College of Humanities & Sciences of Northeast Normal University

Jilin Copenhagen Business College Joint Programme

The sixth semester

Name: Xu Jingyi

Coach: Bai Shiyan

Date: May 28th, 2009

I

Executive summary

This report focuses on analyzing main problems faced by Jiangsu Feiliks

International Co. Ltd and finding solution to the main problems, which based on my

internship in the company.

In the first part, I make an introduction about Feiliks, its product and market so that

readers have a general understanding of the company. In the second part, I analyze

the macro environment including political environment and economic environment. In

accordance with internal and external environment description, I make a SWOT

analysis of Feiliks. Then I make a competition analysis. With competition analysis, I

know that with logistics industry grows at a fast speed, and competition in logistics

market is fierce. As Feiliks is lack of competitiveness, price war makes Feiliks go into

trouble because its profit margin is decreasing. In order to help Feiliks get out of woods,

I make a STP analysis to analyze logistics market and find target clients and

positioning for the company. In the fourth part I put forward recommendation which

should help Feiliks improve its core competence by differentiating its service from its

current competitors according to Porter’s Generic Strategy. And I propose concrete

differentiation strategy with marketing mix for Feiliks. At last, I set an action plan and

budget for my recommendation.

II

List of content

1. Introduction.................................................................................................................................................. 1

1.1 Brief introduction to Feiliks.............................................................................................................. 1

1.2 Problem statement ........................................................................................................................... 1

1.3 Problem formulation ......................................................................................................................... 2

1.4 Terms and demarcation ................................................................................................................... 3

1.4.1 Reasons for the other issues not involved ........................................................................ 3

1.4.2 Defining the most important problems ............................................................................... 3

2. Methodology ................................................................................................................................................ 4

2.1 Data sources ..................................................................................................................................... 4

2.2 Research methods ........................................................................................................................... 4

2.3 Theories ............................................................................................................................................. 5

2.4 Limitation ........................................................................................................................................... 6

3. Presentation of Feiliks, its product and market ...................................................................................... 6

3.1 Company profile ............................................................................................................................... 6

3.1.1 Place and size ....................................................................................................................... 6

3.1.2 Development and trend........................................................................................................ 6

3.1.3 Feili’s core values ................................................................................................................. 7

3.1.4 Vision and Mission Statement ............................................................................................. 7

3.1.5 Organization structure .......................................................................................................... 7

3.1.6 Financial Resource ............................................................................................................... 8

3.2 Product description .......................................................................................................................... 9

3.3 Market description .......................................................................................................................... 11

3.3.1 Market size ........................................................................................................................... 12

3.3.2 Market share ........................................................................................................................ 12

3.3.3 Growth rate .......................................................................................................................... 12

4. Analysis ...................................................................................................................................................... 13

4.1 SW Analysis .................................................................................................................................... 13

4.1.1 Strengths .............................................................................................................................. 13

4.1.2 Weaknesses ........................................................................................................................ 14

4.2 External environment ..................................................................................................................... 15

4.2.1 Political Environment .......................................................................................................... 15

4.2.2 Economic Environment ...................................................................................................... 17

4.3 OT Analysis ..................................................................................................................................... 21

4.3.1 Opportunities ....................................................................................................................... 21

4.3.2 Threats.................................................................................................................................. 22

4.4 Competitive situation ..................................................................................................................... 23

4.4.1 Competition from foreign ventures ................................................................................... 23

4.4.2 Competition from state-owned logistics companies ...................................................... 23

4.4.3 Competition among private logistics companies ............................................................ 24

4.5 STP Analysis ................................................................................................................................... 25

III

4.5.1 Segmenting .......................................................................................................................... 25

4.5.2 Targeting ............................................................................................................................... 26

4.5.3 Positioning ........................................................................................................................... 27

5. Recommendation ..................................................................................................................................... 28

5.1 Feili’s development direction ........................................................................................................ 28

5.2 Porter’s Generic strategy .............................................................................................................. 29

5.3 Marketing mix strategy .................................................................................................................. 30

5.3.1 Product strategy .................................................................................................................. 31

5.3.2 Pricing strategy ................................................................................................................... 31

5.3.3 Promotion strategy.............................................................................................................. 32

6. Action plan and Budgeting ...................................................................................................................... 32

6.1 Action plan ....................................................................................................................................... 32

6.2 Budgeting ........................................................................................................................................ 34

Conclusion ..................................................................................................................................................... 36

Bibliography ................................................................................................................................................... 37

Enclosures ..................................................................................................................................................... 39

1

1. Introduction

1.1 Brief introduction to Feiliks

Feiliks is a new-emerging logistics company in Jiangsu province. The company plays

an important role in logistics industry of Jiangsu province. In 2004, Feiliks was named

"Top 10 International Freight Forwarders in Jiangsu Province" and was awarded the

honorary title of "Law-abiding and Credible Freight Forwarder" by Nanjing Customs

House. Feiliks develops at a fast speed since its establishment. At beginning, Feiliks only

had ten employees. And its business was freight forwarding. During 1999 and 2002,

Feiliks began making profit and its business was expanding. In 2001, Feiliks begin to

serve as a Third Party Logistics supplier. After experiencing start-up phase, Feiliks enters

its rapid growth stage. In order to develop its third party logistics business further, in 2006,

Feiliks combined with government development department jointly invest on bounded

logistics center in Kunshan Export Processing Zone. At present, Feiliks is dedicated to

serve as specialized third party logistics supplier in Jiangsu province. However, Feiliks is

rendering services to the whole country and even the whole world in future.

1.2 Problem statement

During internship of 8 weeks in Feiliks International Co. Ltd, I found several problems in

Feiliks’s operation.

In terms of its operation, coordination of operating departments in Feiliks is deficient

some departments isn’t clear about their duties and power. It is alright to deal with

ordinary work, whereas when unusual conditions take place, there is no clear division of

work to resolve problems. Generally, these problems are resolved by leaders of relevant

departments. It seriously influences efficiency and service quality of Feiliks.

Rate of making mistakes is relatively high no matter how much business volume is. In

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first 3 month of 2009, Feiliks’s business volume decreases 30%, which impacted by

financial crisis. With declining business volume, their service quality doesn’t improve.

Document processors still make many mistakes due to their irregular processing. It

influences Feiliks’s efficiency and service quality. So the company needs to have a

normative management to trace problem solving and performance appraisal.

Mobility of staffs in Feiliks is high. As practiced workers leave Feiliks for better

companies, lots of new workers are employed to fill vacancies. Since new workers don’t

clear about their work, they need training from Feiliks to fit their jobs. It not only influences

the stable operation of Feiliks but also cost a lot in employees’ training.

