Strategic Management: Parcel Force Case Study

Executive Summary

Parcel Force Worldwide is a popular and successful section of Royal Mail with quite a few key issues. To address the case study of PFW¹ this paper would consider the SWOT a variable of the case has been identified first. After that, vision, mission and corporate objective of PFW has been focused for further facilitate to this study. Then, the key issues are represented with proper situational analysis, like, for macro-economic- PESTEL analysis, for industry- Telescope Observation Matrix Framework, market- Porter’s Five Forces Model, Internal- Porter’s Generic forces model is used. After these analyses, current condition of PFW is focused.

By finishing this part, the marketing objectives of PFW has identified and compared with marketing strategies, which is implied with the help of Telescope Observation Framework. Then the model and approaches are implemented in 4P’s of marketing mix. Later on, the budgetary requirements and control and action plan of PFW is identified. Lastly, the conclusion has been drawn to concise the findings of this case study.

Key Issues: (Parcel Force Worldwide, 2009)

The ‘Parcel Force Worldwide’ (PFW) is a part of Royal Mail Group, provides parcel delivery services for both business-to-business and individual entities. Its operation has based on an unregulated market, which is open to all. It has some advantages on the market as because of its challenging competitive advantages. The key issues based on these competitive challenges and SWOT variables are listed below.

Key issues based on Strength

• The handling capacity of services;
• Organisational structure management;
• It has programs to increase operational efficiency;
• Decentralising management;
• It is running its operations designed to become the most valued express carrier in UK;
• It is using a balanced business scorecard.

Key issues based on Weakness

• For many years it was in a losing concern;
• It has emphasised on retaining its existing customers rather to attract new customers;
• It has lacking of strategies to cope up with changes in the external environment.

Key issues based on Opportunity

• Partners in all over Europe;
• Service provider of both B2B and B2C customers;
• Developed unique selling proposition (USP) based on increased level of customer services;
• Recognition of most excellent practice in the industry;
• Access to Postal Administrations by the Universal Postal Union;
• It has serious corporate social responsibility (CSR).
• It is using key performance indicators (KPIs) to measure customer satisfaction.
• There is “Gap analysis” as a tool to improve customer service.

Key issues based on Threat

• It operates in a highly competitive, open and unregulated market.
• Benchmarking tendency, which neglects the improved service quality rather to follow the competitor’s trends.
• It has no program to differentiate it from the competitors.
• Corporate customers may use other service providers without any notice, if the service is not satisfactory, because there are many competitors.

Vision, Mission, & Corporate Objectives

As it is stated before that, “Parcel Force Worldwide” is a top provider of collecting and delivering express packages and parcels in UK and worldwide with lots of delivery options. As it is a major part of Royal Mail, the vision, mission and corporate objectives of PFW is necessary to be identified for the further study.

Vision

PFW is a profitable section of Royal Mail by hard working, maintenance, and new services introduction within the competitive market. Within few years, the profits of Royal Mail would be thrice with the help of parcel and packet services, which are driven now by real opportunities of e-commerce and thousands internet orders. To be efficient in world class market of universal parcel services, there has to be focused on structural changes, which can be developed with the help of visions of PFW: (Royal Mail Holdings plc, 2009)

• Being customer champion in market,
• Developing world class service according to universal demand,
• Being leader in the international market,
• Providing integrated solutions to customers,
• Achieving efficient network of parcel services and
• Developing customers’ consistent and corporate social responsibilities.

Mission Statement

Every working day, PFW has to deliver over 404 million parcels within UK and international market. By delivering the services to customers’ door, delivery drivers use an electronic signature to track the parcel if it is delivered timely and safely. The mission of PFW is focusing on customers’ culture and retention level with best quality services and first time delivery success. (Business in the Community, 2009)

Corporate Objectives

To preserve the vision and mission of PFW, there have to have some corporate objectives established to remove the constraints and to gain the core business by keeping customers’ satisfied. It always focused on Customer Relationship Management (CRM) and Performance Management System (PMS) with increased customers’ services. Royal Mail Holdings plc, (2009) has identified the major objectives of PFW are:

• Increasing time on sales forces in delivering services
• Delivering effectively and timely to each customers
• Introducing flexible CRM system
• Being attractive service provider to customers
• Improving services by proper use of customer data
• Spending more time with customers
• Improving internal process of customers services in reaching correct parcel volumes.

Situational Analysis

For analysing the study, the development and forecasts of parcel services of UK market have to consider with core services, technical services, home delivery, and international courier services. For considering these market factors, some situation analysis have to be developed, which can help in determining target market, and identifying competitors of market. One of the best approaches is to analysis all factors related with market, industry, internal or over the economic condition is Telescope Observations. For this reason, the overview of this approach is given:

These steps of Telescope Observation matrix is going to be used in the different parts of situational analysis and marketing objectives of Parcel Force Worldwide with the appropriate discussion.

