dhl express_ strategic planning document
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DHL express: Strategic planning document
EXECUTIVE SUMMARYThe aim of this strategic planning document is to thoroughly analyze a company and based on the
analysis find the right strategy that fits the company's business purpose and mission. The right strategy,
depending at what is directed, should help the company strengthen its position on the market; increase
profits; help with further development. If a company implements a wrong strategy, it can cause bad
damage or it can have huge financial impact on the company which could even end up in bankruptcy,
which wipes the company off the market.
The company chosen for this paper is DHL Express with focus on European region. DHL is part of the
Deutsche Post DHL (further "DP DHL) brand/group. The reason why I have chosen DHL for the
Strategic Planning Document is that I have been working for DP DHL group for four years. I work
specifically for IT Services which is the service line that internally supports the whole IT technology of
the whole DP DHL group.
ABOUT THE COMPANYDHL was founded in San Francisco exactly 40 years ago by 3 budding entrepreneurs - Adrian
Dalsey, Larry Hillblom and Robert Lynn. It went from small company shipping papers by airplane from
San Francisco to Honolulu1 to global company shipping EVERYTHING around the world.
DHL delivers time-critical shipments as well as goods and merchandise by road, rail, air or sea. DHL
transports courier and express shipments via one of the world's most extensive networks to over 220
countries and territories. The company employs more than 300,000 employees all around the world.
DHL Express provides wide range of easily accessible services and solutions for their customers;
from transport of letters, information to transport of parcels and goods. It operates in more than 220
countries around the world and employs more than 100,000 employees. DHL Express is number one in
Europe with 25% of market share.
Brief history 2
1969 DHL founded by Adrian Dalsey, Larry Hillblom and Robert Lynn in San Francisco;
1974 The first UK office opened in London. Globally, DHL had more than 3,000 customers;
1979 DHL extends its services to delivering packages. Only document services had been
available until now.
1983 DHL is the first air express forwarder to serve Eastern European countries. An
international distribution centre was opened in Cincinnati, USA;
1985 A state of the art hub was opened in Brussels. More than 165,000 shipments are
handled per night
1998 Deutsche Post became a shareholder in DHL;
2002 Deutsche Post World Net became the major shareholder in DHL and 100% shareholding
was completed by the end of the year.
DHL: Our Company Portrait [online]. Available at ww w:
1.
DHL: Steps to success [online]. Available at w ww:
2.
2005 DP DHL acquires Exel, the British logistics corporation. Exel primarily offers transport
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and logistics solutions for key customers;
2008 DHL opens new state of art European air hub at Leipzig/Halle Airport in Germany.
DHL legally operates under Group's title defined as Deutsche Post AG and uses its brand name DHL. As
previously mentioned DHL is part of DP DHL group and is formed by 3 divisions: Express, Global
Forwarding, Freight and Supply Chain supported by internal services Global Business Services. Mail is a
standalone division that is part of Deutsche Post brand. All four divisions together create Deutsche Post
DHL as the picture below describes.
DP DHL: Corporate Presentation, October 2009, p. 3 [online] Available at www .
3.
DHL has a divisional form of structure. The DP DHL group is organized into four operating divisions,
each of which operates under the control of its own divisional headquarters. The Group management
functions are performed by the Corporate Center.
Management responsibilities are structured in accordance with decision-making,responsibility and reporting lines:
Board departments
Corporate departments
Business departments
Service departments
Regions
Departments
DHL Express provides standardized products and services - courier, express and parcel (CEP) - both
locally and globally depending on the country. Whether it is document or parcel, road or air, DHL Express
provides several different types of services that are divided to four basic groups:
1. Same Day
An immediate pick-up of a shipment by a dedicated courier, with an emergency delivery within the same
day via a dedicated network.
2. Time Definite
Express door-to-door delivery by a certain time on an overnight or next possible business day basis.
3. Day Definite
Reliable door-to-door delivery within a certain number of days
4. Optional Services
Shipping convenience with a range of optional services to support your express transportation
DP DHL: Annual Report 2008, p. 22 [online] Available at www.
4.
DHL: Express Services Good afternoon [online]. Available at w ww :
5.
External Analysis
Courier Express and Parcel (CEP) services exist in every single country around the world. It is neither
country specific nor region specific industry. There are thousands of logistics companies operating
locally or internationally around the world and Europe is not an exception.
PESTLE
PESTLE analysis is a view on external environment companies operates in. There are five external
factors that influence life of organizations: Political environment, Economical environment, Socio-cultural
environment, Legal environment and Environmental factor.
The below PESTLE analysis focuses on CEP companies in European market.
Political Environment
European region is stable environment that is not affected by any significant political crisis in
countries and no major changes in political structure are expected in near future. More than half of
European states are integrated into European community, European Union and create one of the biggest
single markets for trade and investment in the world. EU enlargement has removed border lines and hasmade trade and business more accessible for its members. It has brought greater opportunities for
businesses, wider range of companies and benefits for their customers.
EU has created closer links with immediate neighbors and enables bigger exports, free movement
of services, payments and capital for trade and investment. Prior liberalization in 90's there were many
national postal operators acting as monopolies. EU decided to start postal reform that firstly completely
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liberalized CEP market. Liberalization has enabled both national postal operators (Post Offices) and
private postal companies to enlarge their business portfolio into parcel and express market.
This happens through acquisitions of well-established companies and smaller national companies.
Exactly, as it happened to DHL through acquisition by Deutsche Post in 2002. Full liberalization in Europe
will be completed by 2012 which gives current companies time to strengthen their positions, build new
networks and gain wider portfolio of customers.
EU has also built up confidence in European political and economical future of each member which
enables companies to make longer term decisions, strategies and investment plans. Currently the CEP
market is highly competitive and companies have to have capital to establish strong and powerful
position in such an environment and have to have built up networks supported by the modernist
technologies.
Summary:
Europe is stable environment where no major political changes are expected. Full liberalization of
European postal market that will be finished by 2012 will bring more competition especially on domestic
level. However, there is a potential to merge or acquire those companies operating in the local markets
and increase market share. Big companies operating on international level have an advantage of built
global networks and modern technology behind them.
Economical Environment
CEP is highly potential market and its growth is directly related to the level of GDP. Global trade is on the
rising level and together with industrialization has made CEP services more important for majority of
industries. Additionally, product life cycles have been reduced, quality awareness among customer isgrowing and in order to succeed companies are forced to maintain high quality standards.
The global economic crises caused decline in economy and it has affected the entire logistics sector.
Volume of shipments decreased and the recession slowed down the whole market. Even the big
corporations have to fight with decreased revenues and change their investment plans and business
strategies.
Governments around Europe support investment plans by structural reforms and programs that
encourage investors to invest. During the big economic crisis in 30's this did not happen and
governments tended to act individually without multinational or even global cooperation. Today's
economies learnt from those mistakes which help to lower the implications, increase customer demand
and support start of growth. Due to the crisis companies changed their investment plans but did not stop
them. Merges with smaller companies, agreements and strategic acquisitions represent one way of
increasing the competitive advantage.