Feiliks is small-medium sized logistics company, which in its growth stage. The

company needs strong financial resources to support its expansion. However, Feiliks

doesn’t have deep-pocket to support its development. Besides that, with high reserve

ratio, it is difficult to get fund from society.

In terms of competition, Feiliks is lack of core competence. Feili’s business scope is

similar with its competitors in Jiangsu province. In recent years, logistics industry in China

develops at a fast speed. Many new entrants come into this market. As competition in

Jiangsu’s logistics market is fierce, cutting price is their competition way to compete with

each other. In order to keep market share, Feiliks has to cut its price to keep market share,

which dilutes its profit. This is the biggest problem that Feiliks have to resolve immediately

because it relates to the prospects for Feili’s development.

1.3 Problem formulation

The major problem is that Feiliks is lack of core competence. As Feiliks is lack of core

competence, the company has to passively cut price, which offset its profit, to keep its

market share because of offering similar service. Since Feiliks and its competitors offer

undifferentiating service, there’s no clients loyalty. It means Feili’s clients could select

3

anyone to replace Feiliks. Therefore in order to expand market share, logistics firm in

Jiangsu province cut price. Feiliks has to decrease its price to keep market share.

However, decreasing price counteract Feili’s profit. What’s more, as Feiliks isn’t a solid

finance company that has strong financial support in favor of price war for a long time.

And Feiliks even may exit logistics industry due to unprofitable operation and shortage of

competitiveness. Only if Feili’s core competence is improved can its market share

maximized. For this reason, core competence is the knottiest issue that Feiliks should

settle immediately.

1.4 Terms and demarcation

1.4.1 Reasons for the other issues not involved

Once the most important problem is resolved, high mobility of labor and shortage of

capital will be readily resolved because identification and brand awareness will increase,

which could raise customer loyalty and detain employees because of a promising future.

And other two problems is easy to resolve by give more train to their employees and set a

reasonable performance appraisal system to supervise and motivate them. And

compared with the major issue, these problems do not have a direct link to Feili’s

surviving in competition and development prospect. Therefore this report doesn’t discuss

these issues and focus on analyzing the major problem.

1.4.2 Defining the most important problems

For the moment, Feiliks with similar service is lack of core competence. Fierce

competition in logistics market compels Feiliks to reduce its service price to keep its

market share. Therefore the main problem is about competitiveness in the field of

marketing. How could Feiliks improve its core competence, which could make Feiliks

obtain larger market share in Jiangsu province.

4

2. Methodology

2.1 Data sources

Primary data

In this report, primary data are mainly used for internal corporate introduction. And

primary data used in this report are collected by interview and questionnaire.

Company profile, product description and market description are based on primary

data. Feili’s Organization structure, financial resources, market growth rate are from

primary data. Besides that, based on primary data, I complete competitive situation

and STP analysis.

Secondary data

Secondary data are mainly used for external environment analysis. And secondary

data are from internet. Government supporting policy, increasing tenure tax, export

rebate in Political environment and Jiangsu’s economy situation and other economic

factors in economic environment are based on secondary data.

2.2 Research methods

Qualitative research methods

I made interviews to directors of business unit during internship in Feiliks. As this

report is problem centered, interviewing is focused on operation problem of Feiliks.

There are four directors in business unit. And I interviewed three of them. In

accordance with interview, I find several problems of Feiliks. After analyzing these

problems, I find the most important problem that this report centered on.

Quantitative research

5

For workers, I made questionnaire survey. There are 75 people in Feili’s business unit.

And I made 75 questionnaires. My questionnaire focuses on their workload and

thinking about company. I try to find problem in this view.

2.3 Theories

Macro environment analysis

In macro environment, I analyze political and economic environment. Which changing

elements in political and economic environment influence the company? With macro

environment analysis, I understand positive and negative factors for Feili’s

development.

SWOT

Based on corporate internal description and external environment analysis, I make a

SWOT analysis to analyze internal and external situation of Feiliks. With SWOT

analysis, I find Feili’s strength, weakness, opportunities and threats, which is helpful

in analyzing competitive situation of Feiliks.

STP

STP analysis is used to analyze Feili’s target market and positioning in target market,

which is helpful in indicating its development direction and strategy.

Porter’s Generic Strategy

Porter’s Generic Strategy is used in recommendation. With this model, I propose an

advice about how could Feiliks improve its competitive advantage.

Marketing mix

6

Marketing mix is used in action plan. I describe how Feili could offer value-added

logistics service by 4P, which differentiate its service from its competitors.

2.4 Limitation

Primary data may not be accurate as directors and workers are unwilling to say

negative aspects of the company. And secondary data isn’t precise because of outdated.

3. Presentation of Feiliks, its product and market

3.1 Company profile

3.1.1 Place and size

Feiliks International Logistic Co. Ltd， which is a leading logistic enterprise in Kunshan

city, Jiangsu province, was established in 1995. The registration capital of Feiliks is 80

million CNY. Headquarters of Feiliks is in Kunshan Export Processing Zone. In 2007,

Feili’s total revenue is 68,358 CNY and its total assets are 258 million CNY. Feiliks

specializes in Third Party Logistics and international freight forwarding, which mainly

serves electronic information companies in Jiangsu province. And Feiliks has a group of

well-known client such as Lenovo, Acer, Asus, Samsung, etc.

After 14 years development, Feiliks has four subsidiaries in China and two branches

desperately in Singapore and America. Feiliks owns various transport vehicles, container

yards of 70,000 square meters and warehouse of 95,400 square meters including

Customs supervised warehouse and Bonded warehouse. As a government supported

enterprise, Feiliks has a good relationship with local government.

3.1.2 Development and trend

In 2007, feiliks ranked 50th on the list of China’s international freight forwarders

company in China and 6th in warehousing service, 14

th in land carriage and 33

rd in its air

7

freight forwarding capacity. Now Feiliks focus its business on Eastern China and it is

branching out to serve nationwide and worldwide. Feiliks will apply itself to specialized

and outstanding supplier of Third Party Logistics by widely using information technology,

allying logistics partners to integrate various sources.

3.1.3 Feili’s core values

Feili’s business motto is “Think more for customers and do it better”. In practice,

Feiliks is making effort to improve specialization and customers’ satisfaction. Feiliks view

its client as strategic partner. The company has set a plan with Acer, which Feiliks will

offer logistic service to Acer no matter where the plant is. In future, Acer will be a carrier of

Feiliks to enter the whole country. Feiliks are rendering services to the whole country and

even the whole world in future.