Macroeconomic Analysis

Johnson, S. & Whittington, (2005) addressed that Macro-economic environment is the major important influential affect for PFW, as it operates its business also in the global market. PESTEL Analysis is one of the major tools for handling the aspects of the environment, which can be categorised by six main types:

Political Factors

For PFW, some major factors are government stability, taxation and foreign trade policies, social welfare policies etc. PFW is good enough to maintain the social welfare policies by corporate social responsibilities (CSR) and to have the Government stability both in UK and in international market with the access of Universal Postal Union. However, the political instability of many countries can hamper the business of PFW.

Economic Factors

Major economical factors that reflects on PFW directly on the business cycle, GNP trends, interest rates, inflation, unemployment, disposable income, money supply etc. For the failure of understanding economic factors, it is loosing concern for many years. Economic recession of global market is also one of the major reasons for the failure of business in the market.

Social Factors

Some social factors related with PFW are population profiles, income distribution, social mobility, lifestyles, attitudes to work and leisure, consumerism and education level of customers etc. With the changes of social characteristics of customers, PFW has to concern on the existing customers rather than new customers, because of gaining loyalty and less switching tendencies of existing customers.

Technological Factors

Some technological factors are taken by PFW and it is spending on research, technological effort, innovations, speed of transfer etc. PFW is familiar in terms of new innovative technologies and speed rate of transfer services to the customers. The effort of technology, which s based on e-commerce, can make much profitable of PFW.

Environmental Factors

Environmental factors, which are depending on PFW and it is maintaining environmental protection law, waste disposal, energy consumption etc. PFW has strongly controlled the environmental factors by proper steps in Corporate Social Responsibilities and concerning in waste management system.

Legal Factors

Legal factors should be obeyed by PFW such as it should follow competition and employment law, health and safety of workers, service wellbeing etc. PFW are determined to ensure the product safety of customers under any law imposed on it.

Industry Analysis

In the part of Industry analysis of Parcel Force worldwide, the identification of key success factors of the organisation toward employees, customers, shareholders and overall public according to its business is focused.

Key Success Factors of Parcel Force Worldwide: (SAP Education, 2003)

Some major success factors according to its business, profitability and reputation are discussed in below:

• Gathering huge benefits as a Postal giant.
• Leading service provider with guaranteed time.
• Accessing large network of delivering services.
• Close partnership with customers in delivering services.
• With a large employment and large profits, it is operating its business not only in UK, but also all over the world.
• Having a great brand name of “Royal Mail”.
• Recognised as innovative, vibrant and standard small business unit in UK.
• More than 10,000 service users.
• Enhancing decision support capabilities of Royal Mail.
• Delivering not only services, but also significant benefits to the customers.
• Providing consistent, reliable and efficient services to customers.
• Showing responsiveness and flexibility in delivering customer services.

These are the main success factors of Parcel Force Worldwide. But it is not fully successful in the competitive market. According to Telescope Observation Matrix, the key success factors of PFW are focused with the situational analysis:

Situational Analysis according to Telescope Observation

Robert C. Byrd (2008) has introduced telescopic observation framework to managing data quality with four grouping of evaluation such as observing system quality, operability, quality of raw data and derived data quality after the imprecation of the matrix. From the situational analysis of Parcel Force Worldwide by identifying the success factors, it is found that, the success story regarding PFW is not enough, but also the identification of the problems can be specified in terms of other factors relating with PFW. To identify the problems, further study related with market analysis is included.

Market Analysis

In the market analysis, it is known that, Parcel Force Worldwide has a reputation in delivery of services. In market, customers are very much sensitive to the credibility, trust, and timeliness. These factors shape competition in the industry and give industry some unique propositions. The market has competition, trends, opportunities, and threats. Porters five forces model is used to assess market. The five forces are:

Potential Entrants

The threat of potential entrants is high for PFW, because it is operating in an open and unregulated market. New substitute service providers can enter in the market at any time and make the competition much difficult because consumers seek for better service always.

Customers

The customers of PFW are both in business and individual for which the industry is verities in service dimensions. These different types of customers have different preferences for their service and to design the service according to these are difficult tasks. These dimensions of customers force to develop new strategies and thus the firm can retain existing customers and get new. PFW is now using key performance indicators to ensure the customer satisfaction and using gap analysis tool to analyse and improve customer service.

