FedEx\u2019s strategy for success in the market place relies on a combination of customer intimacy, operational excellence and product leadership customer value proposition. Noreen, Brewer and Garrison (2008) describe companies who adopt customer intimacy as companies who attract customers by understanding and responding to individual needs better than competitors (p. 4). Companies that rely on operational excellence deliver products or services quicker, more conveniently and at prices lower than competitors (Noreen, Brewer and Garrison, 2008. p. 4). Companies that pursue product leadership customer value proposition tell their customers to choose them because they deliver a higher quality product than their competitors (Noreen, Brewer and Garrison, 2008. p. 4)
Evidence of customer intimacy and operational excellence is found in FedEx\u2019s 2005 Form 10-K which states \u201cto provide our customers with convenient, seamless access to our entire portfolio of integrated business solutions. We are pursuing a number of initiatives to continue to enhance the FedEx customer experience, including improving the capabilities of our sales professionals. For instance, through our FedEx OneCall program, we assign a single customer service agent to handle virtually all issues of a customer\u2019s account\u201d (p. 4). Further evidence of customer intimacy is found in the statement that each of FedEx\u2019s business segments operates independently because this strategy allows each segment to anticipate and respond to customer
demands (FedEx Form 10-K 2005, p. 4). Additional evidence of operational excellence is in FedEx\u2019s 10-K where they state they are leader in reliable rapid global delivery of packages, documents and freight and further specialized services such as customs-clearance with a money back guarantee (p. 9). Evidence of product leadership customer value proposition is found in FedEx\u2019s statement that \u201cWe believe that seamless information integration is critical to obtain business synergies from multiple operating units. For example, our Web site,
fedex.com, provides a single point of contact for our customers to access FedEx
Express, FedEx Ground and FedEx Freight shipment tracking, customer service and invoicing information and FedEx Kinko\u2019s office and print services\u201d (FedEx Form 10- K 2005, p. 4).
FedEx\u2019s four main business segments are FedEx Express, FedEx Ground, FedEx Freight and FedEx Kinko\u2019s (FedEx Form 10-K 2005, p. 3). A traceable fixed cost of a segment only exists because of the existence of the segment itself (Noreen, Brewer and Garrison, 2008, p.446). If the segment disappears so does the cost. A common cost is incurred to support the operations of multiple segments and is not traceable in any way or part to a particular segment (Noreen, Brewer and Garrison, 2008, p.446). If a particular segment disappears the cost remains and should not change.
One traceable fixed cost for FedEx Express would include the cost to operate their facilities at Memphis International Airport which include aircraft maintenance hangars, flight training and fuel facilities, administrative offices and warehouse space (FedEx Form 10-K 2005, p. 24). Another example of traceable fixed cost for FedEx…