Emerging markets represent big opportunity in long-term perspective. There is potential for investmentand development in emerging markets and it is expected that industrialization will bring opportunities, the
economy will growth and market for services will accelerate. The crisis negatively affects profits of every
company on one hand but on the other hand big corporations with strong brand and position in the
market have to exploit this opportunity. Smaller companies do not have potential to expand because they
are in bigger risk of losing money or even bankruptcy if they fail. Big corporations are able to absorb that
risk much easier.
Companies have started to reduce cost and people have started losing their jobs. Restructuring of
company structure is one of the way how to move forward. IT is core element of every company that
operates in logistics industry. Companies have to invest huge amount of money to development and
maintenance of their IT infrastructure. Recent trend leaves development in Europe and transfers hosting
and maintenance of the infrastructure to Asia.
Summary:
Conclusion from the Economical environment analysis is that companies should not stop their
investment plans because of economic crisis. It is important in current situation to strengthen position in
the market and expand if possible. Emerging markets represent a potential of rapid economy growth.
The risk of loss is the same for all companies but for big corporations is more acceptable. Reduction of
cost is evitable for every company and restructuring or outsourcing are the ways of dealing with it.
Socio-Cultural Environment
The third aspect of PESTLE analysis focuses on forces within society. Social and cultural forces affect
customers' attitudes, interests and opinions. Companies must be able to offer products and services that
aim to complement and benefit customers' needs and wants. If they do not quickly respond to changes
in society they will lose market share and demand for their product or service will decrease.
Removing of border lines makes trade and business in Europe more accessible. Emerging markets are
place that is constantly developing and rapidly growing. Although the infrastructure is not as developedas in Western countries, there will be improvement with economic growth. It is important for the
company to establish its brand and achieve good and reliable image and service quality among its
customers. The portfolio of services that is offered in developing countries is not usually complete and
focuses on the biggest needs and wants of the business.
Companies do not have the only affect and responsibility to their customers. There are different parts of
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society they are in contact with. There are needs of employees, investors and the society as a whole.
Research & Development department play an important role in this area. Customer satisfaction surveys,
employee satisfaction surveys, market surveys help the company to build its brand and image, increase
employees commitment and shape public awareness.
CEP market and logistics industry play one of the key roles in the economic growth globally not only
within European market. Increases in volumes of goods transport has lead to higher CO2 emissions
which according to climate scientists have direct affect on global warming. It is social cost for the society
and governments discourage those social costs with fines, taxes and legislation. Companies'
responsibility is to decrease these cost and work with more efficient and environmentally friendly means
of transport. Social cost have negative affect on customers' spending but could be balanced by larger
offer of environmental friendly oriented products.
Summary:
Social forces affect customers' needs and wants and it is important for the company to know it and
benefit from it. Therefore the role of Research & Development is very important. Company has to
respond to changes in society quickly not to loose market share and demand for services. Customer
satisfaction surveys, market surveys, employee surveys play important role in building company's brand
and image in the market.
Border lines have been removed within EU and services are more accessible in the whole Europe.
Emerging markets represent an opportunity for companies to enter and establish their brand and image.
Additionally, there are also social costs for the society that companies have responsibility for. The affect
on environment is significant and companies' role is to decrease those costs by working with more
efficient and environmentally friendly technology which is then balanced by larger portfolio of
environmental friendly oriented customers.
Technological Environment
Technology environment is vital part of every business that rapidly moves it forward. Technological
innovations have changed the world and manner in which every business operates. Technology has
created society expecting immediate results. Information exchange between customers, companies,
people or any stakeholders is faster. That gives benefit to businesses as they can react quickly to any
changes in the operating environment. However, the ability to quickly react also brings extra pressure on
companies because they are expected to deliver on time and without any delays.
Customers in service industry have to continuously face new challenges in planning, managing and
monitoring their business processes. Companies in CEP market (and not only there) started offering
customized logistics solutions to meet challenges: for example safety transport of sensitive products
such as pharmaceuticals and vaccines to the healthcare industry done within a temperature-controlled
environment. Operations in logistics industry is not only about cars, vans and aircraft there are other
parts of infrastructure that needs technological development and improvement: posting, collection,
sorting, transport, warehousing, delivery and last but not least Information Technologies. IT is core.
Speed and reliability are key success factors to be able to meet standards and quality and gain
advantage among competition.
It is important to pay special attention to IT area because service industry is fully dependent on it.
Companies invest huge amount of money to development and maintenance of their IT infrastructure. As
mentioned above IT is one of the key elements for logistics and operations processes. Systems must be
accessible and available at all times; security is evitable - unauthorized access to data and data
manipulation must be prevented, to ensure that software is not delivered with defects or too late.
Companies have to fight with decreased revenue and reduce their cost in times of economic crisis but
importance of IT technology is so significant that they cannot stop investing in it. Otherwise there is a
threat that they will fall behind and loose their market share.
Outsourcing or in other words subcontracting is a way of reducing cost in IT area. Development ofnew technologies, software or applications goes to another organization. Usually, the company is
specialized in software development. Or hosting and maintenance of applications or services are
transferred to another company. The decision whether to do in-house or outsource is often based on
achieving lower production cost and usage of available resources in better way and focus energy on the
core competencies of the business.
Summary:
Modern technology and environment is key to success of the company that helps to maintain or gain
competitive advantage. IT is the most important technology factor for logistics business because speed
and reliability are equal to success. However, there is an indisputable constant threat of falling
behind.Investments to the modernist technologies are evitable and in times of economic crisis are much
more important then anytime before. Company has to decide if it runs internal IT organization or if it
outsources most of the services and reduce cost.
Legal Environment
Legal rules play a role in nearly every aspect of company's operation from state regulations through
contracts to treatment of employees. Legal factor is very important because companies work within
legislative framework where legislation can either place numerous obligations or can create market
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conditions beneficial for business.
CEP market is regulated by Postal directive applicable in all EU states. Full liberalization process will be
completed by 2012 which gives current companies time to strengthen their position, build new networks
and get more customers before new competition arrive. CEP market was fully liberalized during 90's and
no special license or authorization is required in most of the EU countries. Ten states of EU require
companies to receive explicit decision of National regulatory authority that is called "general
authorization that enables them to start operating in those countries but it does not represent a barrier.
General authorization document contains several conditions that are related to e.g. confidentiality of
correspondence, restrictions on transport of dangerous goods, data protection standards, etc.
As I said previously there are social cost for the society that must be balanced by companies' obligations
in terms of fines, taxes and additional legislations related to regulation of aircraft noise, regulations
concerning emission standards, obligations to reduce greenhouse gas that forces companies to invest
into more environmentally friendly means of transport.
Summary:
Legal factor is important for operations of every company. Companies have obligations like directives,
taxes and rules that they must be aligned with to be able to operate in the market. Legal factor can either
place numerous obligations on the company or can create market conditions beneficial for business.
Liberalization is an example of the benefit. Removal of border lines together with liberalization enabled
building and strengthening of positions in the logistics market. There are no special and expensive
authorizations necessary in CEP industry which is another benefit for companies. On the other hand
there are obligations that balance the above benefits in terms of fines, taxes and directives that are
mainly related to environment. Companies are forced to invest into environmentally friendly operations.
Environmental Analysis
Transportation industry causes major impact on the green house gases in the atmosphere. Mobility has
increased and brought many indisputable advantages that must be weighed against the social, economic
and environment costs it causes. Countries issue legislation that forces companies to reduce emissions.
