case study-FedEX Co.

FedEx , DHL and UPS have been operating over 30 years and have successfully established a strong brand name and customer loyalty . Brand name and brand image are so strong that it is impossible even for existing companies to capture the market where rivals are strong

Long term contracts and commitments also pose issues to new entrants Existing players have strategic alliances with giants like Amazon , Home Depot etc . Also the threat of retaliation from existing players is very huge (Abraham , 2007

Threat of Substitutes

The substitutes for air-freight are ground

or ocean freight . Threats of substitutes are not significant to the transportation industry as the existing players are adopting new techniques and solutions to different needs of customers . People need to send parcels from one place to another place whether it is raw material or final product . However , the market where FedEx has strong foothold- overnight documents delivery is facing significant threat of substitutes by emails , dot-com companies etc . Internet companies are spending heavily to attract customers to digitalize their documents , and online forms . Organizations are accepting digitalized signatures to cut time and money (Porter . 2008

Supplier Bargaining Power

Supplier power is very strong in the transportation industry as the fluctuating fuel prices affect the profitability of the industry severely . Thus oil suppliers are at a strong bargaining position . There is a tendency in transportation to store fuel to hedge against fluctuating prices

However , the suppliers of boxes and packages don 't have high bargaining power . Also , because the rivalry in vehicle manufacturing in very strong and the firms are highly fragmented this brings down their bargaining power (Abraham , 2007

Other suppliers such as aircraft maintenance providers and catering are in a position of strong bargaining power due to high switching costs

Transportation firms are investing heavily in automation technology...