricing strategy of the sector has companies, for instance, who lead cost in one form of shipment such as ground and follow in another form of shipment such as international delivery. Faded foresaw the importance of differentiation early on; as did most of the sector players and Faded realized that it was in the information business. Customers are not only concerned with the product getting from point A to B, but are also interested in the knowledge of where the cargo originated from, its present whereabouts, destination, estimated time of arrival, price and cost of shipment.
All these elements are Just as important to some businesses and consumers as receiving a safe delivery. To support this need, and differentiate itself from competitors, Faded created state- of-the-art technology for customers to track and validate shipments. Shipments are virtually traceable from their origin to their destination all with the convenience of the personal computer. Additionally, Faded has forecasted the important strategic trend of a continuously global shipping market.
The differentiation of products is a continuous process in this competitive industry as innovations are often quickly imitated. Faded strives to develop innovations and listens to customer’s wants and needs. The company has invested extensively in global infrastructure. Faded connects some of the most important areas of the world that make up 90% of the world’s gross domestic product, some of the new hubs were built in the Philippines at Cubic bay and in Europe at Charles De Gaulle, in Paris. A particular emphasis has been placed