Substitutes

The substitute service is come from different competitors. PFW has no strategies to differentiate its services from the competitors. The industry is so competitive that PFW is taking the service characteristics of the competitors as benchmarks. These competitors keep pressure on its operation, as they can become a substitute for PFW at any time.

Suppliers

The suppliers of PFW are like a partner of it. In the competitive environment, the suppliers are a great source of trust, reliability, and confidence to the PFW.

Competitive Rivalry

PFW is facing competitive rivalry. The competitive nature of the market makes this as a natural phenomenon. But as PFW is a part of Royal mail, which is a government organisation, the rivalry cannot affect the basic objectives. Some major competitors’ of PFW are: (Keynes, 2009)

• Business Post
• DHL and
• DX Services.

Evaluation of Findings according to Telescope Observation

The problems found in the market analysis are determined which are given below:

• On going loss of business
• Less concern in new customers
• Less ability to change with environmental changes
• Having problems in competitive and unregulated market
• Less distinctive than competitors
• Less priority to service quality

Internal Analysis

Kotler & Keller, (2006) pointed out that for internal analysis of PFW; there is an appropriate approach of Michael Porter’s Generic Strategies with following thinking:

Overall Cost Leadership

In the cost leadership, every firm’s want to achieve lowest production and distribution costs comparing with competitors. PFW also considering overall cost leadership by following competitors’ trends of doing business, but not concentrating on the service quality of the parcel products.

Differentiation

Every successful business is concentrating on the superior performance providing to customers to capture the target market by contributing intended differentiation than competitors. But it is very pity to identify that, PFW has no such recognition of services or programs provided to the customers.

Focus

It is narrow market segments, where firm is concentrating either on cost leadership or on differentiation. From the study, it is identified that, PFW is focusing on the cost leadership in its services.

Strategy Formulation with Telescope Observation

Strategy formulation consists of three major processes regarding Parcel Force Worldwide, which are situation analysis, setting the objectives and the situation should be emphasized with the current objectives, which is taken from the internal market analysis.

Some formulation are taken for solving the problems, which are:

• Delivering timely and effective services with distinct services, which can be differentiated, from the other competitors,
• Being attractive service provider with providing proper service quality,
• Extended current customers with the proper management of internal process and spending more time with them.

In the strategy implementation, the formulation process are evaluated in terms of financial, personal, operational, timing and safety support of services of delivering parcel. They also have to provide high quality support services to 30,000 customers only UK and more on outside the country.

Summary of Current Situation

From the above situation analysis, it can be identified the problems related with Parcel Force Worldwide and the solutions of the problem also. To remove the losing concern of business, it should focus on existing customers rather than new customers. Some strategies should also be developed for the changes in external environment. The unregulated and competitive market can be maintained by avoiding benchmark tendencies, differentiation in business, and providing satisfactory services.

Marketing Objectives

Concentrix, (2009) argued that to develop marketing objectives of the Parcel Force Worldwide, the objectives has to be matched with the corporate objectives of business and also meeting up the problems associated with the services towards customers. The marketing objectives of PFW are:

• Delivering services to customers on time and an effective way with making different programs and services considering competitors
• Creating attractive service system to customers by generating opportunities for flexible customers management system
• Spending more time with customers and analysing customers data to provide proper customers services
• Providing satisfactory services with customers in correct parcel volumes at perfect timing and efforts.

Monitoring and Control according to Telescope Observation

In the part of monitoring and control, PFW has to focus on the technological change and innovation to connect with customers. They also control the price of services without compromising high quality and size of parcel. The employees of PFW also motivated with value and respect, which are important to control the commitment of them with the customers. By these factors to be fulfilled, PFW can be truly successful in the competitive market.

Marketing Strategies

Kotler & Keller, (2006) explained that by developing marketing strategies of PFW, SWOT analysis is important, which covers the analysis of group of customers with similar or different needs, which arise by the changes in situational factors analysis. To develop market strategies properly, SWOT analysis is the best approach to understand the market with customers and competitors according to the marketing strategies.

Strengths

The strengths of PFW according to market strategies can be:

• Handled of capacity of customers’ demand on time and by proper way
• Developing organisational structure.

Weakness

Some weaknesses are lacked behind PFW; even it has many positive factors towards customers and markets. These weaknesses are:

• Negligence of improve quality services provided to customers
• On going loosing concern of PFW
• Lack of differentiation in service evaluating with competitors.

Opportunities

To overcome the weakness of PFW, there are many opportunities considered by the marketing strategies, which are:

• Having partnership business of services all over Europe and international market in both B2B and B2C customers.
• The USP (Unique Selling Proposition) defined customers in different points of view from competitors.
• The CSR also improves the level of customer satisfaction determined by the Key Performance Indicators (KPI).