Companies have started implementing projects that help them to find out ways how to reduce pollutions
and to be compliant with issued legislation. Transportation companies are dependent on fossil fuels and
to reduce their dependency they have to look for commercial vehicles and aircraft powered differently or
non-conventionally. Change of vehicle is not the only option that would reduce air pollution there are
other ways that companies could take: to make their business more efficient and effective, to reduce
shipping time, to take uniform approach, to offer climate-neutral products or train employees.
Research & Development department plays important role in those projects because it helps to come up
with new ideas, technologies, procedures and processes.
Summary:
Transportation industry has great effect on air pollution globally. It is undisputable fact and companies
are forced to fulfill the requirements of governments to reduce their contribution on pollution of the global
environment. Companies have started implementing projects that help them fulfill those requirements.
Research & Development department is key to the success of it.
PESTLE Summary
Based on the PESTLE analysis I have identified opportunities and threats that will be taken into account
during the SWOT analysis.
Opportunity: Full liberalization of European postal market that will be finished by 2012 brings
new opportunities to increase market share by acquisitions or merges with other logisticscompanies or newly liberalized companies. Established companies wit big market share, global
network and technology have competitive advantage.
Opportunity: Border lines have been removed within EU and services are more accessible in
the whole Europe. Emerging markets represent a potential of rapid economy growth therefore it
is an opportunity for companies to enter and establish their brand and image and gain bigger
market share.
Threat: Role of Research & Development department in the company is very important.
Company has to respond to changes in society quickly not to loose market share and demand
for services. Customer satisfaction surveys, market surveys, employee surveys play important
role in building company's brand and image in the market.
Threat: In times of economic crisis economy slowed down and revenue decreased. Reduction
of cost is evitable for every company and restructuring or outsourcing are the ways of dealing
with it.
Threat: Social costs represent a responsibility of companies towards society. The affect of
transportation and logistics companies on environment is significant and companies' role is to
decrease those costs by working with more efficient and environmentally friendly technology
which is then balanced by larger portfolio of environmental friendly oriented customers.
Companies are forced to invest into environmentally friendly operations by fines, taxes and
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directives placed by governments. Therefore, companies have started implementing projects
that help them fulfill those requirements.
Threat: Modern technology and environment is key to success of the company that helps to
maintain or gain competitive advantage. IT is the most important technology factor for logistics
business because speed and reliability are equal to success. However, there is an indisputable
constant threat of falling behind. Investments to the modernist technologies are evitable and in
times of economic crisis are much more important then anytime before. The role of Research &
Development is evitable here.
Porter's Five Forces
Courier Express Market is highly competitive market and its growth is directly related to growth of
GDP. Customers of logistics companies are demanding. Technology improvements reduce product life
cycles, quality awareness among customer is growing and in order to succeed companies are forced to
maintain high quality standards.
DHL Express has three biggest competitors in CEP market. They are UPS, TNT and FedEx. As you can
see in the Picture 2 below DHL Express has the highest market share of 25% as a single company in
Europe. All four major competitors operate internationally and have global network with good and
modern technology behind them. The picture below also shows us that third of the European market is
dismantled among small and medium sized companies that operates independently.
European market portrait
Customers of logistics companies vary from individuals to big industrial or manufacturing companies. All
of them expect that the delivery service will be simple and convenient and that the delivery will be ontime without any delay and in a good quality. Customers are more and more demanding because range of
suppliers is broadening and they are looking for customized and innovative solutions for delivery of their
goods.
DP DHL: Annual Report 2008, p. 58 [online] Available at www.
6.
The range of offered products is wide but could be introduced in three basic categories:
Courier services are fast, door-to-door pick up and delivery services of high-value goods or
urgently required documents.
Express services are time-sensitive, usually guaranteed services and have delivery time a
specific day (in general the next day) and/or specific time.
Parcel services are the transport of largely standardized packages with usually non-guaranteeddelivery time of 2-3 days (Time-definite and Day-definite)
Porter's Five Forces mode will help me to analyze five forces that influence the logistics industry and
better understand the environment in which DHL Express operates in and competitive advantage the
company has or could gain.
Threat of New Entrants HIGH
CEP market is large and very attractive to business. Everyone needs to deliver package or parcel.
Everyone needs to use courier. Logistics industry is important and dominates to the service sector. It is
very easy to entry. There are no special legal barriers, patents or licenses necessary to run the business.
There are exceptions as described in PESTLE analysis but those exceptions do not represent
"impossible to achieve requirements. The market is still growing and there is an assumption that will
grow further.
There are no border lines among members of EU which would threaten new companies to enter
the CEP market. Company that wants to succeed in such a competitive environment has to have a good
network that enables it to operate on local and international level. Good network requires time and
financial investment. High technology standard is must.
Companies have to protect themselves from the threats of new entrants therefore it is important for them
to find ways to turn disadvantages in their favor. They have to capitalize from their historical experience
and try to find better ways to provide their service. Current big players in CEP market are well
established leaders that have significant cost advantage that is unavailable for the new entrants. Large
companies have buying power that allows them to offer discounts to their customers. Simply, bigger the
business is lower average unit cost they are able to produce.
Customers' loyalty is another important factor that increases barriers to entry for other competitors. Loyaland satisfied customer will be unlikely tempted to go to competitors or new entrants. Establishedcompanies usually do business set on long-term partnerships and contracts. The basic rule says thatcustomers get everything they need or want. There are many advantages that economies of scale
gives to big corporations but there are also limitations that must be taken into account. Those limitationsgive competitive advantage to smaller and medium sized companies. Large companies are very complexand with higher complexity the product range is widening. This makes it difficult to succeed and be thebest. Specialization and innovative ideas are crucial. Large companies are also known for their high levelof bureaucracy which gives smaller companies big advantage because they can satisfy customer fasterand it is what matters in logistics industry. Also large companies have thousands of employees withdifferent labor relations in every country which causes additional legal cost. In case of powerful workersunion it can decrease power of the company and make their operation more difficult especially in time of
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restructuring.
As I have mentioned modern technology is an important factor that significantly helps to increase
market share and creates more barriers for new entrants. Outsourcing or off shoring are possibilities for
companies to take advantage of other economies of scale and use their buying power and specialization
in favor of further development.
Summary:
In summary, logistics market is large and is attractive to business because when GDP grows the
demand for services grows. There is no special barrier to entry. In fact, it is very easy to entry. The
market is still growing and there is an assumption that will grow further. Successful companies havebuilt networks that enable them to operate on local and international level. Good network requires time
and financial investment. High technology standard is must. Historical experience and appearance in the
market is an advantage for companies like DHL.
Big companies and corporations use economies of scale in their favor. Bigger company can provide
higher discount and has lower profit. Customers' loyalty is another important factor that increases
barriers to entry for other competitors because of long-term partnerships and contracts.
On the other hand there are also disadvantages for big companies that must be taken into account.
Large companies are very complex and with higher complexity the product range is widening.
Specialization is an answer to it. Large companies are also known for their high level of bureaucracy
which gives smaller companies big advantage. Bureaucracy slows down the whole process. Strong
workers unions decrease power of the company and make its operation more difficult especially in time
of restructuring.