3.1.4 Vision and Mission Statement

Guided by the mission of “Go all out to aim for perfection”, Feiliks applies itself to

outstanding and specialized Third Party Logistic supplier offering the best service to

clients at present.

3.1.5 Organization structure

8

General Manager

Marketing Financial Human resource Customer service

Document processing Customs affair

Warehousing

Transportation

Quality supervision Sales department

Market expansion

Administration

Figure1: Feili’s organization structure

3.1.6 Financial Resource

Table 1: Income statement of Feiliks

Income Statement of Feiliks

Unit: CNY

Item 2007 2008 Change rate

Sales revenue 683,586,110 769,782,082 12.6%

- Cost of goods sold 475,051,680 540,909,544 13.9%

Taxation 3,269,805 3,680,024 12.5%

Operation profit 205,264,625 225,192,514 9.7%

+ other profit 4,536,250 2,326,010 -48.7%

9

- Expenses 167,459,955 191,413,468 12.5%

Net profit 42,340,920 36,105,056 -14.70%

It is obvious that net profit of Feiliks in 2008 declined despite Feili’s sales revenue

increase 12.6% compared with 2007. There are two reasons. First, increasing petrol price

and labor cost push cost of goods sold and expenses go up. Second, sales price of

service offered by Feiliks is decreasing because the company wants to keep its market

share by cutting price. With decreasing price and increasing cost, net profit of Feiliks in

2008 decreased a lot. The sales turnover growth was driven by increasing sales volume

in 2008.

According to my interview and the company’s performance (shown in the income

statement), Feili’s financial resources are limited for future investment. For example,

Feili’s warehouse is working at full capacity around a year and they need building a new

one to enlarge its business. However, there is no sufficient fund for that. Although heavy

workload means that Feiliks has a high usage rate of warehouse, it stunt further

development of Feiliks because if Feiliks has more fund to expand scale it could serve

more companies and make more profit.

3.2 Product description

Feili’s business covering land, ocean and air international freight forwarding,

Third-Party Logistics, public bonded warehousing.

1. International freight forwarding (land, ocean and air)

Feiliks as an agent offers clients services below:

Door-to-door on-time services for air and inland cargoes

Booking, customs clearance, commodity inspections, quarantines for imports &

exports

10

Packaging, warehousing and distribution of articles

Transport services for oversized and overweight cargoes as well as fresh and

live commodities

Transport services of supervised vehicles between Hong Kong and Chinese

mainland

Container yards, bonded warehouses and container trucking fleet are able to

provide around-the-clock, full-ranged services for loading/unloading of

containers, frozen cargoes, general cargoes, special commodities, oversized

cargoes, chemicals and dangerous goods.

Providing information tracking and feedback services for articles as well as the

insurance brokerage services.

2. Third-Party Logistics (TPL)

Offering services below:

Integrated services to third-party logistics transportation, customs declaration,

warehousing and distribution

Participation/involvement in customers' marketing activities

All-year-round and around-the-clock warmhearted services

Value-added services to customers

Real time tracking/tracing of the customers' goods through the information

platform

Consolidated design of logistics plan

With strong capacity in warehousing and transportation and application of advanced

information management technology, such as Warehousing Management System (WMS),

Vendor Managed Inventory System (VMI) and Electronic Data Interchange (EDI), Feiliks

renders more flexible, specialized and tailor-made service to its clients, which effectively

cutting logistics costs and saving time. In order to satisfy customers’ demand, Feiliks has

11

planed three programs to customers in Eastern China. The programs aim at providing

integrated information and logistics for customers in mainland, Taiwan, Hong Kong and

Macau.

3. Public Bonded Warehousing

Feiliks has 4 bonded warehouses of 21,500 square meters separately in Kunshan

Export Processing Zone, Suzhou Industrial Park Bonded Logistics Center and Shanghai.

So Feiliks provide services of storing, cargo transiting and loading & unloading articles.

Feiliks is able to store those articles that need specific storing situation because Feili’s

warehouses has different spaces, such as humidity controlled space, temperature

controlled space, etc. In order to minimize error rate, Feiliks store and manage stocks by

supervising the Part Number (P/N) and batch.

As offering more flexible and relative comprehensive business, Feiliks spreads its

service to other provinces, such as Shandong, Shanxi, etc, as well as overseas.

3.3 Market description

At present, Logistic industry is in growth stage, the growth rate of China’s logistics is

about 20% in recent two years and Chinese companies in this industry are not mature. As

high development of China’s economy and foreign trade and logistics work outsourcing of

China’s manufacturer, demand in logistics market continually growing in recent years.

Many global logistical enterprises with strong competence enter China’s market. UPS,

FedEx, DHL, etc enters Yangtze River delta area to occupy China’s logistical market. It is

a big threat to Feili’s and also other Chinese companies.

At present, Feiliks mainly renders service to company in Jiangsu province. And

according to my primary research, Feili’s major clients are Lenovo, Acer, Samsung, Asus

and big manufacturer that offers accessory to worldwide well-known computer producer.

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3.3.1 Market size

In 2008, Jiangsu’s total social logistic cost is 552.1 billion CNY, which accounts for

18.05% of the GDP in Jiangsu province. In recent years, tertiary industry develops at a

fast speed, which contribution of the industry increase with years. And logistics industry,

which plays an important role in tertiary industry, is in its growth stage that must develop

quickly in coming years. So the market potential of logistics is large.

3.3.2 Market share

The market share for Feiliks is small. In 2008, the operating revenue of Feiliks is about

770 million CNY, which accounts 1.4% of total logistics cost in Jiangsu. However, this

figure includes not only amount that companies with its own logistics system expand in

logistics work, but also the part that companies using logistics supplier expand in logistics

service. Despite the fact is that Feili’s market share is small. It is an opportunity to Feiliks

that offer cost-effective service to those companies who use its own logistics system. In

doing so, Feiliks could maximize its market share in Jiangsu province.

3.3.3 Growth rate

The market for Feiliks grows fast because business volume of Feili’s clients is

increasing in recent years. The operating revenue is about 52,889 million CNY in 2006

increasing 30.1%. While in 2007, the sales revenue is around 68,358 million increasing

29.2% compared with last year. Feili’s growth rate in recent years is about 30%.

13

Unit: CNY million

Feili’s operating revenue

26,564.40

40,648.36

52,889

68,358

0.00

10,000.00

20,000.00

30,000.00

40,000.00

50,000.00

60,000.00

70,000.00

80,000.00

2004 2005 2006 2007

Figure 2: Feili’s operating revenue

4. Analysis

4.1 SW Analysis

4.1.1 Strengths

1. Feiliks has a good relationship with local governments. As we know, China is a

relationship-focused country. So it is very important to have a good relationship

with governor because that will provide support and convenience to the company.

