DPWN Company: Case Study

DPWN is a leading logistics company based in Germany. The Uk market proposes great opportunities to expand and grow. In the UK, channels of distribution that coordinate the activities of wholesalers, retailers, and manufacturers, or physical distribution activities resulting from the integration of warehousing, storage, transportation, handling, and inventory activities, are examples of marketing systems (Drejer, 2002).

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The fact that entities or activities are capable of being understood as a coherent group, rather than as a collection of parts, makes them a system. This conceptual insight has led to the development of new disciplines such as industrial dynamics and systems engineering (Bearden et al 2004).

Taking into account Porter’s value chain, it is possible to say that the company follows this model and introduces IT solutions at all stages. DPWN introduces IT support to logistics, a strong subcontractor network for IT support, good experience in the market and learning curve, Porter’s Five Forces help DPWN to analyze the eternal environment and respond effectively to current changes and market fluctuations. Five forces are entry, power of input suppliers, power of buyers, industry rivalry, and substitutes and complements (Drejer, 2002).

For DPWN, a change in an internal lever causes a dynamic chain reaction, involving a whole sequence of events. It helps managers to distinguish between market and nonmarket variables within environmental and decision variables, particularly in institutions whose strategy formulation entails aspects of political economy and administrative legislation.

In the UK, entry barriers are low because the state supports alternative energy projects and invests in the development and creation of alternative energy solutions. The power of input suppliers does not have a great impact on DPWN because it controls all manufacturing processes and development stages. The power of buyers has an impact on profitability and the competitive position of the market. On the global scale, industry rivalry is force influenced by legal requirements and innovations, increasing the number of companies proposing the same types of products.

Substitutive products have a great impact on DPWN and its sales. Thus, the company proposes unique state-of-the-art solutions for isolated geographical regions and low populated areas. Often, the entire set of possible outcomes is obscure and difficult to determine. Moreover, if managers oversimplify the interrelationships involved, then they end up ignoring the combined effects of such chain reactions altogether.

Conversely, combining environmental and decision scenarios computed along the interrelationship paths connecting the internal and external variables, Depending on the sales volume that a firm anticipates, it will adjust its sales force, supplies and distribution, equipment, and facilities to match the scale of its production (Bearden et al 2004).

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The case study shows that cost leadership has core business processes that nurture ideas, translate them into products, and market them skillfully (Drejer, 2002). Low cost allows DPWN to attract wide target audiences and remain competitive in the market. “Taking advantage of the know-how of its parent company, it developed a strategy for operational excellence allowing it to. outperform the incumbent in the operational processes for collection.

In that way, it was able to attack the weakness of the incumbent experienced in sorting, delivery, and meetings customer demands” (Deutsche Post World Net 2006, p. 11).

Coherent and consistent actions taken by its marketing, personnel, distribution, and procurement managers demand a shared vision of the intended production scale. Sharing common perceptions about a firm’s strategy is an important step toward coordinating implementation plans and managerial behavior. The use of specialized capital equipment makes vertical integration more profitable for large firms than for small competitors.

The success of DPWN is caused by a strategic move from a state to a privately owned company. Like other big businesses, DPWN receives particular attention from governmental agencies and regulations. Larger business organizations are associated with economic control, lack of competition, and monopoly, which are deemed undesirable. Yet our economy is one of bigness and mass; we enjoy the benefits of mass business geared to mass markets.

After privatization:” The next step involved modernization of the company through extensive investments in state-of-the-art logistics technology. A high level of automation and standardization helped to greatly improve service quality and productivity” (Deutsche Post World Net 2006, p. 3). This strategy allows DPWN to enter other countries and expand its international operations (Hollensen, 2007).

The environmental business change caused the market decline, so DPWN has to develop a new product to increase market share. This change opens new opportunities for DPWN and allows the company to obtain a leadership position.