Modern technology helps to gain competitive advantage and be ahead of new entrants. Companiesshould take advantage of outsourcing or off shoring companies and use their buying power in favor of
specialization and development.
Threat of Substitute Products or Services HIGH
Every customer has a choice when and what to buy. Substitute products or services create a
ceiling on the price. Any need or want of the customer could be satisfied in different ways and it is up to
the customer which company to choose. Threat of substitute products is very high in CEP market
because range and price of offered products is similar. Customer can quite easily turn and goes to the
competitor.
Research & Development department plays outstanding role for this aspect. It is important to know what
customer wants and needs therefore customer satisfaction surveys must be held. Surveys help to
identify the problem of substitute products and help to answer what substitute products customer
considers. They help companies to better position themselves in the market and among customers,uncover customers perceptions, improve customers loyalty, or help to make technology and product
improvements.
For a company to be able to succeed in such a competitive environment it is important to know who the
competitors are and what service they provide that could substitute the service they offer. It is also
important to consider their benefits, price, weaknesses, constraints, limitations, reason for switching
between products and barriers to switch. Based on that information, company can defend the threat
easier and attract customer from another substitute service by innovation for example. It is important to
communicate and educate customers about services the offer. Customers must be tempted to purchase
and if they are loyal it would stop them from switching to another company. Marketing and Advertising is
therefore highly important for this factor. Companies have to invest in building their brand and image to
gain competitive advantage.
Summary:
The range of offered products and prices in logistics industry is similar. Therefore threat of substitute
products is very high. Role of Research & Development department is important and helps to identify
what customer wants and needs, the problem of substitute products or answers what substitute
product customer considers. Its role is also to get knowledge about competition and their offer. Based on
that information, company can defend the threat easier and attract customer by the added value
(innovation for example). Investment in Marketing and Advertising cannot be forgotten. These
departments communicate and educate customers about brand and image of the company, about
products that are in the offer. They help to gain competitive advantage.
Bargaining Power of CustomersHIGH
Logistics industry is highly competitive and there are many companies that offer similar products.
Customer has the power to decide if to pay high or low price, to decide between cheaper or more
expensive company. And also customer has the power to walk away and make a deal with competitor.
Loyalty increases when customers get better value or benefits for the same price. Therefore it isimportant to build customer satisfaction, build partnerships or provide discounts. Basically, any reduction
of the price that customer "negotiatesmeans lower profit for the company.
Customers are very sensitive to price and are willing to switch to the competitor very easily if the
service, company offers, does not differentiate from any other service that can be purchased in the
market. Price is the magic word that matters. Therefore it is important for the company to differentiate
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and offer something more. If it cannot be price then for example it can be company's attitude towards
environment and using climate-neutral transportation or products.
There always must be value added for the customer.
Suppliers always outnumber customers. This is a market rule. Therefore, customer has the
advantage and is allowed to choose from a range of companies who offer the logistics service. The
logistics industry offers similar products and customer is able to compare prices and types of services
from different companies.
Company has to be differentiable for the customer and unique in some way. As I indicated above
price is not the only factor that influences the customer, although it is a strong influencer. It is importantto create a tight and loyal relationship with the customer and offer range of services for good price and
quality. There are many tools company can use to fasten the customer: special offer, favorable financial
arrangements, long-term contracts, etc. Customer's switching costs are dependent on the strength of
the cooperation and linked tasks. Therefore companies in service delivery have to invest in modern
technologies. Internet could serve as an example. It has completely changed the world of logistics and
e-commerce has brought new financial opportunities not only for customers but for suppliers as well.
Summary:
Logistics industry is highly competitive and the range of products and prices is similar. Logistics
companies always outnumber customers and customers very easily switch to competition. Therefore it
is important to gain customers loyalty and provide benefits that would tight them to the company. It is
also important to differentiate from competition and to provide offer with added value for example
climate-neutral products. There are many tools company can use to fasten the customer: special offer,favorable financial arrangements, long-term contracts, etc. Customer's switching costs are dependent
on the strength of the cooperation and linked tasks. Modern technologies are able to tight customer to
the company and increase switching costs.
Bargaining Power of SuppliersHIGH
In this section I would only focus on bargaining power of suppliers in Information technology area
which is the most important factor for the logistics industry. Every company has to invest huge amount
of money into IT to be able to stay on top.
There are two types of technology used in CEP market "front-office and back-office. Front-
office technology represents computers, telephones, scanners, handhelds etc. and back-office
technology is the more important one. It is primarily used for operational purposes of the service, it
creates the network. For example: systems that help companies to improve their operational efficiency
like GPS or track & trace system that help to locate the parcel for the customer at any time.Investments to modern IT technologies are big and every company has to decide if it runs internal IT
organization or if it outsources most of the services. In the latter case, decision of using expensive but
highly skilled company or cheaper and badly skilled company is essential because it could potentially lead
to higher cost in future. IT knowledge and skills are the core for success of the company in logistics
industry. What is modern yesterday is out of date today. The threat of falling behind is present.
Usually, company contracts with few companies for longer period of time. Global companies tend to
supply from already existing suppliers. It is beneficial for both sides. Both supplier and the company can
use buying power in favor of specialization and development in their sectors.
Summary:
Suppliers in IT have an advantage of skills and importance. Every company in logistics industry is
dependent on its network and IT systems. Therefore companies and specifically the large companies
spent big amount of money for development of Information Technologies to be able to stay on top.Company can either use internal IT organization or outsources the services. IT knowledge and skills is
the core for success of the company in logistics industry. There is a constant threat of falling behind.
Rivalry Among Current Competitors HIGH
Rivalry among the big players is high and is very intensive especially on international level. There are
many middle or small companies that represent danger and increase rivalry on local or international level.
As mentioned several times it is very important for the company in order to succeed to differentiate from
its competitors. One of the ways, they can do, to come up with innovative ideas. The role of Research &
Development department is then inevitable. Therefore it is important to employ skilled and committed
people with new ideas that help the company to increase its competitive advantage.
Porter's Five Forces summary:
Based on the Porter's Five Forces analysis I have identified opportunities and threats that will be taken
into account during the SWOT analysis.
Threat of new entrants is very high in CEP market but existing big players have built national and
international networks that provide competitive advantage against new entrants. Historical experience
and appearance in the market is an advantage for companies like DHL and customers' loyalty increases
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barriers to entry for other competitors because of long-term partnerships and contracts. Big companies
and corporations use economies of scale in their favor. Bigger company can provide higher discount and
have lower profit. However, bureaucracy that exists in large companies gives smaller organizations
competitive advantage. Bureaucracy slows down the whole operating process. Outsourcing or off
shoring are used to reduce cost and suppliers' buying power is used in favor of specialization and
development.
Threat of substitute products is very high because the range of offered products and prices in logistics
industry is similar. Role of Research & Development department is crucial and helps to identify what
customer wants and needs and solve the problem of substitute products. Investment in Marketing and
Advertising is important because these departments communicate and educate customers about brand
and image.
Bargaining power of customers is high because range of products and prices is similar and customers
very easily switch to competition. Therefore it is important to gain customer loyalty and provide benefits
and differentiate from competition. Customer has to experience the added value. Customer will not
switch to competition if there is a linked relationship and dependency that would increase the switching
cost.