For example, Kunshan governments offers discount in corporate income tax and

electricity. And local government allows Feiliks has a “green channel”, which cut

down some red tapes to improve efficiency of customs clearance.

2. Feiliks is a small-medium sized company. Operation of Feiliks is rather flexible.

14

As the decision from top will communicate to bottom fast, implementation of

corporate strategies is relatively effective in Feiliks.

3. Feiliks attaches importance to customers. Guided by “Think more for customers

and do it better” Feiliks put satisfying customers at first priority. Feiliks has

special department to get customers feedback to meet customers’ demand. So

Customer Satisfaction Rate of Feiliks is relative high.

4.1.2 Weaknesses

1. Feiliks doesn’t have strong financial resources, which limits the development of

Feiliks. As Feiliks is in its growth stage, it needs funds to expand its scale and

improve its specialization and service level. Capital resource constraints limited the

development of Feiliks.

2. Feiliks is devoid of experienced labor force. Mobility of staff is high. Many

experienced staff in Feiliks leave for a higher position after working for the firm for a

period. High mobility causes stability of Feili’s operation because new employees

need time to familiarize themselves with the work.

3. Feili’s management system isn’t normal. As Feiliks is lack of normative

management system, duty of departments is unclear. During my internship in the

company, I found some department does’t know what should they do and what they

can’t do. When they met unusual conditions, there is no clear division of work to

resolve the problem. It influences efficiency.

4. Feiliks is lack of corporate core competence. Feili’s business scope is similar with

its competitors. As a small-medium sized logistics company in Jiansu province,

Feiliks doesn’t have service diversification advantage. Since competition in logistics

market is fierce, Feiliks is lack of core competence, which makes Feiliks is in

passive position when compete with other logistics companies. As price war in local

logistics market is fierce, Feiliks has to cut its price to survive in the market.

15

5. Compared with global logistics leading companies, Feiliks is lack of advanced

information system and experience in international logistics service. Feiliks need to

improve its efficiency and specialization to offer better services to its customer. In

doing so, Feiliks could have a bright future.

4.2 External environment

4.2.1 Political Environment

1. Governments planning for logistics industry

In recent years, China attaches great importance to logistics development. Central and

local governments release some preferential policies in taxation, electricity, investment,

etc supporting logistics development, formalizing administration regulation, enhancing

supervision of the logistic market. In 2008, central government put forward “Plan of

modern logistics development in China”, as follow

1) Encouraging manufacturer outsource logistic work.

2) Promoting joint development between manufacturing industry and logistic industry.

3) Supporting Third Party Logistic company development by issuing preferential

policies.

4) Reinforcing informationization and standardization of logistics, pushing logistical

innovation.

5) Intensifying regional logistics cooperation, speeding up the development of logistics

centralized area, especially Yangtze River delta area, Pearl River Delta, etc, to reduce

inter-regional barriers and optimize the allocation of resources.

As a series of preferential policies, logistics has become one of the fastest growing

industries. In 2008, the total logistic expenditure is 5454.2 billion CNY, increasing 16.8%

comparing with that in last year. In 2009, central governments will subsidize six industry

16

including logistics 20 billion CNY by discounts government loans to energize these

industry.

As a Third Party Logistics supplier, Feiliks will get benefit from these policies, especially

the regional logistics cooperation of Yangtze River delta area because this area is the

principal market of Feiliks. The cooperation will be to the advantage of Feili to share of

information resource, integrate storage, transportation, information resources to improve

efficiency.

2. Tenure tax

There is a threefold increase in China’s tenure tax since 1st January, 2007. According to

statistics, the storage cost in 2008 is 1892.8 billion CNY increasing 21.8%. Ascending tax

on land use has a negative influence on Feili’s operation because cost of operation will

increase and profit will decrease. Storage service is an industry that has lower output but

needs take up huge amounts of land. With higher tax on using land, profit margin of

warehousing will decrease because cost of warehousing is going to rise. Meanwhile it is

hard for company to construct of logistical facilities further. It will slacken speed of

warehousing development. At present, capacity of storage is going to saturation. As

investment in warehousing decline, the supply of storage service can not satisfy soaring

demand. So it is harmful to warehousing service. For Feili, increasing tenure tax not only

decreases the profit margin but also impacts expanding scale in future.

3. Raising the export rebate

In April 1st 2009, Chinese government raises the export rebate of textiles, clothing,

electronic information products, steel, etc. this is the 6th time that China increase export

rebate of industrial products since August 1st 2008. This policy must stimulate China’s

export. Increasing export rebate will be conducive to Chinese electronic information

industry. It is a piece of good news for Feiliks because Feili mainly serve to electronic

17

information companies in Jiangsu province. As business of electronic information

companies increases, Feili’s business will go up too.

4.2.2 Economic Environment

1. High growth rate of economic development in Jiangsu

The world experiences the financial crisis in 2008. The global economy gets into trouble.

China’s economy keeps growing despite the financial crisis impacts economy in China.

According to figure 3, it’s easy to see that gross provincial product of Jiangsu province

has been increasing steadily. The relative stable situation offers a good opportunity to

logistics industry. In 2008, Gross provincial product of Jiangsu province is 3059.3 billion

CNY, increasing 12.5%. Service industry creates 116.56 billion CNY, which accounts for

38.5% of the gross provincial product, raising 12.6% compared with last year. It means

Jiangsu’s service industry has developed rapidly.

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0

500

1000

1500

2000

2500

3000

3500

2006 2007 2008

Unit: CNY Billion

2006-2008 Gross Provincial Products

TertiaryIndustry

SecondIndustry

PrimaryIndustry

Figure3: 2006-2008 Jiangsu’s Gross Provincial Products

Source: http://www.jssb.gov.cn/

Total export-import volume of Jiangsu province in 2008 is 392.27 billion USD increasing

12.2% comparing with that in last year. Exports of goods raise 16.9% reaching 238.04

billion USD. Imports of goods is 154.23 billion USD raising 5.7%. Hi-tech exports are

104.05 billion USD and imports are 70.6 billion USD.

