Dhl Strategy Model
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Transcript of Dhl Strategy Model
Nur Syahirah Husaini GM 04674Sameena Siraj GM 04558Geetha A/P Valaidum GM 04556Philominah Arkappan GM 04502
COMPANY OVERVIEW• Founded in San Francisco more than 40 years ago by 3 budding
entrepreneurs - Adrian Dalsey, Larry Hillblom and Robert Lynn • DHL is the one of the global market leader in international express,
overland transport and air freight• DHL offers integrated services and tailored, customer-focused
solutions for managing and transporting letters, goods and information.
• DHL’s international network links almost 220 countries and territories worldwide
• Around 285k employees are dedicated to provide fast and reliable services that exceeds customer’s expectations in 120k destinations in all continents
MISSION & VISION
• Mission : to be the first choice worldwide
• Vision : for the future is nothing less than to transform the logistic industry and to deliver beyond customer’s expectations.
NEW MISSION & VISION
• Mission : enhances the business of our customers by offering highest quality express and logistics solutions based on strong local expertise combined with the most extensive global network presence.
• Vision : create and promote innovative logistics solutions that aims to deliver freight services that are beyond customers expectations
• "FedEx Corporation will produce superior financial returns for its shareowners by providing high value-added logistics, transportation and related information services through focused operating companies. Customer requirements will be met in the highest quality manner appropriate to each market segment served. FedEx Corporation will strive to develop mutually rewarding relationships with its employees, partners and suppliers. Safety will be the first consideration in all operations. Corporate activities will be conducted to the highest ethical and professional standards."
FedEx Mission & Vision
Mission & Vision supporting the Strategies
• DHL’s strategies : – To intensify customer focus– To deliver consistent service excellence– To extent capabilities– To attract, develop and retain talent– To relentlessly drive efficiency– To be proactive in social
Mission & Vision supporting the Strategies
• Statements of vision and mission of the company are a manifestation of the commitment of achieving success as these statements drive strategy. Strategies are founded on these statements hence are considered the idea of purpose
Market Positioning MapHigh Distribution Network
Moderate ServiceQuality Service
Low Distribution Network
FedEx
UPS
DHL
Nationwide
Skynet
City-LinkTNT
DHL’s Marketing Strategy• Aggressive promotion strategy (Promotion)• Just in Time• High quality service• Advanced technological support• Planning and scheduling• Horizontal management practices• Optimization of HR & OM (People)• Location (Place)• Product choice (Product)
DHL’s Strengths & WeaknessesStrengths Weaknesses
Strong Brand Image Not well-known globally
Globalism High Tariffs
Technology pioneers High Prices
Innovators Not fully operational in Domestic Markets
Corporate Symbiosis Customer loyalty issues
Reach and Frequency No difference of the services of DHL with competitors
Quick delivery due to dynamic route planning system
Weak to tap and venture against its potential domestically and internationally
Customers have control on what they purchase
Subject to stagnate market
Excellent e-commerce services
Clear visibility of supply chains all the time
IFE MatrixStrengths W R WS
Strong Brand Image 0.12 4 0.48
Globalism 0.08 2 0.16
Technology pioneers 0.09 3 0.27
Innovators 0.09 3 0.27
Corporate Symbiosis 0.08 3 0.24
Reach and Frequency 0.15 4 0.60
Quick delivery due to dynamic route planning system 0.03 1 0.03
Customers have control on what they purchase 0.03 1 0.03
Excellent e-commerce services 0.04 2 0.08
Clear visibility of supply chains all the time 0.04 2 0.08
Weaknesses W R WS
Not well-known globally 0.10 3 0.30
High Tariffs 0.08 1 0.08
High Prices 0.09 2 0.18
Not fully operational in Domestic Markets 0.12 3 0.36
Customer loyalty issues 0.02 1 0.02
No difference of the services of DHL with competitors 0.03 1 0.03
Weak to tap and venture against its potential domestically and internationally 0.04 2 0.08
Subject to stagnant market 0.03 2 0.06
TOTAL 1.00 2.67
Based on the results above, DHL’s Internal Factor Evaluation is slightly above average to their internal strengths and to abstain weaknesses.
Major competitors
• Federal Express• UPS• City-Link International• Nationwide Express• TNT Express Worldwide• Skynet Worldwide
DHL FedEx UPSLess expensive than UPS or
FedExGenerally more expensive
than USPS or DHLSomewhat expensive but
cheaper than FedEx
Offers fast delivery to some locations.
very quick delivery system Relatively fast delivery
Offers free boxes and other shipping supplies, but only
for their Air Express service (not DHL Ground).