Bargaining power of Suppliers in IT is high. Logistics companies are dependent on network and IT
systems. IT knowledge and skills is the core for success of the company in logistics industry. There is a
constant threat of falling behind. Therefore it is important to choose right supplier.
Rivalry among current competitors is high because all four biggest competitors are successfully
established on international level and have experience with competition. Local or international
competitors represent third of the European market and must be taken into account as well. Therefore
differentiation and innovation are important for the company. The role of Research & Development
department is indisputable here.
Internal Analysis
Internal Analysis serves as a tool that tells me if company is capable to use opportunities and
defend from threats that were found during the analysis of external environment.
From the analysis of external environment I know that CEP market is highly competitive. Customers
are demanding and request effectiveness, efficiency, speed and quality. Company that wants to succeed
in this environment must have good operational network and modern technology that would support it
on local and international level. Successful companies work on development of their competencies to
become core competencies to get bigger competitive advantage.
Competences
DHL Express has been in logistics business for 40 years now and it has built its brand and business ontradition. It provides wide range of easily accessible services and solutions for their customers; from
transport of letters, information to transport of parcels and goods. It operates in more than 220 countries
around the world and employs more than 100,000 employees. DHL Express is number one in Europe
with 25% of market share. It wants to become a Logistics company of the world.
The advantage of operating globally, using of fixed routes and standardized workflows for delivery is
enormous. DHL Express operates in tight cooperation with other divisions (Mail, Global Forwarding &
Freight and Supply Chain) which helps to better address customers' needs. Modern Information
Technology stands behind the success without any discussion. Customer and service support serves 24
hours a day and 7 days a week.
DHL Express has built its success on committed employees and experts. DP DHL group belongs among
the five most admired companies in the world in logistics industry. It is on fourth place just behind
FedEx, UPS and TNT according to the Fortune magazine. It invests huge amount of money onto
research and development area and has come up with several interesting projects aimed on employees,
shareholders and customers, environment and innovations. DHL pays special attention to Marketing &Sales area and presentation of their brand and image. DHL knows that educated customer and employer
will bring future benefit.
Core Competences
Core competences represent competitive advantage of a company. They help to differentiate, be more
profitable, be more successful and gain more market share. DHL works on its competences very hard to
gain the competitive advantage and be the best in the Express market. They say that size is not enough
and they are not the best just because of the biggest market share but also because they are able to
provide the best service, innovative solutions and achieve customers' satisfaction.
DHL Express' core competency is guaranty of the fastest delivery in a good quality anywhere. As I said in
previous text the trick behind that is the network in which DHL Express operates consisting of more
than 220 countries, standard routes, modern technologies, standardized procedures and processes and
last but not least more than 100,000 committed employees. Further more DHL's aim is to continue inimproving its core competencies and continue in innovation, quality and productivity and provide career
development opportunities for their employees. And in the same time be seen as socially responsible
organization.
DP DHL group and subsequently DHL Express have rolled out strategic programs and initiatives that
they believe drive the company forward to the future and are based on core competencies:
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First Choice program is focused on improvement of business processes based on customers'
needs. The rationale behind is to strengthen customers' loyalty and intensify and broaden
business with current customers. DHL also wants to change the corporate culture of DP DHL
group and improve collaboration among employees across divisions and regions to provide
better value to their customers.
Roadmap to Value program is focused on transparency, profitability, cost reduction,
performance, organic growth, sustained increase in the company value, etc. This program is
aimed to make DHL first choice for customers and employees and also for investors.
As mentioned several times in this paper environment and social costs are closely connected
therefore DHL has rolled out a program focused on climate protection and disaster relief. It is
called Go Green. The company itself set a goal to achieve 30% improvement in CO efficiency by
2020. Therefore it has implemented measures such as fleet optimization (both aircraft and
ground vehicles) and expand range of climate-neutral and climate-friendly products. Additionally,
the company is an official partner of United Nations organization and provides logistical support
during natural disasters.
The main driving force behind the programs and initiatives are people, the human resources, the
organization itself. People are the great benefit that DHL Express has. Educated, skilled and smart
people are the core competence that helps to move the company towards future. DHL rolled out an
initiative called Discover logistics to present logistics as an exciting industry that looks into the future
and introduces DHL as attractive employer. DHL uses an online career portal that is taken as an
adequate and fitting recruiting tool in the age of internet.
Position Audit
Position Audit will tell me if DHL Express is able to take advantage of opportunities and is able to
mitigate threats that were identified previously.
The analysis of External environment revealed an opportunity for DHL to increase market share by
merging with other logistics companies or newly liberalized companies. According to the Picture 2 third
of European market is dismantled among small or medium logistics companies. Through mergers and
acquisitions DHL could enlarge its network and result of having better and efficient facilities with loyal
customers. DHL has assets that allow the company to go that way.
Another opportunity that appeared was entrance into Emerging markets. There is potential of rapid
economy growth and profit. DHL has already entered in these countries and through Marketing is
working on establishing of its brand and image there.
Modern age has brought changes and constant development of technology and demand. This
represents a threat for the company that will not be able to quickly react to those changes and the
company may loose market share. As indicated in PESTLE analysis role of Research & Marketing is
evitable and represents must for the company. DHL invests into this area and mitigate this threat quitesuccessfully.
Economy crisis has brought slow down of economy and decrease of revenue. Every company has
to deal with that threat and mitigate it. DHL is aware of that threat and is convinced that strong brand
makes them safe and well-equipped for difficult times. Therefore, they plan less investments and have
started working on lowering of indirect costs by cost-cutting. Therefore, they have started with
restructuring and initiatives that improves cross-divisional cooperation.
Social cost and responsibility of companies represents another threat for companies in terms of
fines, taxes and customers' perceptions. Logistics industry has significant negative effect on
environment and companies' responsibility is decrease the social cost by working with more efficient
and environmentally friendly technology to balance it. DHL has come up with their goal Living
responsibility and initiated several innovations and programs to deal with this threat (e.g. Go Green
program). Research & Development has played an important role in it.
21st century is the age of modern technologies and namely Information Technologies. Logistics isbased on technology because speed and reliability are basics for success and to fall behind is relatively
easy. DHL Express mitigates this threat by strong internal IT organization that supports the whole DHL
network. Additionally, DHL uses knowledge of IT companies like Hewlett Packard and IBM to use the
modernist IT tools and technology. Additionally, DHL also outsources highly skilled specialists to
cooperate on innovations and innovative ideas. Roadmap to Value program helps to mitigate that risk.
Threat of new entrants is very high in CEP market and DHL has to mitigate the risk and does it very
well. It has built strong national and international network that provide high competitive advantage.
Experience and strong brand increase loyalty and create barriers for new companies to entry. DHL has
25% of European market share which brings an advantage of economies of scale. Possibility of more
favorable prices offer, higher discounts bring new customers and help to build long-term partnerships
and contracts. DHL knows about the advantage and work on it with help of Sales and Marketing and
Research & Development department programs First choice and Roadmap to value help to mitigate
that threat.