  • Strengths the strategic change from a state to privately owned company allowed DPWN to positioned itself and take on a leadership role in the world. It has a strong brand name which creates a core of loyal supporters around the world. The strength of the company is that it is an expert and leader in the market proposing high-quality products and services.
  • Weaknesses include the high price for some types of products and the high-cost structure. On the other hand, high price helps to sustain a strong brand image as a unique brand. There is a danger of ignoring the environment, as customers and their needs, competitors, changes in technology, etc., can play an important role in determining competitive success. Since industry must constantly aim at being competitive, the specific energy consumption of the industrial sector has always shown a marked downward trend.
  • Weaknesses include a high price for some types of services and a high-cost structure (Hollensen, 2007). On the other hand, high price helps to sustain a strong brand image as a unique brand. There is a danger of ignoring the environment, as customers and their needs, competitors, changes in technology, etc., can play an important role in determining competitive success. Since industry must constantly aim at being competitive, the specific energy consumption of the industrial sector has always shown a marked downward trend.
  • Opportunities of DPWN include the potential to expand its activities in all countries around the world. New technologies will create new markets for DPWN. The increased size of the alternative energy market in Japan and Europe creates new opportunities for sales in these regions. In this situation, DPWN will be in a powerful position within the market to influence the expectations of other stakeholders. It will have access to information and channels of influence that are not available to many other stakeholders.
  • Major threats include global competition and entrance to new markets with high political and economic risk. Inflation and low income create threats for profitability and successful performance. Comparatively low consumption levels and the development of alternative sources of energy like solar power and water power threatens DPWN. (Bearden et al 2004).

Market expansion was one and the only possible strategy for DPWN to increase its market share and compete in a new environment. “DPWN embarked upon the strategy to establish itself on an international level through acquisitions, investments, and partnering agreements and to has expanded its market position steadily by Integrating services” (Deutsche Post World Net 2006, p. 3).

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  • Political /Legal factors: in Europe, the political situation is marked by stability and democratization of government institutions. Large capital investment will be required for environmental protection measures with respect to coal dust, coal-ash deposits, and waste-gas cleaning, for which technology has not yet completely solved the problems; the same environmental measures tend to limit the application of coal for large installations. (Hollensen, 2007).
  • Economic Environment The European economy is marked by stable development. Economic indicators show that the European market proposes great opportunities for such companies as DPWN to develop innovative and state-of-the-art solutions. The alternative energy industry is underdeveloped in Europe and does not play a great role in the economy.
  • Social/Cultural: The main strength of European countries is national unity. European countries represent a culture with a synchronous view of time. In spite of the interest in change and experimentation, however, Europeans do not like direct confrontation and forceful interpersonal challenges. In their opinion, problems should be solved by open discussions leading to a compromise, not by force.
  • Technological factors/resources Innovation in production technologies and the computerized system of the supply chain is the main opportunity for DPWN marketing communication. The threat is that investment in new technologies requires additional finance. Intellectual property and licensing protect business operations. Bearden et al 2004).

In order to increase its market share, DPWN follows aggressive acquisition strategy. “.Those acquisitions helped Deutsche Post to leverage local competence to build a strong Europe-wide distribution network. Another major step came in 2000 when Deutsche Post AG went public with a successful IPO, operating then under the brand1 Deutsche Post World Net” (Deutsche Post World Net 2006, p. 3).

A long-term view is taken by corporate executives and financial management, and a realistic estimate of profits and losses for the short term must be made to promote a smooth transition. Likewise, these estimates and forecasts must be made clear to upper management and transferred into corporate goals for the coming years (Bearden et al 2004).

If these goals are unrealistic or overly optimistic, there is always the danger of low morale when they are not met. However, this is not to say that financial targets should not be made or that milestones should not be established. The utmost effort must be made to meet planned financial targets. Only a long-term commitment to the merger strategy and a realistic establishment of milestones by upper management can ensure success (Keegan and Green. 2004).