19

2006-2008 foreign trade in Jiangsu province

050100150200250300350400450

2006 2007 2008

Unit: CNY billion

Exports of goodsImports ofgoods

Total Imports and Exports

Figure 4: 2006-2008 foreign trade in Jiangsu province

Source: http://www.stats.gov.cn/tjgb/ndtjgb/dfndtjgb/t20090216_402548982.htm

Rapid growth in China’s foreign trade drives the continued growth of social logistics

cost. In 2008, China’s total logistic amounts 89895.3 billion CNY increasing 19.5%

comparing with that in last year. And total social logistics cost, including transportation

cost, storing cost and logistics administration cost, is 5454.2 billion CNY in 2008

accounting for 18.1% of GDP, which means if we create value of 100 RMB, we will

expend 18.1 RMB as logistic cost. In resent years, the figure is decreasing year by year.

But this ratio in developed country, such as USA, Japan and Germany, is about 8%. So

China has a large space in improving its logistic industry.

Table 2: Key indicator of logistics statistics in Jiangsu province

Unit: CNY billion

20

Total logistic

amounts

Total social

logistics cost

Logistical

added-value

2006 6228.9 371.5 136.1

2007 7641.8 450 159.3

2008 9835 552.1 188.3

Source: http://www.yzetc.gov.cn/Rdetail.asp?id=14950

http://www.mofcom.gov.cn/aarticle/n/200808/20080805732706.html

In 2008, total logistic amounts of Jiangsu province is 9835 billion CNY, which accounts

for 11% of national total logistic amounts, increasing 22.3% compared with last year.

Social logistics cost of Jiangsu province is 552.1 billion CNY, which accounts for 18% of

Jiangsu’s gross provincial product. The number shows that Jiangsu should promote its

logistic industry further to create more social value. According to figure, logistical

added-value grows rapidly. The extent of increase in recent two years is more than 15%.

It means logistics in Jiangsu develops rapidly. Socialization and specialization of logistics

is improving. It also implies that competition in Jiangsu’s logistical market is quite fierce.

2. High reserve ratio

In order to stable economy, China heighten reserve ratio to 17.5% in 2008, which

decrease money supply in the market. It worsen the situation that small-medium sized

logistics companies financing. With growing demand for logistics service, logistics

companies, such as Feiliks, have to enlarge operation scale. As their financial recourse is

limited, they need financial support from outside. While decreasing money supply makes

financing from society harder than before. As Feiliks is in its expansion phase, it needs

large amounts of money. Since Feiliks doesn’t have a deep-pocket, it needs much more

support from outside. So high reserve ratio makes against to Feili’s expansion.

3. Increasing transportation cost

21

Petrol price continued increase in 2007 and 2008. Increasing petrol price puts pressure

on the China’s transportation. In 2007, China’s diesel price increases 86%, which

increase transportation cost of logistical company. In 2008, China increase fuel oil

surcharge, which makes cost of air transportation going up. Price of highway

transportation and railway has risen in recent years, which increasing the operating cost

of logistics company.

4. Increasing labor cost

As high development of China’s economy, cost of labor force is rising, which will

increase operating cost of logistics companies as well. Despite logistics isn’t a labor

intensive industry, Chinese logistics companies’ mechanization level isn’t high. Increasing

labor cost will decrease profit margin of logistics companies.

Despite logistics industry develops at a high speed, the profit margin of Feiliks isn’t

rising continually due to increasing transportation and labor cost. Without a deep-pocket,

it is difficult to Feili to expand because financing from society is tough.

4.3 OT Analysis

4.3.1 Opportunities

1. Location of Feiliks offers great external environment to its development. Jiangsu

has clear advantage in economy and geographic position. Jiangsu province is in

Yangtze River Delta, which is one of the most developed areas in China.

First-class transportation infrastructure system and high-speed economy

development in Jiangsu province offers Feiliks a solid foundation.

2. Demand for logistics service is large in Jiangsu province. However, not all the

companies are consuming services offered by third party logistics supplier at this

moment. Feiliks could maximize its market share in Jiangsu province to render

22

service to those companies who use its own logistics system.

3. China’s large amount of foreign trade drives logistics industry grows quickly. future

of logistics industry is prosperity. In 2008 Hi-tech exports are 104.05 billion USD

increasing 25.2% and imports are 70.6 billion USD increasing 23.4%. As

information technology industry develops rapidly in Jiangsu province, their

demand for logistics service will increase as well. As Feili’s major clients are in this

industry, Feili’s business volume will rise further.

4. Preferential policies released by Chinese governments will promote logistics

development. As tertiary industry in China develops, proportion of the third

industry in GDP is growing. Logistics industry is one of China’s sun rising

industries. Chinese governments begin to attend to development of logistics

industry. Many preferential policies are unveiling. It is a piece of good news for

Feiliks because it will get benefit from these policies. Regional logistics

cooperation in Yangtze River delta will stimulate development of logistics industry

in Jiangsu province.

4.3.2 Threats

1. Increasing price of energy pushes China’s transportation cost rising. With increasing

landing using cost and labor cost, the operation cost of Feiliks is going up, which will

absorb its operation profit. It has negative influence on Feili’s operation and

development.

2. High reserve ratio will worsen financing from outside. As Feiliks is in its growth phase,

it needs large amounts of money to expand its scale. While Feiliks doesn’t have

deep-pocket, it needs financing from society. So worse financing condition will limits

Feili’s expansion and development in future.

3. China’s logistics market has caused foreign companies interests. Global logistics

leading companies enters China’s logistics market. As they have distinct advantages

in financial resource, informationization level, management system and a great deal of

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experience of international logistics service, they will share market with Chinese

logistics companies. It is obvious that they have strong competitiveness compared

with Chinese logistics companies. Of course their entering will intensify competition in

China’s logistics market.

4. As foreign logistics enters Chinese market snatching market share, in order to survive

in fierce competition, Chinese private logistics companies cutting price to maximize

their market share. As Feili’s service is similar with their service, Feiliks has to cut

price to hold its market share. With increasing operation cost, price war will decrease

Feili’s operation profit further.

4.4 Competitive situation

In recent years, logistics as one of China’s sunrise industries develops at a high

speed. The demand in market is rising and market potential of logistics is large.

International logistics enterprises, state-owned logistics corporations and China’s private

companies share logistics market in China. Competition in the market is fierce.

4.4.1 Competition from foreign ventures

In recent years, China’s logistics market has caused foreign companies interests.

Many global leading logistics companies enter China’s market merging Chinese logistics

companies and occupying Chinese market. These companies have distinct advantages in

financial resource, informationization level, technology and management. With a wealth of

experience in overseas logistics operation, they will be more specialized in offering

logistics service. UPS, FedEx and DHL has enters Jiangsu province expand their

business in Yangtze River delta. UPS has established transit logistics center in Shanghai

Pudong airport, allying with Yangtze River Express offer service to companies.

