DHL External Analysis

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<p>DHL External Analysis</p> <p>Company Overview</p> <p>DHL is a wholly owned subsidiary of Deutsche Post World Net . The company offers expertise in express , air and ocean freight , overland transport , contract logistics solutions as well as international mail services . DHL links 120 , 000 destinations in more than 220 countries and territories . The company provides services from a network of about 6 , 500 offices , and it employs a fleet of nearly 76 , 200 vehicles and about 420 aircraft .</p> <p>The company operates through four business divisions : DHL Express , DHL Freight and DHL Global Forwarding , DHL ExelSupply Chain and DHL Global Mail .</p> <p>1. Apply the five forces model to the industry in which your company is based. What does this model tell you about the nature of competition in the industry?</p> <p>Porters Five Forces ModelRisk of Entry by Potential Competitors</p> <p>gaining Power of Suppliers</p> <p>Intensity of Rivalry among established firms</p> <p>Bargaining Power of Buyer</p> <p>Threat of Substitutes</p> <p>Low due to:</p> <p>Risk of Entry by Potential Competitors</p> <p> High cost of entry High existing brand loyalty amongst consumers High absolute cost advantage Customer switching cost Government Regulations </p> <p>Rivalry among established companies</p> <p>High due to:</p> <p> Similar industry competitive structure High industry demand High cost conditions High exit barrier</p> <p>Th re a t o f Su b s t it u t e Pro d u c t sSubstitute Products are the products from different businesses or industries that can satisfy similar customer needs .</p> <p>Low due to:</p> <p>Threat of Substitute ProductsHigh barriers to entry</p> <p>Lesser new entrants</p> <p>Lesser substitutes</p> <p>Bargaining Power of Buyers</p> <p>Refers to the ability of buyers to bargain down prices charged by companies in the industry or to raise the cost of companies in the industry by demanding better product quality and service.</p> <p>Bargaining Power of Buyers</p> <p>High due to:</p> <p> High dependence in consumers Switching cost is low in this industry, however for DHL, the company has high brand loyalty due to good and consistent services in delivery.</p> <p>Refers to the ability of suppliers to raise input prices, or to raise cost of the industry in other ways, for example, by providing poor-quality inputs or poor service.</p> <p>Bargaining Power of Suppliers</p> <p>Bargaining Power of Examples of Suppliers DHL suppliers:- Powerful - Low number of substitutes due to low number of suppliers</p> <p>- Planes and Transportation:</p> <p>- Packaging and Labeling:- Less Powerful - High number of substitutes due to high number of suppliers</p> <p>Nature of Competition Intense competition Competitors have similar business nature to one another DHL strives to serve consumers better in order to maintain their position as one of the leading logistic company in the industry</p> <p>SWOT</p> <p>Source: DHL Company Profile (2009). Retrieved from www.datamonitor.com</p> <p>2. Are any changes taking place in the macroenvironment that might have an impact, positive or negative, on the industry in which your company is based? If so, what are these changes, and how might they affect the industry?</p> <p> Technological Forces (Positive) Changes: Incorporate technology in the operating systems Effect: Safely delivering goods in a fast manner</p> <p>Changes in the MacroEnvironment</p> <p>Changes in the MacroEnvironment Social Forces (Positive)</p> <p>Changes: GO GREEN! Effect: New delivery methods to satisfy current consumer trends</p> <p>Source: Top 50 Supplier Chain Partners (2010). http://www.inboundlogistics.com/digital/top50green_digital2010.pdf</p> <p>Changes in the MacroEnvironment</p> <p>Social Forces (Positive)</p> <p>Changes: Increase trend of online shopping Effect: Creates business opportunities for logistic companies</p> <p>Changes in the MacroEnvironme nt Political and Legal ForcesSource: DHL website. http://www.dhlusa.com/resources/Prohibit ed_Restricted_Commoditie s.pdf</p> <p>Changes in the MacroEnvironment Global Forces (economic) Changes: Rise in fuel prices Effect: High operating cost Changes: Unpredictable natural disaster Effect: Disruption of transportation and communication</p> <p>3. Identify any strategic groups that might exist in the industry. How does the intensity of competition differ across these strategic groups?</p> <p>Strategic GroupsStrategic Groups are groups of companies that follow a business model similar to other companies within their strategic group but are different from that of other companies in other strategic groups.</p> <p>Prices Charged</p> <p>Strategic GroupsMarket Leader - DHL -FedEx -UPS - TNT Market Follower - Skynet - Kangaroo -Gdex</p> <p>Re lia b ilit y</p> <p>Strategic Groups</p> <p>Difference in intensity of competition across these groups</p> <p>4. In what stage of its life cycle is the industry in which your company is based? What are the implications of this for the intensity of competition both now and in the future.</p> <p>Life Cycle</p> <p>Mature Life Cycle Market totally saturated with low to no growth: Industry consolidation based on market share, driving down price.</p> <p>DHL is in t h e lo g is t ic In d u s t ry wh e re t h is in d u s t ry h a d m a t u re d d e lib e ra t e ly b e c a u s e e n t ry in t o t h e m a rke t is d iffic u lt , ye t in it ia l c o m p e t it o rs a re s lo wly g ro win g .</p> <p> Now DHL is an established brand hence they fall under the mature stage. DHL should prevent from falling into the declining stage by securing and increasing their brand loyalty. This promotes higher entry barrier and less new entrants will enter the market. Then, competition is lower. Solution: Maintain as a market leader by providing the same high quality services to keep consumers coming back. Build close long term relationship with the suppliers.</p> <p>Life Cycle</p> <p>Life Cycle Future Keep being innovative by coming up with more competitive advantage like developing new technology, service etc. Focus more on CSR as consumers are more concerned with global warming and climate change. Ensure competitiveness by keeping track of competitors actions and strategies and also, consumers changing needs and trends. Consider joint ventures project (e.g.: currently with UPSP)</p> <p>ConclusionBy a n a lyzin g a n d u n d e rs t a n d in g t h e d yn a m ic m a c ro - e n viro n m e n t , DHL is a b le t o id e n t ify wh ic h o f t h e fo rc e s h a s t h e g re a t e s t im p a c t t o t h e c o m p a n y a n d it s in d u s t ry. By h a vin g a c le a r u n d e rs t a n d in g o f t h e e xt e rn a l a n a lys is , DHL will kn o w wh e re it s c o m p e t it ive p o s it io n lie in t h e in d u s t ry, t h e c u rre n t m a rke t t re n d s a n d it s c o m p e t it o rs s t ra t e g y in o rd e r t o g e n e ra t e a s u c c e s s fu l s t ra t e g y t o s a t is fy t h e e xp e c t a t io n o f c o n s u m e rs in o rd e r t o c o m p e t e .</p>

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