The case of DPWN shows that in the initial phase (market entry), there is no direct competition. The tasks of marketing programs and strategies are those of gaining initial market acceptance and changing habits. They are concerned with creating primary demands for the product, providing customer and consumer information, identifying market segments, gaining market knowledge, soliciting channel support, and promoting to gain a foothold in the marketplace.

The second phase is characterized by endeavors to establish markets. In this phase, limited direct competition exists, and potential competitors begin to notice the situation. The functions of marketing programs and strategies are to solidify and extend market footholds and to establish differential advantage (Kotabe and Helsen 2006). Marketing activities center around gaining brand acceptance and developing customer loyalty. The attempt is to establish a market niche.

DPWN develops a successful diversification and acquisition strategy which helps the company to increase its market share and compete in Europe. To protect against market fluctuations, many firms choose a strategy of diversification through acquisition. By diversifying into related or unrelated lines of business, depending upon the strategy, DPWN protects against negative market fluctuations and economic turbulence (Mintzberg et al 2004).

A manufacturer of snow skis, for example, may choose to acquire a firm in the business of manufacturing water skis to counteract the seasonal nature of its business. It may also wish to diversify into a broader line of sporting goods equipment to obtain the same effect. Also, a firm in a declining industry may decide that it needs to move into a completely different line of business for it to have any chance of survival. This transition from one business to another might be accomplished through a strategy of acquisition, by bringing into the firm the new capabilities needed for success.

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The added risk to acquisition strategies is that they, in general, have greater capital requirements than do mergers or alliances. Acquisitions involve a purchase transaction of some sort, requiring an outlay of capital, assets, or other forms of funding. In many instances, large amounts of debt are carried by the acquiring company to fund the acquisition. As we have previously seen, the recent popularity of leveraged buyouts in the United States to fund an acquisition has led to hazardous levels of corporate debt (Moore, 2001).

These range from a desirable diversification of the local economy to the forming of a base for future economic development after the quarry operations are completed and the quarry is exhausted. The studies examined the full spectrum of the land and sea ecologies of the area (Bearden et al 2004).

The main financial services which help DPWN to debenture are online banking, new payment processing, and retail banking. The level of commitment required of a firm to a given corporate strategy must be assessed and defined. Some industries, such as those that are growing rapidly, will show immediate results, whereas others might require a greater period of time for assessment.

Thus, a firm may not need to commit to as long a time period before it knows whether it should commit further resources to the acquired firm or sell it. Although it may be easier to tell whether the strategy is a success or failure in one industry than in another, these commitment levels must be. DPWN follows two main types of diversification: related diversification is applied to logistics services while unrelated diversification is typical for financial services (Dobson and Starkey, 2004).

The main strength of DPWN is that it follows an acquisition and partnership strategy in many countries around the world. It has acquisitions, alliances, and partnerships in the Netherlands, Poland, Sweden, and the UK. With any human endeavor, personalities play a key role in either its success or failure.

If a merger has the backing and full support of its employees and management, the chances of success are greatly improved. Although there are fewer obstacles than in the case of a hostile takeover, gaining support and trust is always a difficult endeavor. The marketing tasks involve insuring moderate growth and trying to maintain a relatively competitive position and market share. Since there are more competitors, there is a great tendency for market shares to decline.

During market maturity, downward pressures on price build-up, companies segment markets further, product and package variations are initiated in an attempt to maintain some growth, and minor product adjustments become important. Strong use is made of promotional activities to maintain market position.

A consideration of market-opportunity phases and related marketing activities indicates that companies enter markets that are in different phases of development (Pittengrew 2006).

Some companies may be innovators and others may be cut-rate operators that concentrate on phases four and five. The result is that at a point in time, a variety of competitive situations confront an organization and require different strategies. When one considers the wide assortment of company products facing various market opportunity phases, and the changes in these markets over time, the complexity of designing marketing programs comes into sharper focus (Dobson and Starkey, 2004).