4.4.2 Competition from state-owned logistics companies

24

Meanwhile state-owned logistics corporations, such as Sinotrans are reconstruct

their business to fix in with change of market demand. Sinotrans Jiangsu Co., Ltd. is the

largest shipping company, the largest forwarder and one of the largest shipping agent and

air courier in Jiangsu province. The company has spread its business channels over the

main ports along the Yangze River and developed cities in Jiangsu Province. With

extensive business covering and huge amounts of transportation and warehousing assets,

they are focusing on updating their business, improving specialization and strengthen

core competence. In doing so, with good relations with central governments, they have

established a stable, comprehensive and cooperation with big manufacturers, trade

companies at home and abroad.

4.4.3 Competition among private logistics companies

Many Private enterprises survives in the market cracks. Many private logistics

companies are lack of strong financial resources, experienced labor force, advanced

technology and normative corporate management system. So they are in weak position in

the market. As their business is approximately similar, in order to increase market share,

cutting price is a common competition way.

At present, Feiliks doesn’t have enough competence to compete with large-scale

global leading logistics companies and state-owned logistics corporations. So its major

competitors are local private logistical enterprises, such as Weijia Logistics Company,

Honggao Logistics Company, etc. As Feiliks is lack of core competence, with similar with

its competitors, the company has to passively cut price, which offset its profit, to keep its

market share. Besides that, as transportation and labor cost is increasing Feili’s profit

margin is decreasing despite its operation revenue is increasing. Adverse competition

makes Feiliks facing a difficult situation because weak competitiveness and decreasing

profit will leads Feiliks exit this market finally. With hit of financial crisis, during the period

of my internship in the company, Feili’s business volume in first three month of 2009

25

decreased slightly due to volume of business of Feili’s clients decreases. According to my

primary research, average documents processing quantity per person is 118 copies in a

month of 2009, while in 2008 the figure is 277 copies. The figure in 2009 decreases 32%

compared with that in 2008. The other logistics companies in Jiangsu province must have

same problem. In order to survive in the competition, cutting price must go into greater

degree. As operation cost in transportation and labor cost is rising and price war is fierce,

it is tough for Feiliks to get profit. So it is in a difficult situation.

4.5 STP Analysis

As competition in Jiangsu’s logistics market is fierce, price war makes Feiliks cut

price to maintain its market share. While adverse competition will worsen Feili’s operation

and seriously stunt its development. In order to get rid of adverse competition, the first

thing that Feiliks should do is to analysis segment the market, which should make a STP

analysis. And then Feiliks should combine with its present circumstance to set a strategy

changing passive to active. In doing so, Feiliks could change passive competition to

active competition and have a long-term development.

4.5.1 Segmenting

Logistics services mainly serve for three kinds of product in China including produce,

industrial product and consumer product. At present, as Feiliks doesn’t have strong

financial resources to expand its business to the whole country, Feili’s main business is in

Jiangsu province. Development of economy in Jiangsu province ranks third place in

nationwide. And Jiangsu is developed in manufacturing industry.

Table 3: Three main logistics goods in 2008

Unit: CNY billion

26

Value of output Growth rate of

output value

Logistics

demand

Growth rate of

logistics demand

Produce 211.09 4% 137.69 11.1%

Industrial

products 1682.62 12.90% 7671.3 24%

Consumer

products 836.02 21.60% 13.26 12%

Source: http://www.ewise.com.cn/2005report/2009884jiangsuwuliubg.htm

In 2008, value of produce output is 211.09 billion CNY increasing 4% comparing with

last year. Value of industrial product output is 1682.62 billion CNY rising 12.9%. And value

of consumer goods output is 836.02 billion CNY increasing 21.6%. In the view of growth

rate of the three kinds of product, we could see that consumer products have a highest

growth rate among them, the second is industrial product with growth rate of 12.9%.

However, total logistics amounts of consumer product in Jiangsu province 29.51 billion

CNY increasing 10%, which only accounts for 0.3% of total provincial logistics amounts.

While total logistics amounts of industrial product are 7671.3 billion CNY increasing 24%

comparing the same period of last year, which accounts for 78% of total provincial

logistics amounts. In the view of logistics amounts, it’s easy to see that industrial products’

demand for logistics service is the biggest.

4.5.2 Targeting

At present, Feili’s target client is manufacturer producing industrial products in

Jiangsu province. And during 2008 in Jiangsu province, output value of communications

equipment, computers and other electronic equipment manufacturing is 967.94 billion

CNY increasing 21.7%, which accounts for 15% of total industrial products’ output value.

In 2008, investment on fixed asset of communications equipment, computers and other

27

electronic equipment manufacturing is 246.3 billion CNY in Jiangsu province increasing

17.6%. It means that theses manufacturing will go on developing at a fast speed. As Feili

with limited resources has experience in serving electronic information companies, it is

appropriate to consider communications equipment, computers and other electronic

equipment manufacturing as its target market.

4.5.3 Positioning

Figure 5: Positioning of Feili at logistics market of electronic information

companies

There are two dimensions grouping companies in the target market. Companies in

group A with high company size, sales revenue and market coverage is global major

logistics corporations. These companies are rich in industry technology and overseas

Group A

Group D

Group C

Low

Sales revenue, Company size, market coverage

High

High

Group B

Specialization, Service ability

28

operation network. And they have strong financial resources, advanced IT system and

good relation with international clients. UPS, FedEx and DHL are in group A.

Companies in group B with high specialization in Third party logistics, offer Market

integration and value-added services to some customers. But their company size and

sales revenue is relatively low. Representing companies are YCH, BAX, etc.

Group C with relatively big company size and spreading market coverage has strong

capacity of warehousing and transportation and good relations with central governments.

These companies could offer comprehensive specialization services in some logistics

area to its clients. Representing companies are Sino trains, Cosco, etc.

Group D is new emerging logistics companies with small-medium size. Their

business scope, clients and service boundary is relatively small. Their competitiveness is

relatively low compared with other groups. Their limited financial resources and fixed

assets hamper their expansion and development.

Feiliks is in Group D. As other groups are earlier enters, they have advantage in

experience, existing clientele, and even economies of scale. Companies in Group D with

low specialization and service ability, they have to offer cheaper service to occupy market

share. So the competition among companies in Group D is price war.

