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Strategic Management Presentation on DHL ExpressBy edit Master Click to group 7: subtitle styleAshok Amipara Vikram Dutt Vimal Boda Mehul Dhamsaniya Salim Dodhiya Hiten Mandaviya 4/12/12 Tolani Institute of 09003 09009 09018 09025 09027 09058

AIR EXPRESS INDUSTRY

Movement of documents and parcels by air. Air express industry offered two main products: document delivery and parcel delivery 75% Parcels(WPX) 25% Documents(DOX) The industry is growing at 6% per annum 4/12/12 Tolani Institute of 22

Main features of the industry

Speed of service. Door to door delivery. Proof of delivery. Tracking system. Security & reliability. Global network.4/12/12 Tolani Institute of 33

Air Express Industry In India

Started In 1979. Growth rate 13% (Approximately) Major Players:

DHL Blue Dart Elbee First Flight Overnite ExpressTolani Institute of 44

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About DHL Express.

DHL Expressis adivisionofDeutsche Postproviding internationalexpress mailservices. Originally founded in 1969 to deliver documents betweenSan FranciscoandHonolulu. The company expanded its service throughout the world by the late 4/12/12 Tolani Institute of 55 1970s.

Cont..

In 1998,Deutsche Postbegan to acquire shares in DHL, finally they achieved majority in ownership and completed the purchase in 2002. Today,DHL Expressshares DHL brand with other Deutsche Post business units such asDHL Global ForwardingandDHL Exel Supply Chain.4/12/12 Tolani Institute of 66

Entry of DHL Express in India

DHL Express collaborated with AFL (Air Freight Ltd.) to enter in Indian market. Before Collaboration AFL was in the business of transportation of goods through maritime cargo and surface logistics. DHL India is a centralised unit. The management of this unit is in the 4/12/12 Tolani Institute of 77 hands of AFL.

Vision & Mission

Vision:

To be the acknowledged leader in providing world class integrated logistic solution

Mission:To provide organization and individuals the best value in integrated logistics though a global network, innovative use of 4/12/12 technology and caring people Tolani Institute of 88

Evaluation of vision and mission

DHL India is among top air express service provider. DHL India had installed a sophisticated IT network to provide customers quick information and other services. All the strategies are based providing the best value customers.4/12/12 Tolani Institute of 99

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Case Background

The case is providing the overview of the Air Express Industry. Data is provided from the year 1991 to 1997. Comparisons between different Air Express service providers but mainly focused on DHL India.

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Cont.

Major issues faced by DHL India at that time.

How to run the two segments of business namely domestic and international? What should be the response to the recent moves of competitors? What should be the future relationship between AFL & DHL Worldwide Express.Tolani Institute of 1111

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INDUSTRY ANALYSIS1. 2. 3. 4.

ETOP Analysis Potters 5 forces analysis Major competitors analysis Key success factors

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1. Environment Threat and Opportunity Profile (ETOP)4/12/12 Tolani Institute of 1313

Environmental sectorsEconomic Market

Nature of impact Impact of each sector Bank ,telecom, IT are growing. Speed is only key to success which required huge investment. Threats from global players. The industry is very big so the political attention is very high. Rules and regulation of export and import, strict rules of air ways. Trends of society is changing and everyone is transacting globally. Accurate timing followed by the Air line industry. Technology increases the 1414 efficiency of the service.

International Politics

Regulatory

Social

Supplier

Technology 4/12/12

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Analysis of ETOP

Here, unfavorable impact of the industry are on Regulatory and International sectors. Other impacts are almost favorable to the industry. The major threat is entry of global players. To remove this threat, the better strategies are:Tolani Institute of 1515

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2. Porters 5 forces Analysis

Face of competition: Threat of substitutes: Threat of new entry: Bargaining Medium Here, 4/12/12 power of

High Low Low Low suppliers:

Bargaining power of buyers:

most of the forces 1616 low, are Tolani Institute of

3. Competitors analysis

Blue Dart, Elbee, First Flight, Overnite Express, Speed Post, Fedex are the major competitors of DHL India. Most of the competitors are concentrating on domestic and non document market because of higher growth rate.