The key stakeholders (shareholders, management, employees, suppliers, customers) have a great impact on the company’s strategy determining the main problems and opportunities, cultural changes, and possible solutions to problems. Management and employees influence the internal level of strategy and take an active part in decision-making (Dobson and Starkey, 2004).

“The market is characterized by a conservative attitude of managers in Polish companies who are not willing to spend money in direct marketing activities, preferring traditional campaigns. This cultural characteristic leads to lower advertising budgets and expenditures on direct marketing than in other countries” (Deutsche Post World Net 2006, p. 9).

Shareholders do not have a great impact on the company, thus they influence the level of investment and new sources of investments. Once these resources are located, the next step is determining which ones are usable. Not all resources may be needed after the merger. They may not necessarily coincide with the new corporate strategy or there may be duplicates.

The key strengths are obvious and are generally the main reason for the merger in the first place. In the Philip Morris case, In high-tech mergers, the firms involved are generally attracted to each other because of the technical expertise that each offers the other (Perreault et al 2003). There are many other reasons as well, including the influx of financial muscle to the organization, increased distribution channels, the ability to enter new markets, and the establishment of complementary product lines.

However diverse the merging companies maybe, an underlying characteristic common with successful mergers is that management focuses on their individual corporate strengths (Drejer, 2002). Two contradictory factors are at work: one is the effort to reduce price conspiracies and increase competition, and the other is the effort to avoid overaggressive competition.

The state of European law may tend to promote uniformity of prices rather than competitive prices, as is the case with resale price maintenance. An effective antitrust policy requires the maintenance of a delicate balance. Government and court decisions concerning these difficult questions direct, shape, stimulate, and bind marketing. The business has been remiss in acting on these issues. It makes its point of view known after the fact by reacting to economic and legal arguments rather than advancing its own logical stipulation.

Suppliers and customers determine market trends and demand, price level, and competition. Company demand refers to the demand for a company’s products and relates to market opportunity (Perreault et al 2003).

Although it is affected by the industry demand level, it is also affected by the use of marketing tools and techniques by a firm to gain a market share. Let us note that corporate effort may also shape the industry demand. Control-unit demand refers to demand at the level of the particular unit utilized for control purposes.

The unit may be a product line, specific product, brand, group of consumers or wholesale, or retail outlet. Here, demand refers to purchasing actions of a significant unit. For DPWN, the market opportunity is a more specific and narrowly defined term and reflects a more dynamic picture of the demand relationship from the standpoint of the marketing organization itself. It refers to the demand for a particular good and service that a firm can provide.

Bibliography

Bearden, W. O., Ingram, Th. N., LaForge, L.W. 2004, Marketing, Prentice Hall. Deutsche Post World Net. WHU.

Deutsche Post World Net. WHO. 2006. Excellence in Management Education.

Dobson, P., Starkey, K. 2004, The Strategic Management: Issues and Cases. Blackwell Publishing.

Drejer, A. 2002, Strategic Management and Core Competencies: Theory and Application. Quorum Books.

Hollensen, S. 2007, Global Marketing: A Decision-Oriented Approach. Financial Times/ Prentice Hall; 4 edition.

Keegan, W. J., Green. M. C. 2004, Global Marketing. Prentice Hall; 4 edition.

Kotabe, M., Helsen, K. 2006, Global Marketing Management. Wiley.

Mintzberg, H., Lampel, J. B., Quinn, J. B., Ghoshal, S. 2004, The Strategy Process. Pearson Education.

Moore, J. L. 2001, Writers on Strategy and Strategic Management: Theory and Practice at Enterprise, Corporate, Business and Functional Levels. Penguin Books Ltd.

Pittengrew, A. M., Thomas, H. Whittington, R. 2006, Handbook of Strategy and Management. Sage Publications.

Perreault, W.D., Cannon, J.P., McCarthy, E.J. 2003, Marketing: Principles an Perspectives. McGraw-Hill/Irwin; 4 edition.

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