Provide boxes free of charge
Insurance for valuables worth up to $100 is
included free of additional charge.
Provides online tracking at no additional cost, but not
as detailed as FedEx
Provides the most detailed online tracking system.
Ground, Express, and Freight shipping services
are available, as well as extra fast same-day and
overnight options.
Competitive Profile MatrixFedEx UPS DHL
W R E R E R E
Service Quality 0.13 4 0.52 3 0.39 2 0.26
Price Pressure 0.15 3 0.45 3 0.45 2 0.30
Strong consumer orientation, segmented approach
0.10 3 0.30 3 0.30 2 0.20
Completeness of service 0.09 3 0.27 3 0.27 1 0.09
Good quality for a competitive discount price
0.12 3 0.36 4 0.48 2 0.24
Reputation 0.11 3 0.33 1 0.11 1 0.11
Advertising 0.10 2 0.20 3 0.30 4 0.40
After sales service 0.08 2 0.16 1 0.08 1 0.08
Customization 0.12 2 0.24 4 0.48 2 0.24
Total 1 2.83 2.86 1.92
The result shows UPS is dominating on critical success factors because the total weighted score is higher compared to FedEx and DHL
PESTLE Analysis
• Political Environment– Europe is a stable environment where no major
political changes are expected. – European Union has removed border lines and has
made trade and business more accessible– Enable bigger exports, free movement of services.
Economical Environment
– companies should not stop their investment plans because of economic crisis.– It is important in current situation to strengthen position in the market and expand if possible. –Emerging markets represent a potential of rapid economy growth. –E.g restructuring or outsourcing –reduced cost
Socio-cultural Environment
• affect customers' needs and wants• Research & Development - to respond to changes in
society quickly not to loose market share and demand for services.
• Customer satisfaction surveys, market surveys, employee surveys play important role in building company's brand and image in the market.
Technological Environment• IT is the most important technology factor for logistics
business because speed and reliability are equal to success. However, there is an indisputable constant threat of falling behind.
• Investments to the modernist technologies are evitable and in times of economic crisis are much more important then anytime before.
• Company has to decide if it runs internal IT organization or if it outsources most of the services and reduce cost.
Legal Environment
• obligations - directives, taxes and rules that they must be aligned with to be able to operate in the market.
• Liberalization - Removal of border lines enabled building and strengthening of positions in the logistics market. There are no special and expensive authorizations necessary in CEP industry which is another benefit for companies
Environmental Analysis
• Air pollution globally – transportation industry• Projects have been implemented – smart
truck project
External AnalysisOpportunities Threats
Global Expansion Rules and restrictions of other countries
JV with foreign countries’ local transportation companies
Competitors improvising DHL’s strategies
Expansion of E-Commerce Economic and Political condition of the country
Increasing number of manufactured goods
Insurance costs
Delivery products from city to city New Tax System
Creation of new market segmentation Increase in fuel price
Largest world sector Tough competitors
EFE Matrix
Opportunities W R WS
Global Expansion 0.08 3 0.24
JV with foreign countries’ local transportation companies 0.08 3 0.24
Expansion of E-Commerce 0.07 2 0.14
Increasing number of manufactured goods 0.08 3 0.24
Delivery products from city to city 0.07 2 0.14
Creation of new market segmentation 0.07 3 0.21
Largest world sector 0.07 3 0.21
Threats W R WS
Rules and restrictions of other countries 0.06 2 0.12
Competitors improvising DHL’s strategies 0.05 2 0.10
Economic and Political condition of the country 0.06 1 0.06
Insurance costs 0.08 3 0.24
New Tax System 0.07 2 0.14
Increase in fuel price 0.08 2 0.16
Tough competitors 0.08 1 0.08
Total 1 2.32
Based on the results above, DHL’s External Factor Evaluation is below average to the environment for exploiting opportunities and to overcome threats.