Threats

Threats are focusing on the external market risks of PFW, which is important to overcome problems in marketing strategies, like:

• Having competitive and unregulated market
• More concentration on competitors rather than the quality of services
• No specific differentiation in services of PFW comparing with other competitors.

Implementation

The analytical and strategic formulation can be implemented on the Parcel Force Worldwide on the basis of 4 P’s of marketing mix, the main factors related with PFW directly, which are:

Product

The Times (2009) analysed that as a service organisation, Parcel Force Worldwide has to focus on the different service ranges in the target market comparing with competitor’s services. With considering the speed of delivering services, they are also ranged their products for different users. As customer is the main source of generating profit of the organisation, PFW has to flexible to meet the appropriate needs of customers. For these reason, PFW has implemented new service offers to meet proper customers’ needs, which are given below:

Place

The different channels of marketplace, like transportation, storing goods are considered as place in Parcel Force Worldwide. The distribution has to be made with product and market factors. PFW can access services of depots, direct collection from customers, and linkage up with international partners. Technological support and EMS network has given more support to the distribution channels in UK and international market over 30 countries. Therefore, PFW should implement dramatic service offerings specifically to international market to reduce capital and revenue costs. (The Times100, 2009)

Price

Price of PFW is determined by considering the factors of market share, competition, material costs, and customers’ viewpoint towards services. For this reason, it has implemented different pricing strategies, which are:

• Differential Pricing: Prices are differed with different groups and types of customers.
• Price Leadership: Prices are set by market leader.
• Market Penetration: Prices are set as low to capture new market with new services.
• Competitive Pricing: Prices are set after seeing the competitors’ prices. The Times100, 2009)

Promotion

Promotional activities are used to obtain aims and objectives of Parcel Force Worldwide. For new strategic implementation, PFW has to promote new promotional activities considering market competitiveness. These approaches are:

• Above the line: Direct paid up advertising, like TV, radio, internet, newspapers etc to capture the B2C market coverage’s.
• Below the line: More controlled advertising form, like direct mail, e-mail marketing, public relations, ad sales promotion, which can cover B2C, B2B, and also international market. (thetimes100, 2009)

Budgetary Requirements

Parcel Force Worldwide is popular in terms of pay settlement for operations and exit rate, which are increasing day by day with the payment of £45.70 a month to all CWU grades, £63.50 a month to all CWU grades, £19.09 a month to all CWU grades from 2008 to 2009. Annually, the total payment is £1,539.48 with overtime rates, allowances, and overall increases. (The Communications Union, 2008) Some other factors and variables related with PFW are given below:

• 1 National and 1 International Hubs
• 1 Parcel Exchange area, 47 Depots, and 5 Satellites
• 1,850 Vehicles
• Parcels Delivered- 201,000 everyday and 279,000 every day in December
• Quality of services- 97.5% by time and electronic proof.

Key performance highlights of PFW in 2008-09: (Royal Mail Holdings plc, 2009)

Control, Milestones, and Corrective Action

To control and measure the study is a helpful tool to take corrective actions of any organisation, also appropriate for Parcel Force Worldwide. PFW as a part of Royal Mail has to follow a unique control and measurement system for its situational analysis. To control situation of PFW, with the problem issues, are depending on three major steps, which are:

• The equitable corporate environment, which is suitable for PFW
• To grow the understanding level among the employees and management
• Transparency of decision making and implementation of the decision

In case of PFW, in billing and sales administration sectors shows quick win and supports the current payback and price related decisions. To impose effective control and measurement system to overcome the problems and to develop the control system, PFW can take some actions.

• In case of sales, administration and billing it can arrange some free resources from the customers, suppliers, buyers, etc.
• Implementation of the pricing arrangement to ensure the proper change adjustments for different pricing approaches for customers.
• The estimation and productivity related information can be separated from value of PFW’s objectives.
• Identify and implement the necessary tools to enhance the requirements and to develop the IT developments plans for generating more services that are effective.

Conclusions

The high level of competition in the parcel delivery tune-up makes it difficult to sustain as the market leader for the Parcel Force Worldwide. In the competition, it has some competitive advantages but new market entrants keep pressure on it. Some programs, like Customer Relationship Management (CRM) and Performance Management System (PMS), facilitate PFW in a way that can ensure the customer intimacy along with attainment of the corporate objectives of the company. The success here is thus a function of proper designation of customer-oriented service and retains the cost leadership. PFW becomes the customer friendly company as they treat customers as their main assets. It is proved by Parcel Force Worldwide that customer oriented strategies brings high competitive advantages.

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Footnotes

1. Parcel Force Worldwide.