Fedex Corporation; Planning for Innovation and Competitive Advantage in a Dynamic Global Environment

Case Study 3

Sebastian Olar 900905-2235

1. How do the IT investment strategies and focus of FedEx and its main competitor UPS differ? Which company has the better strategy? Why?

As Rob Carter (the CIO of FedEx) was interviewed, he stated that FedEx has since a long time ago put a huge, $1 billion, investment in the information technology where they focus more on the customer based technology and less in the operational technology. The factors in the customer based technology that was being in focus were such as revenue-generating, customer-satisfaction-generating, and strategic-advantage technology. This focus provides FedEx with a better strategy for long-term success and building long-term goals and relationships by investing in the customer-satisfaction-generating and strategic advantage technology. FedEx is also striving for innovation, with its innovation team, that can open up for opportunities to come out of the gate with something more unique which the competitors are not prepared or aware of. The mentioned technologies being applied, and the innovative structure of bringing up brighter ideas, helps FedEx to reach diverse development, obtain better services and gaining competitive advantage by fulfilling customer needs. A good mentioned example could be the developed product called Insight.

Compared to FedEx UPS is a larger company that aims more focus at the operational strategy.  In the earlier days UPS didn’t realize the benefits of investing in informational technology until the early 90’s, where they decided to invest more significantly in information technology for ultimately reaching better achievements. However to fulfill this gap takes a period of time and UPS is also not as innovative as FedEx. In order to stay in competition with FedEx, UPS is copying and following FedEx’s strategic advantage technology.

Seeing from both companies IT investment strategies and focus, I would conclude that FedEx is put in a more beneficial and sustainable position than UPS. The reason is that FedEx has realized the importance of investing in IT technology. An annual budget of 1$ billion has been invested in IT in a long period. UPS realized the importance at the beginning of the 90’s and to fulfill this gap will take a long period of time. However, UPS is gaining more achievements since they’ve started investing in IT.

FedEx also has a more competitive advantage than UPS as they’ve set a huge focus on innovation, while UPS is only copying and following FedEx in order to stay in competition. On the long run, FedEx is successfully obtaining better services and products to fulfill customer needs.

Besides these advantages, FedEx has a more broad focus on developing more technologies and not only the operational technology as UPS does. They are also focusing on revenue-generating, customer-satisfaction-generating, and strategic advantage technology. This let’s FedEx reach more developments, that are beyond UPS; only focusing on the operational technology.