Airborne Express case study Essay

airborne demo, an air have a bun in the oven dose companionship has succeeded to cope with a few big competitors much(prenominal) as Federal evidence and join Parcel Service (UPS) even it does non have funding as much as its competitors. In 1996, it held trine position in the industry with 9 percent of the market. Even airborne is smaller size company comp atomic number 18d to its main competitors, it still send word stand with the free-enterprise(a) advantage by means of its resources and capabilities. With some unique resources and core competences, a company may have free-enterprise(a) advantage over its competitors, and this is the centering small capital company able to compete with its competitors. mobile Express is the first and just now air express reassignation company that owns an airport. Because of the special control, airborne has purchased an airline at Wilmington in 1980. Since then, the airport became the hub of the company, and all the trading ope rations of the company were conducted here. It is as well as the biggest privately owned airport in United States. With the ownership of the airport, airborne is able to control the operations to a greater extent easily. similarly that, Airborne does not need to pay for any landing or gain fees to the airlines company like its competitors. Comparably, Federal Express and UPS own the planes unless still need to lease the airport from new(prenominal) party. It helps Airborne to however a lot of damages.Apart from that, Wilmington airport is one of the strategic airports in United States. It means that the place is having a well weather record. For express air transportation industry, weather is a big factor that backside profess the nonchalant subscriber line operation. If the weather is bad, the shipments go away not be sent to the final destination at the promised time. Time is the promise to the customers and it does affect the confidence of a companys customers.Besides airlines, Airborne withal has a complete formation of ground transportation. With the turn outment of trucking hubs in some places, Airborne able to deliver the shipment that near to the hub utilise the ground transport. Almost 25 percent of the companys domestic volume is dealt with ground transport. However, the cost of service by ground transport is not transp bent to the customers who assume that the packages are flown. Thus, the charge is same with the air-transported goods. equal to air transport, ground transportation costs five times lower. From here, the emolument marginhas been increased. In the other way, the company in any case can can lower price for ground transportation packages. Instead of making more(prenominal) profit, the company can utilize the low cost emolument to compete with its competitors.In 1996, Airborne Express owned a fleet of cv aircraft. To keep the capital expenditure down, Airborne has purchased only used planes. The planes willing be m odified to suit its specification for air express transportation. The cost of purchase and modification is $30million lower than purchasing a new plane. equation to other companies, a big amount of money is being salvage by Airborne. Further more, Airbornes DC-9 and YS-11 aircraft require only two person cockpit crew compared to normal three person crews need in Federal Express and UPS. Labour cost has been sustaind again. Airborne also have its own maintenance facility in Wilmington. It is the only all-cargo carrier wave to do so. It can handle most if the maintenance works invite out major engine repairs. It was estimate that the labour costs of $16 per hour is $49 lesser than the subcontracted labour cost. It was a major source of annual cost savings.Instead of serving all kinds of customers, Airborne decided to revolve about on serving the necessarily of high volume corporate accounts. It is because the gross(a) competition and the cost of serving small customers. The company is able to establish scheduled pickup routes and use it as ground capacity more efficiently. Due to this factor, the unit cost structure has been reduced. According to the Airborne executives, their unit cost is $3 lower than its main competitor, Federal Express. Besides that, because of the unalike consumer behaviors between different groups, the focusing of the service is one of the ways to adopt a part of market in severe competition. By matching the needs of the groups, the company will have a better materialise to win the customers than its competitors.Another aspects that Airborne get competitive advantage is the earth of the only privately certified Foreign Trade Zone (FTZ) in United States at its Wilmington hub. In a FTZ, merchandise is tax-free and no customs duty is paid until it leaves. It is a big attraction to the immaterial companies. The companies can keep their inventories in Wilmington hub, and the inventorieswill be delivered to the destination by Airborne when infallible. The local companies that implement Just-In-Time policy will prefer the service truly much. It is because the inventories cost will bear by the suppliers that keep inventories in Airborne hub. For foreign companies, not only can satisfy the needs of local customers, but also can save the cost of tax and duty paid. The FTZ is a good factor that will help Airborne to set foot into the international market. However, because of the capital constraint, Airborne still ineffective to compete with Federal Express and UPS in the international market.Normally, large sizes A-containers are used in the air cargo business. Around $1million per plane is required to install cargo doors to take A-containers. To solve the problem, Airborne has developed C-containers that are six times smaller, and can fit through and through the passenger doors of the aircraft. The equipment to stretch the C-containers also about 80 percent less expensive than the equipment needed for A -containers. The shape of C-containers also designed to allow maximum utilisation of the plane space. To prevent other competitors copy the design, Airborne has taken out the unmingled on the C-containers. Therefore, C-containers seem to be the speciality of Airborne Express. It helps the company to save a lot of costs. It is a long term cost savings because it involves in daily operation. Therefore, it also a long term competitive advantage over the other competitors.Apart from that, through its subsidiary company, pass on Logistics Services Corp., Airborne is promoting a range of third-party logistics service. It provides customers with the ability to maintain inventories in a 1 million square foot downslope step in facility located in Wilmington hub. The customers can choose to manage the inventories themselves or subcontract to Airborne. In stock exchange service, third party will involve in the instruction for movement of the inventories.It easier the process of the movemen t of inventories, and also help the customers to minimise inventory holding costs. Airborne is the first and only air express transportation company that provide this unique service. It in truth involves a complex system. Therefore, knowledge or human resource is very important in order to develop the system. Since it is the only company, customers who interestedwith the stock exchange service will come to Airborne. The unique competence gives Airborne a competitive advantage.Science and technology is developing rapidly in the world. Information system becomes more and more important in the business world. The more developed system a company has, the more competitive advantage it gets. Airborne uses three information systems to help in its daily operation. LIBRA II system is a metering device and computer software product that easier the transaction between Airborne and customers. It also lowers Airbornes run costs. FOCUS is the main system provided by Airborne and it benefits cust omers the most.It is a intercontinental tracking system that help the customers to track the location their package through Internet link. It increases the companys reliability and service quality. With the trust on the company, customers will be more confident to give the job. The third system is the Customer Linkage electronic entropy interchange program. It eliminates repetitive info entry and paperwork by the customers. It also a system that created purposely to benefit its customers. The company also benefits from lowering the costs by eliminating manual data entry.From all the resources and capabilities mentioned above, we could realise that most of the competitive advantages Airborne has over its competitors is through costs reduction. According to Porters Generic Strategies Model, Airborne is actually implemented a cost-focus strategy to get the competitive advantage. Because of the lesser capital, Airborne is unable to compete with the giant of the industry, such as Fede ral Express and UPS. If Airborne can be the cost leader in the industry, it can give a severe competition to the competitors. Besides that, the unique resources such as C-containers and Foreign Trade Zone are also full-grown core competences to the company.In conclusion, facing the competition from competitors that have powerful funding, Airborne not only can survive, but also get a strong position in the air express transportation industry. A correct and suitable strategy adopted by a company can change the company position. A company, which can fully and cleverly utilise its resources and capabilities, it can havecompetitive advantage over the other competitors and it really benefits the company a lot.