5. Recommendation

5.1 Feili’s development direction

29

Figure 6: Two strategies for Feili approaches to group A

At present, Feiliks is in Group D, which is in bottom of positioning diagram. Group A is

the ultimate goal of Feiliks. Feiliks could achieve this goal by two ways. The first is

improving its specialization and service ability towards group B and then extending its

market share to approach group A. The second is increasing its sales revenue before

improving its specialization and service ability. However, Feili’s service is similar with its

competitors, it is impossible for Feiliks to expand its market share directly unless Feiliks

cut down its price. However, Feiliks isn’t a solid finances company that can not support

Feiliks cutting price for a long time to maximize its market share. Therefore Feiliks has to

choose the first proposal, which is improving its specialization and service ability first and

then expand its market share, to achieve its goal to become a company in group A.

5.2 Porter’s Generic strategy

How to ascend its specialization and service ability to improve its core competence

is the next step Feiliks should think about. Michael Porter said that “a firm’s strengths

Group A

Group D

Group C

Group B

Low Sales revenue, Company size, market coverage

High

The first strategy

The second strategy

High

Specialization, Service ability

30

ultimately fall into one of two headings: cost advantage and differentiation.”① For Feiliks

it is impossible to be the low cost third logistics supplier because the company is a

growing company that cannot achieve economies of scale. However, other developed

logistics enterprises must get lower cost than Feiliks. Besides that, Feili’s major

competitors only offer basic logistics service such as transportation, transit and storage.

Therefore, Feiliks should differentiate its service from its current competitors to improve its

competitiveness.

Figure 7: Porter’s Generic Strategy

Source: http://www.quickmba.com/strategy/generic.shtml

And according to STP analysis, Feili’s target market is electronic equipment

manufacturing. So Feiliks should adapt differentiation focus strategy to improve its

competitive advantage.

5.3 Marketing mix strategy

There’s no doubt that Feiliks should adapt differentiation focus strategy to improve its

① http://www.quickmba.com/strategy/generic.shtml

31

competitiveness. However, how could Feili differentiate its service from its current

competitors? As a matter of fact, the service offered by Feili can not satisfy some

customers’ demand according to my interview. With expansion of business, these clients

wish Feili could offer more detailed service, which could save their cost and improve

efficiency.

Case of logistics service of USP to IBM

UPS is an American multinational logistics enterprise that is a leader in distribution and

express service. It is a third party supplier of IBM offering value-added services. Based on

clients’ requests, UPS do some processing to IBM’s product such as configuration, testing,

labeling and packaging, etc during warehousing. After finishing all works, UPS then

distributes finished products to IBM’s customers. In doing so, UPS shorten delivery time

and reduce cost for IBM by offering value-added service that improves efficiency and

customer satisfaction. And UPS makes fat profit because it makes IBM slip service price

and pay more attention on value of service that generates a higher economic profit.

5.3.1 Product strategy

For the moment, Feili’s major competitors only offer basic service such as

transportation, transit and storage. As a third party logistics supplier, Feiliks could learn

from UPS offering value-added service to its clients to differentiate service from

competitors. It means Feiliks should update its service. At present, Feili’s service includes

transportation, transfer and warehousing. While as a value-added logistics service

supplier, Feiliks should extra offers processing, sorting, Warehouse management,

vanning & devanning and information processing and feedback. In doing so, Feiliks could

improve its competitiveness that will bring bigger profit margin and market share for

Feiliks.

5.3.2 Pricing strategy

32

At present, Feiliks has to offer cheap service to keep its market share. As soon as

Feiliks renders value-added logistics service, Feiliks should charge a premium price

because tailor-made service will bring much benefits such as low cost and efficiency for

its clients, which makes clients overlook prices and focus on value that generates a

comparatively higher price and a better margin. With a profitable price, Feiliks could get

rid of price war and access fat profit supporting its development.

5.3.3 Promotion strategy

Feiliks as a third party logistics supplier offering service to electronic information

equipment manufacturers should advertise its value-added service by internet. Feiliks

could disseminate the news that it will offer value-added logistics service to its clients on

its own website and public logistics information websites. Besides that, Feiliks should

focus on establishing positive corporate image. Feili could make charities and events

marketing to create positive brand image of the company differentiating with its

competitors. In doing so, Feiliks could establish favorable brand that differentiate from its

competitors.

6. Action plan and Budgeting

6.1 Action plan

As Feiliks has limited financial resources, the company should offer value-added

logistics service to its major clients at first. After having more experience in value-added

services, Feiliks could promote the service to other companies expanding its market

share in Jiangsu province. However, becoming a third party logistics supplier offering

value-added service requires companies have high degree in technological management

and operation efficiency.

First, Feiliks should improve its technological management, which includes ability to

33

design system, ability to tailor-made service, service ability to information system and

network coverage. Feiliks as third party logistics supplier of electronic information

technology companies need offers tailor-made service according to features of products,

purchasing plan, producing plan and marketing strategies of clients. Therefore, Feiliks

should update its information management system because it could ensure the accuracy

and efficiency of logistics management. Besides improve its own computer system,

Feiliks should build an information exchange platform to feedback information promptly.

In this part, there are two steps Feiliks should do,

a) Introducing advanced information management system. The administration

division could in charge of this action.

b) Feiliks should train its employees familiar with new information system. Human

resource department should be responsible for this work.

Second, Feiliks should improve operation efficiency. It means Feiliks should invest on

advanced logistics facilities and train skilled workers, which could satisfy customers’

demand with comparatively low cost. Besides that, Feiliks should improve its coordination

and communication among corporate departments. At present, some departments don’t

know what duties and powers they have. So their coordination and communication is

deficiency. Feiliks should formalize duties and powers of each department to improve its

efficiency. It is an urgent issue that Feiliks should dispose.

In this aspect, Feiliks should do,

a) Recruiting skilled workers who work on value-added service. And Feili should

train its employees familiar with content of value-added service. In doing so, Feili

could improve specialization. Human resource department should be responsible

for this work.

b) Purchasing advanced logistics facilities to improve mechanization and efficiency.

34

Administration could take responsibility to this work.

For the moment, Feiliks is planning a strategic agreement with Acer who is a major

client of Feiliks. In future, Feiliks will be Acer’s third party logistics supplier, no matter

where Acer goes, Feiliks will offer service in there. Feiliks as strategic cooperation partner

of Acer could offer value-added services to Acer.

As Feiliks is going to render value-added logistics service to Acer, the company

need advertise this service to Acer. This work should be done by sales person in

marketing department of Feiliks. In order to attract Acer, Feiliks could offer a discount

price on original service. This is the first stage of promotion.

After Feiliks successfully offers value-added logistics service to Acer, it could

advertise in a large extent by promoting Acer’s successful instance to other electronic

information manufacturers in Jiangsu province. And this work also should be done by

marketing department of Feiliks.

