Q5. What are the factors that put pressure on FedEx to consolidate its operations, while remaining customer-focused?

Rising fuel prices

Rising fuel price had severely impacted upon the Company’s net income. Cost of fuel charges large proportion of the variable cost of transportation. It affects the operating income a lot. According to the Annual report of FedEx, the average fuel cost per gallon kept rising from 2010 to 2012. Fuel expense increased 19% during 2012 primarily due to price increases. 

It put pressure on the Company to re-think its business strategy.

You can also check the most current price at this website:

http://www.GasBuddy.com/gb_retail_price_chart.aspx?city1=USA%20Average&city2=&city3=&crude=n&tme=96&units=us

The Internet Market and e-Tailing

The Internet changed the basis for competition for most businesses. 

Its low cost and high diversity of applications made it appealing and accessible. The expectations of its customers, the size of the company was of no significance. 

The impact of the Internet on FedEx was twofold. Firstly, it opened up opportunities in logistics management for FedEx as businesses were using the Internet to re-engineer their supply-chains. So long as customers were satisfied, it really did not matter whether the goods were warehoused or not, whether the goods came directly from a factory in some distant location or whether the goods had been made to order. 

Intensive Competition

The industry was loaded with companies, local and global, that provided a myriad of transportation services to a wide range of businesses. Although FedEx pioneered the Web-based package-tracking system, such systems became the industry norm rather than a competitive advantage.

Minimizing duplication of work &Customer Confusion

FedEx was trying to promote five different subsidiary companies with completely unrelated names and business logos under the FDX banner through distinctly separate sales and customer service teams. By consolidation, information could be shared across the business units and hence minimize  the duplication of work and better serve customers.

Reflection

Internet and IT systems did help FedEx to integrate the customer services and supply chain activities. The case study keep our awareness of the importance of IT systems and how it could contribute to a company's operations. Other than that, integrate the supply chain not only help to cut down the cost but also help to enhance customer satisfaction