On the other hand the advantage of DHL as a big corporation has also brought more bureaucracyand slow down of processes. This is a fact and I can only confirm it as a DHL employee. Program like
Roadmap to value helps to mitigate it and brings more transparency and performance. DHL has started
with restructuring of the company organization that also brings cost reduction. First choice program
brings more collaboration between employees and consequently brings innovations.
The range of offered products in logistics industry is similar. Therefore the threat of substitute
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products is very high. DHL works on mitigating it through Research & Development and through First
Choice program. The result of the initiatives has brought identification of customers' wants and needs
and help to solve the problem of substitute products. DHL continues on improvement of the products
and services that are in the offer. High quality together with speed and reliability are key success factors.
Standardized systems, processes and workflows enable the DHL sales force to increase productivity.
Again the programs Roadmap to value and First Choice is an answer to the threat of substitute products.
Bargaining power of customers is very high in logistics and threat of losing customers is significant. DHL
knows that therefore invest in Marketing & Sales and in constant communication and education of
customers. It has built well-established and well-managed brand that is one of the most valuable assets
of any company on national or international level. First Choice program helps to align processes with
customer needs and subsequently bring cost efficiency.
Suppliers play an important role in logistics business, their power is high especially in IT. Information
technology is a key success factor. All systems must be accessible and available at all times;
unauthorized access to data or data manipulation must be prevented, and it is important to ensure that
software is not developed with defects. The success of IT depends critically on employees and
suppliers. DHL uses its internal IT organization and as mentioned above DHL also uses knowledge of IT
companies like Hewlett Packard and IBM and outsources highly skilled specialists to cooperate on
innovations and innovative ideas. Investment in that area is high but it is worth it. DHL uses knowledge
and core competencies of other companies in its favor.
Rivalry in CEP market is high and DHL is aware of it. DHL Express has started working on tighter
cooperation with other divisions; uses cross-divisional synergies and works on improvement of
products and services through differentiation and innovation and invests in research and development.
Additionally, DHL has competed to gain highly qualified specialists and managers and through First
Choice program "fight successfully with competition. Surveys, improvements, innovations,
transparency, cooperation and restructuring is a way for DHL to mitigate the risk of high rivalry andsustainable work on maintaining and extension of its market share.
SWOT Matrix
OPPORTUNITIES
Mergers and acquisitions
Investment in Emerging markets to strengthen market position and gain new market share
Investment into strategic programs
Active Sales and Marketing department
Improvement of products and services through innovation
Specialization of products
Improvement of collaboration cross-divisionally
Deepen relationship with suppliers to be able to use their buying power
Differentiation from competition (e.g. expand offer of climate-neutral and climate-friendly
products)
Intensify and broaden business with current customers to increase their dependency
Customized solutions for every customer
Increase productivity by strengthening of standardized systems, processes and workflows
key factors quality, reliability and speed
Education of customers
Communication to customers
Build more transparent organization by restructuring and cost-cutting initiatives
Outsourcing or off shoring
Be seen as socially responsible organization
Become First Choice for employees
Become First Choice for customers
THREATS
Slow down of economy due to economic crisis and lower profit
Social cost and impact on environment
Threat of falling behind in IT due to technology development and rapid changes
High dependency on network and IT
High threat of new entrants (doing business in highly demanding and attractive environment)
High threat of substitute products
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High bargaining power of customers
High rivalry among existing competitors
STRENGHTS
History and experience
Strong brand and image
Strong financial position
High market shareCost advantage
Global network and standardized w orkflows
Cross-divisional experience and cooperation
Standardized product portfolio
Portfolio of loyal customers
Broad portfolio of quality IT suppliers
Very good customer support
Established and strong Research & Development department
Strong Marketing & Sales
High level of technology
Skilled and committed employees
Very potential employer
Committed employees and highly skilled specialists
Official partner of United Nations
WEAKNESSES
Third of European market is dismantled among small and medium companies which weakens
the power of DHL Express
Bureaucratic environment (danger of slower processes and potential loss of customers)
Wide range of customers' portfolio (from individuals to big companies)
Wide range of product portfolio (worse identification of targeted customer)
Customers easily switch to competition
No major differentiation among the major competitors (network, history, experience, customer
portfolio, product portfolio)
SWOT Analysis
SWOT analysis is process of minimizing or mitigating threats by turning them into opportunities, turning
weaknesses into strengths, and matching of strengths with opportunities.
Threats
Economic crisis has brought slow down of economy, lower number of shipments and consequently
lower revenue and profit to the organization. DHL Express is strong organization with strong brand and
good financial situation that make it safe for the time-being. It is an opportunity for DHL Express to work
on making the organization more transparent, less bureaucratic and restructure its organization. These
initiatives would bring cost-cutting and help to financial health of the company for the future. It is also an
opportunity to outsource or off shore some of IT services from suppliers and use their buying power in
terms of competitive advantage.
There is a big threat of falling behind due to speed of technology development and high dependency on
IT and network for DHL Express. It is not possible to avoid that threat but it is important for the company
to minimize it. DHL Express uses broad portfolio of quality suppliers like HP and IBM that help to
minimize the risk of falling behind. Thankfully, the dependency is two-sided. It is not only for DHL
Express but also for the suppliers. It is important to deepen the cooperation and create stronger
dependencies. This could be done through innovative projects held through Research & Development
department.
As previously indicated the threat of new entrants is very high in CEP market, however, DHL Express
mitigates this risk very well. It has built strong global network. It has experience, history, strong brand
and very good image in the market. As a big company it has financial advantage and can offer more
favorable prices and discounts to the customers. Sales & Marketing and Research & Development
departments help to minimize that threat. Strategic programs that work on improvement, innovation,
education and communication cross-divisionally, among employees and customers are the success
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factors.
The threat of substitute products is very high in logistics and it is important to fight with this threat and
differentiate for the customer. Customer is interested in quality, reliability and speed; therefore it is
important for DHL Express to work on specialization and provide customized solutions for customers.
Good and recognizable brand brings image of quality and this is strengthen through Marketing & Sales
activities - communication channels, advertisements, commercials and further initiatives.
Customers have strong bargaining position in logistics industry because all logistics companies provide
similar portfolio of products. There are many competitors on domestic and international level that are not
easily recognizable for customers and therefore it is relatively easy for them to switch to competition.
Customers very often rely on image of the company and its historical experience which is a big
advantage for DHL Express. Therefore the investment into Marketing & Sales is important and work on
further development in that area is a big task. It is important to know what customer needs and surveys
play an important role in it. DHL Express takes initiatives based on it and came up with strategic
programs that work on improvement of company's assets in customers' eyes.
There is high rivalry among competitors in logistics industry as indicated before. DHL Express has to
fight with it but it has the advantage of international company with history and experience, with strong
and recognizable brand and good image. Cross-divisional cooperation, highly skilled specialists,
committed and educated employees, strategic programs focused on improvement of company's
strengths and weaknesses are ways of dealing with rivals and competition. The existence of smaller
rivals gives to DHL Express the possibility to merge with those companies and use their resources,
assets and networks to gain more market share. Cooperation and collaboration on innovations and
programs with them creates opportunity to further minimize this threat.