SWOT Analysis
Strengths Weaknesess
• Strong Brand Image• Globalism• Technology pioneers• Innovators• Corporate Symbiosis• Reach and Frequecy
• Not well-known globally• High Tariffs• High Prices• Not fully operational in Domestic Markets
Opportunities SO Strategies WO Strategies• Global Expansion
• Joint Ventures• Expansion of E-Commerce
• Increasing number of manufactured goods
• Advertise new technologies and online ordering system
(S2,S3, O4)
• Create joint ventures with local logistics companies (W1,
O1, O2)• Promoting business in China
and India (W1, W4, O1)Threats ST Strategies WT Strategies
• Rules and Restrictions• Economic and Political
condition• Slow and stagnant economic
growth• Relationship with foreign
countries• The increase in fuel prices
• Promotions when using online ordering system during
economic slow-down or restrictions (S2, S3, S6, T1, T3)
• Enhance the Smart-Truck Project to overcome fuel price
increment (S3,S4,T5)
• Acquire small local companies abroad to catch up with competitors (W1,W4,T4)
SPACE MatrixA SPACE MATRIX RATINGS TOTAL AVERAGE
Financial Strength (FS) Revenue 4.00 Cost reduction 2.00 Asset utilization 3.00 9.00 3.00Industry Strength (IS) Technology Savvy 6.00 Large distribution network 5.00 Brand 4.00 15.00 5.00Environmental Stability (ES) Risk in business -3.00 Increase in fuel prices -2.00 High rivalry in market -5.00 -10.00 -3.33Competitive Advantage (CA) Innovation -4.00 Service quality -5.00 Product choice -3.00 -12.00 -4.00CONCLUSIONDirectional Vector X-axis: CA + IS = -4.00 + (+5.00) = 1.00 Y-axis: FS + ES = 3.00 + (-3.33) = -0.33Strategy to pursue is Competitive Strategies
BCG Matrix
• DHL has been analyzed in 3 categories of its businesslike – mail, express and logistic
• 1) mail – market growth rate
• DHL Market Growth Rate 53212 – 40935 X 100% = 30%
40935
BCG Matrix indicates that DHL is placed in Cash Cow. This means DHL’s market growth rate is low, but its market share is high so it should milk as much profit as possible
Grand Matrix Strategy
Weak competitive position Strong competitive position
Rapid Market Growth
Slow Market Growth
QSPMSTRATEGIC ALTERNATIVES
Enhance & focus on innovation
Expand business & acquire more logistics companies domestically and internationally
Key Factors Weight AS TAS AS TAS
Opportunities
Global Expansion 0.08 3 0.24 4 0.32
JV with foreign countries’ local transportation companies
0.082 0.16 4 0.32
Expansion of E-Commerce 0.07 3 0.21 3 0.21
Increasing number of manufactured goods 0.08
3 0.24 4 0.32
Delivery products from city to city 0.07 - -
Creation of new market segmentation 0.07
- -
Largest world sector 0.07 - -
Threats Rules and restrictions of other countries 0.06 2 0.12 3 0.18
Competitors improvising DHL’s strategies 0.05 - -
Economic and Political condition of the country 0.06 - -
Insurance costs 0.08 - - New Tax System 0.07 - - Increase in fuel price 0.08 3 0.24 2 0.16Tough competitors 0.08 4 0.32 4 0.32Total 1.00 Strengths Strong Brand Image 0.08 3 0.24 3 0.24Globalism 0.07 2 0.14 4 0.28Quick delivery due to dynamic route planning system 0.03 - -
Customers have control on what they purchase 0.03 - -
Excellent e-commerce services 0.04 - - Clear visibility of supply chains all the time 0.04 - -
Technology pioneers 0.07 4 0.28 3 0.21Innovators 0.07 4 0.28 3 0.21Corporate Symbiosis 0.06 3 0.18 4 0.24Reach and Frequency 0.09 2 0.18 4 0.36
Weaknesses Customer loyalty issues 0.02 - - No difference of the services of DHL with competitors 0.03
- -
Weak to tap and venture against its potential domestically and internationally
0.04 - -
Subject to stagnate market 0.03 - - Not well-known globally 0.07 2 0.14 2 0.14High Tariffs 0.06 2 0.12 2 0.12High Prices 0.08 3 0.24 3 0.24Not fully operational in Domestic Markets 0.09
4 0.36 3 0.27
Sum Total Attractiveness Score 1.00 3.69 4.14
Recommendation• Enhance & focus on innovation
– Make difference to have new customers and increase their half market share
– Making little difference on the current product or services to be better
– Delivery will be faster and cut cost by using less fuel
Recommendation
• Expand business & acquire more logistics companies domestically and internationally– By acquiring small local companies in different
countries like China, India, USA, will give presence in that countries.
