Transcript
Page 1: DHL External Analysis

DHLExternal Analysis

Page 2: DHL External Analysis

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.

The company operates through four business divisions: DHL Express, DHL Freight and DHL

Global Forwarding, DHL Exel Supply Chain and DHL Global Mail.

Company Overview

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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?

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Porter’s Five Forces Model

Bargaining Power of Suppliers

Bargaining Power of Buyers

Risk of Entry by Potential Competitors

Threat of Substitutes

Intensity of Rivalry among established

firms

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Low due to:

• High cost of entry

• High existing brand loyalty amongst consumers

• High absolute cost advantage

• Customer switching cost

• Government Regulations

Risk of Entry by Potential Competitors

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High due to:

• Similar industry competitive structure

• High industry demand

• High cost conditions

• High exit barrier

Rivalry among established companies

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Substitute Products are the products from different businesses or

industries that can satisfy similar customer needs.

Threat of Substitute Products

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Low due to:

High barriers to entry

Lesser new entrants

Lesser substitutes

Threat of Substitute Products

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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.

Bargaining Power of Buyers

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High due to:

• 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.

Bargaining Power of Buyers

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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.

Bargaining Power of Suppliers

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Examples of DHL suppliers:

- Planes and Transportation:- Powerful- Low number of substitutes due to low

number of suppliers

- Packaging and Labeling: - Less Powerful- High number of substitutes due to high

number of suppliers

Bargaining Power of Suppliers

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• 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

Nature of Competition

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SWOT

Source: DHL Company Profile (2009). Retrieved from www.datamonitor.com

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2. Are any changes taking place in the macro-

environment 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?

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• Technological Forces (Positive) • Changes: Incorporate technology in

the operating systems

• Effect: Safely delivering goods in a fast manner

Changes in the Macro-Environment

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Social Forces (Positive)

Changes: GO GREEN!

Effect: New delivery methods to satisfy current consumer trends

Changes in the Macro-Environment

Source: Top 50 Supplier Chain Partners (2010). http://www.inboundlogistics.com/digital/top50green_digital2010.pdf

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Social Forces (Positive)

Changes: Increase trend of online shopping

Effect: Creates business opportunities for logistic companies

Changes in the Macro-Environment

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• Political and Legal Forces

Changes in the Macro-Environme

nt

Source:DHL website. http://www.dhl-usa.com/resources/Prohibited_Restricted_Commodities.pdf

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• Global Forces (economic) • Changes: Rise in fuel prices• Effect: High operating cost

• Changes: Unpredictable natural disaster• Effect: Disruption of transportation and

communication

Changes in the Macro-Environment

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3. Identify any strategic groups that might exist in the

industry. How does the intensity of competition differ across these strategic groups?

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Strategic 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.

Strategic Groups

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Strategic GroupsPri

ces

Charg

ed

Reliability

Market Leader- DHL

- FedEx- UPS- TNT

Market Follower- Skynet

- Kangaroo- Gdex

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Difference in intensity of competition across these groups

Strategic Groups

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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.

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Life Cycle

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• Market totally saturated with low to no growth:

• Industry consolidation based on market share, driving down price.

Mature Life Cycle

DHL is in the logistic Industry where this industry had matured deliberately

because entry into the market is difficult, yet initial competitors are

slowly growing.

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• 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.

Life Cycle

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• 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)

Life Cycle

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ConclusionBy analyzing and understanding the dynamic macro- environment, DHL is able to identify which of the forces has the greatest impact to the company and its industry.

By having a clear understanding of the external analysis, DHL will know where its competitive position lie in the industry, the current market trends and its competitors’ strategy in order to generate a successful strategy to satisfy the expectation of consumers in order to compete.


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