Logistics industry has highly negative impact on environment and creates additional social cost for the
company. It also has negative impact on image of the company; therefore DHL Express mitigates thisthreat by initiatives like Go Green program and close cooperation with United Nations organization by
help during natural disasters. Big companies have to use their power and authority to educate their
customers, suppliers and employees and work on decrease of the negative impact.
Weaknesses
As found out during the PESTLE analysis third of European market is dismantled among small and
medium sized companies which weakens the power of DHL Express. It mainly affects the domestic
markets. The small and medium companies do not generally operate internationally because they do not
have such a network and financial assets to build their international position and gain market share.
However, these small and medium companies represent an opportunity for DHL Express for merge or
acquisition and additionally for gain of more market share. DHL Express is in the position of strong and
financially healthy company and this is an opportunity that is quite easy to use.
DHL Express has more than 100,000 employees globally and large international network which createsfriendly conditions for bureaucracy. Bureaucracy creates formal and informal networks that connect
organization levels to one another through flows of information and cooperation and there is a danger
that these flows and organizational levels become to complicated and in some cases double the work
needed or it can happen that two organizational levels do the same task. Bureaucratic environment
slows down processes and procedures in the company and causes loss of customers. In order for DHL
Express to turn this into strength it is important to use and support work of Research & Development
department, support further cross-divisional cooperation, work on standardized process workflows and
create smooth cooperation channels among people in different levels of organizational structure.
DHL Express has wide range of customers' portfolio from individuals to big companies. It is given by
company size and environment it operates in. There is another weakness connected with this one and it
is wide portfolio of product offer. It is again given by size of DHL Express and the nature of logistics
environment. All four biggest competitors cannot be easily differentiated; they all have strong brand,
history, experience and similar product offer. Therefore it is not difficult for customer to switch to
competition. I believe that the above weaknesses cannot disappear, however DHL Express can work on
minimizing the impact. It is important for DHL Express to broaden and intensify business with current
customers and increase their dependency by providing customized solutions for every customer. If
customer uses tools of DHL Express and is dependent on its network it is costly to switch to
competition. DHL Express has to work on improvement of products and services and through
innovation and specialization increase productivity, reliability and speed of their services. This will tight
the customer closer and there will not be any desire to switch to competition. Investment programs are
the way to move those initiatives forward. The role of Sales and Marketing is important at this stage
because it supports the company and educates and communicates with customers. If company is seen
as a strong, financially healthy organization, with good image and recognizable brand, it attracts
customers.
Matching Opportunities and Strengths
Mergers and acquisition were identified as a big potential for DHL Express to increase their market share
and strengthen position in European market. DHL Express would use power of those smallercompetitors, their networks and customer portfolio to gain bigger competitive advantage. European
market will be fully liberalized by the year 2012 and it is clear that there will be more small and medium
sized competitors in near future. DHL Express has experience with merge and acquisition around the
world. I do not have to go far and say example of PPL, Czech logistics company that operates as a
partner of DHL. From my perspective as a customer it has given to PPL better image and competitive
advantage because anytime I have need to deliver a package I called PPL. However, in times of
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economic crisis when companies change their investment plans, every investment like this must be fully
analyzed and evaluated. This is not time for quick decisions and actions. DHL Express has the biggest
market share at the moment and any merges or investments to purchase new companies could be
postponed to near future.
Size of European market is limited but there are still gaps and opportunities for logistics companies in
Emerging markets. Emerging markets have the potential of high economy growth and despite the
influence of economic crisis the growth has slowed down but has not stopped. Therefore it is important
for DHL Express to be present in those countries and invest in active Sales & Marketing. The aim is to
continue and expand DHL Express presence and continuously work on brand and image recognition.
The offer of product portfolio cannot be full because DHL Express would not be profitable if it offers the
full range.
As DHL Express is big company it is important to work effectively, efficiently, be reliable, be quality and
be speedy. It is not easy in all situations, therefore it is evitable to run strategic programs that work on
company's strengths and weaknesses and provide new opportunities. As discovered during the internal
analysis DHL Express has started several strategic programs that help the organization to stay on top.
First Choice program is focused on improvement of standard business processes and workflows based
on customers' needs. The program intensifies cross-divisional collaboration. It educates employees to
actively cooperate and by their attitude interest more customers and work on good relationship with
current customers. Closer cooperation with customers and employees brings new innovative ideas and
identifies gaps. If the company exactly knows what the customer wants, it helps to work on
customization of products and workflows to satisfy their need. Specialization and customization is
definitely an important and strong opportunity for DHL Express and it is one of the most important
opportunities I have identified. It also increases dependency that forces customers to stay with DHL
Express.
Roadmap to Value program is focused on transparency, profitability, cost reduction and performance.
Productivity of DHL Express will be increased by strengthening of standardized systems, processes and
workflows and it will bring the key success factors that customers request: quality, reliability and speed.
Restructuring of the organization will bring more transparency and although there will be redundancies
connected with it I strongly recommend to take this step. Outsourcing is an opportunity for DHL Express
to use skilled specialists and use their buying power to stay modern IT company in logistics world.
Climate protection is high topic in 21st century and DHL Express has to pay attention to it. Go Green
program is focused on climate protection and disaster relief. It helps to decrease social commitment the
company has towards society. And it also provides opportunities for the company to work on expansion
of climate-neutral products offer to the customers which help DHL Express to differentiate. It is important
to start using energy efficient technologies (modern fuel efficient vehicles), train employees to be
environmentally conscious, develop climate-neutral products and use standardized workflows and
systems. Therefore, further investment into Research & Development organization is important.
Employees are the treasure of any company. Skilled, educated and committed employees are the corebenefit for every company. DHL Express has very good image of employer and in order to stay on top it
is important to inform, educate and communicate with its employees. Standardized workflows and
standardized processes make it easier to work reliably, with good quality and be on time. Employees are
the people who communicate with customers and are the first point of contact. Therefore it is important
for DHL Express to hold regular employee surveys, issue bulletins, provide trainings and career
development plans. Marketing & Sales do not only communicate with outside world but also inside the
organization.
Value Chain Analysis
Inbound Logistics
DHL Express operates in more than 220 countries around the world and employs more than 100,000
employees. DHL Express is number one in Europe with 25% of market share. The DHL brand and imageis strongly recognized and their customers know that they will receive quality and fast service. Skilled,
educated and committed employees and specialist are those that help to run the company towards
future. DHL Express is aware of that. Modern technology in terms of vehicles, Electronic Data
Interchange systems (EDI) enabling planning, monitoring, operating and checking, handhelds, GPS,
barcodes and scanners, track and trace systems stand behind the success. Information Technology is
core for every logistics company. It is heart of the whole system that helps to work effectively and
efficiently. DHL Express has an internal IT organization that supports and maintains the applications 24
hours a day, 7 days a week to provide full support to their customers. Information Technology helps to
reduce time and consequently cost of the service which is what customer values. DHL Express has
started several programs to standardized workflows and processes to better satisfy customer and make
more efficient network.
Operations
DHL Express offers wide range of portfolio products and customers can either use service number
or internet to order any logistics service. DHL also maintain service points where any customer can drop
off or pick up shipments and have them packed at no extra charge. This is one of the innovative ideas
that DHL Express provides to offer climate-neutral shipping product within their Go Green program.