– Creative solution for problems and acquiring new brain
EPS/EBIT ANALYSIS
• Earnings per share: Year 2011 € 1Y(Million) Q4(Million)• EBIT 2436 599• EPS 0.96 0.14 (0.82 for 9 months)
EPS/EBIT ANALYSIS• Earnings per share: Year 2012 (9 Months) € (Million)• EBIT 1838• INTEREST 270• EBT 1568• TAXES 452• EAT 1116• SHARES 1209• EPS 0.92
Mail : €678
Express €829
Freight €346
Supply Chain €301
Others €-315
Consolidation €-1
EPS/EBIT ANALYSIS (assumption)
Capital needed € 5000 millionEBIT range € 2000 to 4000millionInterest rate € 5%Tax rate 25%Stock Price € 15.20Shares outstanding € 2019 million
EPS/EBIT ANALYSIS (assumption)
100% DEBT 100% STOCK 50/50 DEBT/STOCK
EBIT 2000 4000 2000 4000 2000 4000
INTEREST 250 250 0 0 125 125EBT 1750 3750 2000 4000 1875 3875TAXES 438 938 500 1000 469 969EAT 1312 2812 1500 3000 1406 2906SHARE 2019 2019 2348 2348 2184 2184EPS 0.65 1.39 0.64 1.28 0.64 1.33
EPS/EBIT ANALYSIS (CHART)
CONCLUSION:THE BEST FINANCING ALTERNATIVE IS 100% DEBT SINCE THE EPS VALUE ARE LARGEST; THE WORST FINANCING ALTERNATIVE IS 100% STOCK SINCE THE EPS VALUES ARE LOWEST.
RATIO ANALYSIS OF DHL
2012 2013Current Ratio € = 12750 20000
13449 18600
0.95:1 1.08:1Debt Equity ratio € = 22929 29161
34544 6426466.38% 45.38%
2012 2013Return on Sales € = 1838 3701
40935 532124.49% 6.96%
Return on Asset € = 1196 238640935 532122.92% 4.48%
RATIO ANALYSIS OF DHL
FUTURE ASSUMPTION BY DHL
• The group intends to generate annual EBIT
growth by an average of 13to 15% through 2015• EBIT Range 2.6 to 2.7billion• Dividend Payout ratio will be 40 to 60%• Number of employees in 2012 ( 426,104) tend to
increase by 10% in 2013
• CEO of DHL Logistics, enhancing the Smart-Truck Project is going to be his first strategy. This project will allow their company to deliver faster and cut cost by using less fuel.
• To achieve this goal, we will follow some steps:
a)Increase the budget of R&D 10%.b)Prepare an office for a new innovation team
and assign a leader to work on this project
FUTURE ASSUMPTION BY DHL
The Financial PerspectiveStrategic Themes
Strategy Revenue Growth & Mix
Cost Reduction/Productivity Improvement
Asset Utilization
Growth
Strategic Objective
Improve Market Penetration
Improve Revenue Productivity
Efficient use of resources
Improve wallet share
Improve Channel Mix
Improve market share
Reduce Operating Expenses
Ensure Loyalty
The Financial PerspectiveStrategic Themes
Strategy Revenue Growth & Mix
Cost Reduction/Productivity Improvement
Asset Utilization
Growth
Strategic Objective
Improve Market Penetration
Improve Revenue Productivity
Efficient use of resources
Improve wallet share
Improve Channel Mix
Improve market share
Reduce Operating Expenses
Ensure Loyalty
The Customer PerspectiveThe Customer Value Preposition
Strategy Product/Service Attributes
Image and Reputation
Customer Relationship
Growth
Strategic Objectives
Price/Performance Brand Image Contractual Responsiveness
Ease of Use Brand Equity Flexibility
Product Availability Honesty and Openness
Buying Experience
Customer Feedback
The Business Process PerspectiveTypes of Business Processes
Strategy Innovation Operations Post-sales Service
Strategic Objectives
Growth
Identify emerging needs of customers
Reduce order fulfillment cycle time
Enhancing support centres
Improve communication process between customer and company
Response time for solving customer problems
Learning and GrowthCategories
StrategiesEmployee
CapabilitiesInformation System
CapabilitiesMotivation
Empowerment and Alignment
Growth
Strategic Objectives
Strategic skills (improve selling
skills, analyst skills, technical support)
Improve Intellectual Property
Staff Empowerment
Skill leverage (multiple product
selling)
Tracking privacy Personal goals alignment with corporate goals
Morale
Conclusion
• DHL already established themselves and holding the third largest logistic company in the world
• Based on all the strategies matrix above, will be able to aid DHL future performance and overtake their competitors