6.2 Budgeting

Table 4: Estimated operation revenue after offering value-added service

The estimated operation revenue after offering value-added service

Unit: CNY

Month 1 2 3 4 5 6 Total

Operation

revenue 80，113，672 81，769，832 82,723,622 83,558,500 84,835,287 85,567,586 498，568，499

In 2008, demand for value-added logistics service reaches 163.3 billion CNY

increasing 31.9% compared with last year around China. It is obvious that market

potential for value-added logistics service is quite large. And in 2007, Jiangsu’s demand

for value-added logistics service raises 35.8%. Suppose the growth rate of demand for

35

value-added logistics service is constant in 2008, Feili’s operation revenue multiplies with

growth rate getting forecasting operation revenue.

Table 5: estimated investment on assets of value-added service

Table 6: estimated cost after offering value-added services

The estimated cost of offering value-added service

Unit: CNY

1 2 3 4 5 6

Wages 5,756,900 5,925,900 5,056,900 5,356,512 5,526,870 5,756,900

Transportation 965,700 968,976 970,230 973,361 975,610 977,880

Rent 317,368 317,368 317,368 317,368 317,368 317,368

Labor training 100,000 100,000 100,000 100,000 100,000 100,000

Depreciation 7,500 7,500 7,500 7,500 7,500 7,500

Computer system

maintenance 7,000 7,000 7,000 7,000 7,000 7,000

Other operation

expenses 19,000 20,210 21,340 24,586 26,789 27,891

Total 7,173,468 7,346,954 6,480,338 6,786,327 6,961,137 7,194,539

Total estimated cost after offering value-added services is 71,194,539 CNY. And

estimated investment on assets is 3,150,000 CNY. Therefore the total forecasting input

will be 74,344,539 CNY. With estimated total revenue of 498,568,499 CNY, it is obvious

that Feili will get a big profit margin. However, as Feili doesn’t have sufficient fund

investing in this project, the company needs to finance from outside. Feili could issue

corporate bond and attract investors to finance. And Feili could borrow money from social

credit institution.

The estimated investment on assets of value-added service

Unit: CNY

Month Land Machinery Warehouse Computer system Total

Fund input 700,000 150,000 800,000 1，500,000 3，150,000

36

Conclusion

This report analyzes the main problem of Feiliks International Co. Ltd. In the first

place, I introduce the company, its service and market and make an external analysis

Based on it, I make SWOT analysis, competition analysis and STP analysis. After all the

analysis, I find Feili’s main problem is that Feiliks is lack of core competence, which

makes Feiliks is difficult to expand its market share in Jiangsu province and price war

makes Feili’s profit margin is decreasing. In accordance with this problem, I put forward

recommendation to Feiliks. I clearly show Feili’s development direction improving its core

competency primarily and then with competitive advantages, Feiliks could expand its

market share. Feiliks should imitate pioneers’ action offering value-added services to its

target clients, which differentiates its service from its current competitors to improve its

competitiveness. In doing so, Feiliks could get rid of price war, which brings decreasing

profit margin, and expand its market share.

37

Bibliography

Books

[1]. John Squelch and Robert. Joan Marketing management [Textbook], Page

397-430

[2]. Douglas M. Lambert, James R. Stock and Lisa M. Ellram. Fundamentals of

Logistics Management [T], Page 228-275

[3]. Mark Sutcliffe. Essentials of Economics [T], Page 84-108,

Websites

[1]. http://www.feiliks.com./

[2]. http://www.jssb.gov.cn/jstj/tjsj/tjnj/

[3]. http://www.stats.gov.cn/tjgb/ndtjgb/qgndtjgb/t20090226_402540710.htm

[4]. http://search.moc.gov.cn:8080/was40/detail?record=49&channelid=56836

[5]. http://www.cfea.org.cn/show_news.asp?id=110

[6]. http://www.0769wl.com/info_browse.php?infoID=6528

[7]. http://www.chinawuliu.com.cn/cflp/newss/content/200806/35_6812.html

[8]. http://www.560591.cn/Article.aspx?Article_Id=1389

[9]. http://www.jsetc.gov.cn/newsfiles/33/2007-06/15850.shtml

[10]. http://www.yzetc.gov.cn/Rdetail.asp?id=14950

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[11].http://www.ewise.com.cn/2005report/2009884jiangsuwuliubg.htm

[12].http://wiki.mbalib.com/wiki/%E7%AC%AC%E4%B8%89%E6%96%B9%E7%89%A9%E6%B

5%81%E5%A2%9E%E5%80%BC%E6%9C%8D%E5%8A%A1

[13].http://www.fiet.gov.cn:81/huodai/ReadNews.asp?id=1329&Col=%D0%AD%BB%E1%B6%AF

%CC%AC

[14].http://www.china-baogao.com/Html/news_588.htm

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Enclosures

Interview: Question for directors:

1. Could you describe organization structure of Feiliks?

2. Does Feili’s business satisfy the demand of all clients? Does Feiliks offer tailored

service to specific clients?

3. In your opinion, what is Feili’s advantage? What aspects Feiliks need to improve

further?

4. What companies are Feili’s clients?

5. What are reasons do you think causing customer churn?

6. Customers’ feedback is important to service industry. Does Feiliks have channels

to collect clients’ suggestions?

7. Whether Feiliks has made response and improved in accordance with these

suggestions? What about effect?

8. What’s the biggest problem of Feiliks?

9. How does Feiliks cope with hit of financial crisis? With fierce competition in

logistics market in Jiangsu province, how does Feiliks compete with other logistics

market?

10. Which company is Feili’s major competitor?

Questionnaire: Questions for workers:

1. Do you think Feili has a reasonable performance appraisal?

A. Yes ( 47 people) B. No (28 people)

2. Do you think Feili offers you equal opportunity to promote?

A. Yes (70 people) B. No (5 people)

40

3. How many documents do you process per month in 2008? What about in recent

months?

A. About 200 copies (10) B. About 300 copies(43) C. Over 300 copies(22)

4. Are there any unreasonable and unnecessary work?

A. Yes (43) B. No (32)

5. Do you satisfy cooperation of other relevant departments?

A. Yes (21) B. No (54)

6. What other aspects you don’t satisfy in your work?

7. Do you think you will have a bright future in Feili?

A. Yes (16) B. No (10) C. I have no idea (49)

8. Do you have a better choice of work than Feili at present? How many years will

you work for Feili?

A. Yes (7) B. No (68)

9. What factors will lead you leave Feili?

A. A better salary for the job in other companies (17)

B. Bad relation with your superior (4)

C. The expiration of labor contract (20)

D. Heavy workload of current job (34)