Possibility of track and trace their shipment is nothing exceptional nowadays.
Research & Development department plays an important role in development and success of DHL. There
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are several strategic programs running in DHL to strengthen its position in the market. First choice
program aims for DHL to become the first choice for its customers. Go Green program represents
commitment to environment and social issues. Innovation centre that gather employees with excellent
skills coming with new innovative ideas. Additionally, there are employee programs and surveys that
help to measure and to support their commitment. Skilled and educated employees are core for every
business. They are the people who meet with customers and they help to build customers' loyalty.
Surveys also can show to management how familiar employees are with the key strategies and how
strongly they are identified with them.
Outbound Logistics
DHL has thousands of customers and thousands of orders every day. Although their aim is to deliver
faster and with quality delays and mistakes could happen. However, DHL works every day on
improvement of processes, procedures and networks to satisfy every customer need and provide
appropriate solution. As mentioned several times IT is the element that helps to deliver the shipment on
time and w ith quality.
DHL Express have several warehouses in every country and there is one international hub that serves
for all international deliveries in Europe and globally. It is in Leipzig, Germany.
DHL Express has uniform range of international time-definite and domestic day-definite express services
in European region. It continuously expands its services to developing countries. For example they now
offer overnight delivery from all European major cities and economic centers to those countries.
Furthermore the day-definite road transport was expanded which help to acquire better contracts in
industrial sector especially in automotive industry an in consumer goods delivery.
These services are supported by processes, procedures, standards and strict cost control. Cooperation
across the divisions brings cost savings. Consolidation and restructuring of IT infrastructure and
transferring operating functions brings further savings.
Marketing & Sales
DHL Express has very active sales and marketing organization that help to present DHL's brand and
build image of quality. It also works on expanding company's presence into emerging markets. Asset of a
company lays in well-established and well-managed brand especially in the service sector. Good brand
also gives a competitive advantage in the labor market. It is important to show the company as an
attractive employer to get highly skilled and committed employees. DHL uses modern tools for marketing.
As an example can serve an online career portal used as a recruiting tool.
DHL also reworked its corporate design and every service employee wears uniform clothing. Employees
are educated about their company through Brand manuals. There is multi-lingual internet platform for
DHL employees to get consistent information and be aware of the brand image. Customer retention,
customer loyalty and brand recognition are amongst the benchmarks that DHL values to reach success.
These innovative programs that DHL is running are expensive for the company. They know that the
benefit will not come in short-term. Brand awareness and trust cannot be gained in short-time. However,
if it is gained it could have long-lasting.
After Sales
Customer support and customer service is very important in logistics industry because one of the most
important factors is customer satisfaction. Therefore, DHL Express regularly holds customer satisfaction
surveys because they help to identify problem of substitute products, help to answer what substitute
products customers consider, make better position in the market and among customers, uncover
customers' perceptions, improve customer loyalty and make product improvements. DHL Express
knows that loyalty of the customers increase with satisfaction and if customer gets better value or
benefit for the same price it could mean lower profit for the company but it is worth it in long-run.
Research & Development and Marketing & Sales organizations have their significant role in After sales.
objectives
Using the SWOT analysis and Value Chain Analysis I have identified the main DHL Express objectives
and goals.
Increase profitability and productivity
Work on further growth despite economic crisis and invest into emerging markets
Balance the economic decline by restructuring and cost-cutting initiatives
Remain preferred provider and retain market share
Remain technology leader and improve relationship with suppliers
Specialize and customize products to achieve customer satisfaction
Differentiate by expansion of climate-neutral and climate-friendly products
Provide services in high quality and efficiency
Use Research & Development organization and improve products and services through
innovation
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Invest into strategic programs
Use power of Sales & Marketing and communicate with customer and educate employees and
become their first choice
Strategy Formulation
DHL Express is well known organization with recognizable brand and good financial situation. Economic
crisis has brought less revenue and profit of the organization decreased. Therefore, the first goal is to
stabilize the company situation and return to the level before economic crisis as soon as possible. It
means increase profitability and productivity of the organization. This is an opportunity for the company
to make the organization more transparent and start with restructuring initiatives like improvement ofcross-divisional cooperation, work on standardized process workflows, create easy cooperation
channels among people in different levels of organizational structure and make redundancies if it is
necessary. All these activities will bring lower cost for the company.
Emerging markets were identified as an opportunity for DHL Express to increase its market share due to
their growth potential. Although economic crisis has brought cost-cutting initiatives I see a big
opportunity for DHL Express to invest in building of networks and activities in those countries and
initiate active Sales & Marketing there. Another investment opportunity represents merge or acquisition
with small or medium sized companies in the EU market. Although, it would bring new customers and
new networks I see it as more risky then investment into Emerging markets due to consequences of
economic crisis in EU region and do not recommend taking this step. It is much feasible to retain the
current market share and remain preferred provider in the region.
DHL Express uses internal IT organization that supports all its IT systems around the world. It represents
high investment and cost for the company to stay on top. DHL Express employs top specialists in this
area and is one of the technology leaders. DHL Express closely cooperates with IT suppliers and skilled
specialists on software developments and innovations. Although investment in this area is important I
also recommend including the IT organization to restructuring and cost-cutting initiatives. And carefully
consider contracting of outsourcing or off shoring providers and use advantage of lower prices.
It is important for DHL Express to broaden and intensify business with current customers and increase
their dependency by providing customized solutions. This will bring differentiation for the customer. DHL
Express has to work on improvement of products and services and through innovation and
specialization increase productivity, reliability, quality and speed of the service. Innovation and
specialization also gives DHL Express space to work on environmentally friendly products and solutions.
DHL Express has already started with programs that are targeted on the above opportunities and are
supported by Sales & Marketing organization. Customer satisfaction surveys must be held at least once
a year and the results must be taken into account during the programs development. The main objective
of the program for DHL Express is to become First Choice for the customer.
As I stated in Value Chain Analyses, employees are the treasure of the company and skilled, educatedand committed employees are the core benefit for every company. DHL Express belongs among the
most admired employers in logistics industry and in order to stay on top employees must be educated,
informed and trained. It is important to create for them standardized workflows, processes and
procedures that will make their life easier. It is important to hold employee surveys at least once a year
and communicate the results of it to employees and make actions based on it and provide personalized
development plans. They are the first who communicate with customers and make them stay or leave.
DHL Express has already initiated a program focused on it. The main objective of the program is to
become First Choice for employees.
Strategic programs represent an area that DHL Express has already initiated, and as proved by the
analysis, they represent important success factors for the organization and it is valuable and worth to
continue them. The most important once are First Choice program, Roadmap to Value program and Go
Green program. The details of these programs could be found on page 40.
Marketing & Sales organization must further work on image of DHL Express and its brand awareness
worldwide. This department communicates with inside and outside world of the company and togetherwith Research & Development must by financially supported by the company to bring advantages. I see
these two organizations as one of the most important ones and as the top layers above all innovations,
specializations, customizations, solutions, education, trainings and programs.
conclusion
Although I thoroughly analyzed all aspects of the company and went through the analysis of external and
internal environment my strategy does not differ from the official strategy of DHL Express. On one hand it
is disappointment but on the other hand I am glad that I am working for a company that has clear