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Consequently, the need of worldwide good export contributed the development of freight industry. Nowadays freight industry is subdivided in a wide range of sectors; however, the fastest and sot reliable is air freight sector (GAGA, 2011). The main advantage of the air cargo is the capability to deliver goods to afar distances in a very short period of time. Apparently, that is one of the main causes when out of all transportation possibilities preference is given to the air cargo.
Also, existing companies generally have strong and time-proven relations with foreign countries they are operating in (Evader, 2008). New entrant faces the need to win the trust and loyalty of suppliers and buyers. BUYER POWER The buyer power is stated as moderate, due to the existence of substitutes and low switching cost (Marketing, 2013). The buyer will easily switch to another company, which offers same services at a lower price(Wald and Sleigh et al. , 2010). Moreover, with the development of the Internet, it became easy to compare services and prices of different companies.
The threat is strengthened by the marked quality improvement of the services offered by the substitutes in the recent years. Currently air freight fares are on average 4 times higher than the tariffs for other modes of transportation. Since time is not always a decisive factor, the main competitor of the carriage of goods over long distances is maritime transport. For medium and short distances most of the cargo is transported by rail and road (Wald and Glitch et al. , 2010). Nowadays, wide ranges of different size organizations operate in the air-freight sector (Evader, 2008).
Despite the difference in size, air cargo companies are easily same destinations using identical routes. Such similarity and low switching cost results in a high rivalry between companies (Marketing, 2013). The company was found by Frederick W. Smith in 1973 during the time, when he was a college student with a concept in his mind. The idea was related with overnight delivery services, which resulted in building up one of the largest and fast growing companies in the world (Marketing, 1973). SOOT analysts Firstly, Faded, during its activity, has created a strong brand name which is associated tit fast and reliable delivery.
Since 2001 Faded has been in the top 20 of “Most Admired Companies” in the Fortune list, reaching 7th place in 2012. This is clearly a huge advantage in its competitive industry, and influence the profitability of 8 the company. However, the company would not achieve this without good advertising. According to Marketing (2012), advertising investments accounted $375 million in 2010 and $421 million in 2012 financial years. Secondly, Faded operates not only in the air cargo market, which results in a large scale of operations. The company is divided into 4 segments: Faded Express, Faded Ground, Faded Freight and Faded Services (Faded, 2014).
Thus, such diversity lowers threat from substitutes and enables to serve more customers. Overall, Faded maintains a global presence with operations in 220 countries all over the world, but mostly in the US market (Marketing, 2013). Finally, Faded has a strong and stable financial performance. The figures in financial reports, such as company’s revenue, operating and net profit, as well as cash flow from operating activities are constantly growing. Faded has seen a stable growth of revenues from $3,473 million in 2010 to $39,304 million in 2011 and $42,680 million in 012, which is an increase of 10. 8% (Marketing, 2013).
Such positive figures are an evidence of good management decisions and successful strategy planning. One of the Faded weaknesses is a large number of lawsuits (Marketing, 2013). Claims are often emanated from employees who accuse the company of exploitation, salary delays and the lack of adequate working conditions. As a result, it can aggravate Faded performance, earnings and reputation. Another weakness is related with provided sponsor programs for employees. These programs are associated with pension obligations. However, allocated funds of 17,334 million proved insufficient to meet these programs’ requirements.