Sales Force Integration at FedEx (A)

SDM/2012/Venu Gopal

Competitive Threats facing FedEx

Emergence of substitutes email Rivals UPS attempting to grow its Air Business and is growing faster than FedEx Buyers emergence of JIT New customer segments emerging Internet commerce (p.4)

How did FedEx overcome these threats?

Acquiring Caliber in Jan 1998 Acquired RPS specialized ground Unit with a 12%
market share of the $18 bn ground market

Acquired Viking Freight Acquired Roberts Express niche player Acquired Caliber Logistics Consulting Service

How did the Acquisition of RPS help?

RPS is a highly profitable business(page 5, para 1) with operating margins of 11% compared to 3% of FedEx. Less expensive operations low cost Highly innovative delivery systems

Network of highly automated hubs Easy way to enter a new segment

Compare and Contrast the two Organizations

Dimension Services Delivery method Executives Customers /target customers Marketing support Cost structure Sales calls Package yield Sales difficulty FedEx 4 Own vehicles, planes 2200 1.5 million (mostly logistics, procurement High High Easy (p.7) $16.16 (Exhibit 1) Less (p7, para 2) easy to gain access RPS One (under 150 lb package) Sub contracted, third party 800 65000 Low Low Difficult $5.55 (Exhibit 2) Target one box (page 8, para 3) UPS was a clear leader

Compare and Contrast the two Organizations

Dimension Salary Breakup Sales Targets Incentive qualification Sales Philosophy FedEx 70 fixed, 30 variable FLEXIBLE 96% (page 8, para 1) For Presidents club Long term relationships, become an indispensable part of their ongoing business High (page 7, para 4) RPS 82 fixed, 18 variable Fixed At least 50% (page 8 last para) Get one box

Value Addition

Low (just delivery)

Analyze Project ARISE

ARISE was both an internal and external need Internal need
Developing a well balanced sales approach Express and Ground Combined Marketing Customer Information Technology Synergies

External need
Consolidation of Air and Ground Businesses become big response to UPS threat Presenting a unified face to customers Competitive advantage due to savings

What challenges does Project Arise face?

Challenge Sub areas Organizational structure, Territory design, Customer segmentation, customer retention, managing call frequencies Setting Performance Targets, Compensation, Career Development, Recruitment

Sales (General) Sales (Management)

Pricing / contracting, reporting, budgets Sales (Administration)

Operations
Training

Coordination of Marketing and Sales Express and Ground

Product Training, Cross Sell Training,