Case study

Case study

Question 1

The expresses mail industry has evolved in stages since its invention. Before the invention of the express mail industry, passenger airlines were used by the express mail companies to deliver freights to various destinations. During this period the express mail companies collected cargo from customers, combine them and transport through the use of passenger airlines. Once the cargo has reached the final destination the express companies would collect and deliver the cargo to final destinations. During 1950 to 1970 the airfreight business became significant although their profit was still low (Rivkin, 2007). In the subsequent years, the express mail companies began to abandon passenger planes in favor of cargo planes to avoid inconveniency that are occasioned by shipping cargo using passenger planes. Recently express mail industry has become competitive with various firms entering the industry. Nearly all the firms in the industry own cargo planes hence does not rely any longer on passenger planes. These changes in the express mail industry have made it difficult for small firms to enter the industry due to large capital requirement. This is because it is necessary for new entrants companies to purchase cargo planes so as to be able to compete favorable with others. Cargo planes are expensive and small companies can not afford to purchase cargo planes.

Question 2

Airborne Express has used a number of strategies to ensure that it survives and prospers in the industry. The company has been selective with the customers it serves. For example, the company employs the principle of target marketing in its business operation. Target marketing has enabled the company to concentrate on specific market segments. This has enabled the company to have specialized services to the targeted customers and companies hence improve customer’s loyalty. Airborne is also having its own airport that it is uses to transport its cargo. This has enabled the company to reduce operational costs that are associated with lending fees for airport. The availability of its own airport also enables it to design the airport facilities to suit its specific needs hence enhance customers satisfaction. The company has also diversified its business to include warehouse facilities that it leases to customers at fee (Rivkin, 2007). This enables the company to increase it profitability as a result of extra income from the affiliate businesses. Another strategy used by the company involves offering competitive prices in the market. This has been achieved by charging low prices as compared to its close competitors hence attracting large number of customers.

Question 3

Airborne express has cost advantages over other express mail carriers due to the low prices it charges to its customers The company charges lower cost for its cargo as compared to its rival firms. The price charged by Airborne for morning deliveries of letters is lower than the cost charged by Fedex and UPS for morning deliveries of letters. For Lb letter Airborne charges $ 10.95 while Fedex charges $ 13.86 (Rivkin, 2007). This gives a difference of $ 2.91. In this case Airborne has a cost advantage of $ 2.91 over Fedex in delivering of 1Lb letter in the overnight morning category. It also has a cost advantage of $ 1.59 over UPS in delivery the same letter in the overnight morning category.

In all other categories, Airborne has cost advantages to its main rivals firms that include Fedex and UPS. This means that customers are likely to use the services of Airborne Company to ship their consignments to different destination. Businesses are most likely to reduce their cost so as to be able to maximum profits. This will imply that rational businesses and individuals will most likely to choose Airbone Express to transport their consignment as opposed to UPS and Fedex.

Reference

Rivkin, J. W. (2007). Airborne Express, Case Study 9-798-070. Harvard Business School,

Cambridge, MA