strategic management q. and a

8/13/2019 Strategic Management Q. and A.

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Case Discussion Questions

1 .What aspec t s o f DHLs s t r a tegy fo r en te r ing the Uni te dStates reflect a low-coststrategy? A differentiation strategy?The

section in the text titled Evaluating Cost Leadership Opportunities

(pages 234-242) will help with this discussion, and identifies ways toachieve low-cost advantagesand how to evaluate differentiation advantages

as well. Right now, DHL is a newentrant into the U.S. market, but it doeshave significant market shares in both Europe

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and Asia as the dominant provider of its logistics/delivery services in those

regions.DHLs skills and resources that foster cost leadership include:

Sustained capital investment and access to more capital from its parent

companyExcellent integration skills and an ability to effectively pursue acquisitions

for expansion

Tried and proven logistics systems

Structure within the organizationfor one, the company is trying toimprove itsservices by hiring the right people in the first place

The organization has some quantitative measures of successDHLs skillsand resources that support differentiation include:

Strong marketing abilities and an aggressive, competitive ad campgaign

Strong management

Reputation for doing what others in the industry wont or cant afford to

Willingness to travel to small- to mid-size companies in more remote areasinorder to provide delivery service

Inclusion of some qualitative, subjective measures of success20 .Ar ethere an y aspec t s tha t appea r to r e f l ec t a fo cus s t r a tegy? Right

now, DHL is just trying to get established as a viable carrier in the U.S.markets.It is focusing on a small market share, but trying to grow that


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market share as well as itcan. DHL is serving the niche that others have not

or do not want to. For instance, it iswilling to send drivers to more remoteareas to deliver and pick up packages or providelogistics services. Right

now, the firm is applying elements of the differentiation andlow-cost

approaches in combination form to serve a more narrow market niche.Whilethis is not necessarily its long-term aim (it wants to serve this niche

andserve the broader market), it is part of the current approach.3 .How has

DHL incorpora ted speed in to i t s overa l l s t r a tegy? The companyhas a corporate reputation in international markets for quality

andleadership. The company is flexible, and has strong financial backing

from its parentcompany. Its customer service personnel are good atmeeting face to face withcustomers to provide service and arrange

logistics, instead of doing everything online or via telecommunications

options. For more, refer to Exhibit 8.4, Evaluating aBusinesss RapidResponse (Speed) Opportunities, on page 241.4.W hat app ear to beDHLs mos t impor tan t compet i t ive advan tages? Are they bes t

su i t ed to a mature industry or a growth industry? Which way would you

characterize the U.S. parcel market and the global parcel market?Rightnow, DHLs most important competitive advantages appear to be their

strength inlogistics and resources in the airborne parcel market, their

strong management background and success in other international markets,and their willingness to focus onservice for all clientsnot just big name

companies. Because of globalization and thesubstantial increases in

demand to make deliveries across international borders aroundthe world,the global parcel market can be considered a growth industry. DHLs

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strategic strengths in this market include the ability to establish strong

brandrecognition, the ability to scale up to meet demand with its strong

capital resources, anability to differentiate the firms services, and itsstrong marketing skills. (Refer toCompetitive Advantages and Strategic

Choices in Growing Industries, page 248.)The U.S. parcel market is more

evolved and is undergoing what is cited in the text as thetransition tomaturity (page 248). Some growth remains in niche markets that are

notserved by either of the big two providers: UPS and FedEx. DHL has

identified theunderserved niche and included those individuals andbusinesses in its marketingapproach. DHL is establishing itself through

marketing as a known alternative in theU.S. market, and is t rying to


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differentiate itself from the domestic carriers as the viablealternative for

domesticand

international shipping needs. In this industry, thecompanys horizontal

integration skills and international expansion strategies supportthe firmssuccess .5 .What appears to be the l ikel ihood that DHL wi l l

su cc ee d? Wh at ke y fa ct o rs wi ll determine that?DHL will likelysucceed because of several reasons and resources. First, the companyhas

significant support and resources from its parent company and thestrongmanagement skills of those directing the company. Second, it is very

successfuldominant evenin the two largest international economies

after the U.S.Europe andAsia. DHL plans to invest heavily in the U.S.and realizes that it must make a long-termcommitment to establishing itself

despite the higher costs to penetrate this market in theface of strong

incumbents. Its success will hinge on commitment of financialresourcesand the ability to reshape its HR function to hire the rightpeople to provide customer service.6. DHL co mes to you for adv ice

on whether th ey should con t i nue a g loba l focus on parce l s and

express mail or diversify their business activities into other types ofbusinesses.What would you advise and why?Because the global parcel and

express mail industry offers growth, and because it hasthe financial and

managerial resources to commit to establishing success in the U.S.market,DHL should continue its global focus. Because the company is so skilled

athorizontal integration, it should stay within this market focus. The

company is notspecialized at other forms of diversification, and theirmanagement focus should remainon the current U.S. problem rather than

diverting managements attention to new business endeavors.188

strategic management q. and a

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