Competitors are investing in fixed costs (transportation vehicles), so they are having the benefit of economies of scale. 4/12/12 Tolani Institute of 1717

4. Key Success Factors

Global reach. High Speed in providing services. Using advanced technology (IT Network, Tracking software). Maintaining Customer data base. Maintaining Personal relations with corporate customers. Use of marketing communication 4/12/12 1818 tools(Direct Tolani Institute of mail).

Overall Attractiveness of the Industry

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ETOP:

Most of the Impacts are favorable and other unfavorable impact can be minimized by adopting the beneficial strategies.

Porters 5 Forces:

Most of the forces are favorable and threat of competitors can be removed by providing the better services to the customers.

Competitors Analysis:Tolani Institute of Most of the competitors have 2020 benefits of

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Key Success Factors:

Key success factors can be achieved by huge investment.

Overall, the industry is having good opportunities and it is also very attractive in terms of long term returns.4/12/12 Tolani Institute of 2121

COMPANY ANALYSISSWOT Analysis Value Chain Analysis Financial Statement Analysis

1. 2. 3.

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SWOT Analysis4/12/12 Tolani Institute of 2323

Strength

On time delivery. Effective Communication System. Loyal customers(Philips, Motorola). Market Share leadership(DOX). Strong Brand Equity. Use of updated technology. Low fixed cost.4/12/12 Tolani Institute of 2424

Weakness

Higher dependency on airlines. Low investment on transport vehicles(No benefits of economies of scale) High prices. Not able to capture enough market share in domestic (Parcel) market.4/12/12 Tolani Institute of 2525

Opportunities

Emerging new market. Product and service expansion. Takeovers small units of unorganized sector to capture domestic market. Increase in global shopping.

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Threats

Upcoming private competitors. External Changes(government, policies, tax). Price Wars. Decrease in traditional services (Letters) due to electronic communication(email).4/12/12 Tolani Institute of 2727

2. Value Chain AnalysisProduct R&D, Technology, Systems Development Human Resources Management General Administration

Suppo rt Activit iesService Profit Margin

Inbound Logistics

Operation s

Outbound logistics

Sales and marketing

Primary Activities4/12/12 Tolani Institute of 2828

Financial Statement Analysis

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Investment ReturnCapital Market ratios:

EPS: PAT/No of Equity shares.DHL 36.38 38.67 10.05 14.60

BLUE DART

ELBEE 17.85 10.82

EPS 2006-07 EPS 2007-08

More EPS is beneficial for the shareholder, here DHL is giving good return compare to others, It shows the profitability of the DHL is strong than the others.Source: www.DHL.co.in, www.bluedart.co.in, www.elbee.co.in 4/12/12 Tolani Institute of 3030

Financial strengthLiquidity ratio:

Current ratio: Current assets/Current LiabilitiesDHL BLUE DART 4.46 2.74 ELBEE 6.69 2.48 1.95 2.53

2006-07 2007-08

Ability of the firm to meet its current liability, Higher the current ratio the greater the short term solvency. Here ,DHL was not in good position as compared to others so it was needed to improve.Source: www.DHL.co.in, www.bluedart.co.in, www.elbee.co.in 4/12/12 Tolani Institute of 3131

Solvency Ratio:

Debt-Equity Ratio: Debt/EquityDHL BLUE DART 1.06 1.45 ELBEE 2.8 1.37

2006-07 2007-08

1.27 0.92

The lower the debt-equity the higher the degree of protection enjoy by the creditors, Here the DHL position is better than the others.Source: www.DHL.co.in, www.bluedart.co.in, www.elbee.co.in 4/12/12 Tolani Institute of 3232

Debt-Assets:DHL BLUE DART 0.39 0.34 ELBEE 0.26 0.39

2006-07 2007-08

0.39 0.32

This ratio measure the extent to which borrowed funds support the firms Assets, here all company had similar position in 2007 - 08.

Source: www.DHL.co.in, www.bluedart.co.in, www.elbee.co.in 4/12/12 Tolani Institute of 3333

Interest coverage Ratio : PBIT/INTERESTDHL 2006-07 2007-08 5.71 12.152 BLUE DART 9.925 14.112 ELBEE 6.126 4.1247

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Ability of firm to pay its interest burden, high interest ratio means company can easily meet its interest burden, DHL was not in good position in 2006-07 but profit increased and company paid the debt which increased the interest coverage ratio in 2007-08. It was better than ELBEE but similar to Source: www.DHL.co.in, www.bluedart.co.in, BLUE DART.Tolani Ins

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