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4101 - • Cut cost by not advertising in the mass media...

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Mercedes Jones Cost Drivers Passed over residential deliveries and infrequent shippers, focused on companies such a Xerox. Stopped serving catalog companies with heavy seasonal requirements, keeping cost down by serving customers they are best at. Owns their own airport, serving as their major hub. No landing fees, nor did they face any obstacles to tailoring the facility to its needs. Operated the nation’s only privately owned foreign trade zone in Wilmington which led to reduced property taxes. Managed to run its aircraft roughly 80% full compared to 65-70% of the competitors. This kept cost down because they need less aircraft. Volume consisted of after-noon and second-day deliveries, making the use of more trucks which are one-third the cost of aircraft. Reduced labor cost by enabling couriers to pick-up and deliver more parcels per stop. Invested selectively in technology. Let the competition invest in new technology, and invest in it only if it proves to be beneficial to their mission.
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Unformatted text preview: • Cut cost by not advertising in the mass media. • Tailored its services to the needs of particular large business customers. Keeping cost down by customizing services to certain companies. • Frugal, conservative, employees. “top executives answered their own telephones.” • Used commercial airlines and local partners to complete shipments in international routes, cutting cost by not using their own aircraft. Cost Calculations Cost Driver Airborne UPS FedEx Ind. Avg? Aircraft 175 529 608 236.93 Avg. overnight delivery (prices) 28.91 32.98 34.34 32.08 Avg. overnight, afternoon Delivery (prices) 27.37 28.38 31.01 32.25 Maintenence (1996) 387M 823M 618M 609.33 Transportation Purchased/Rente d (1996) 828M 1306M 959M 1031 CAGR: Net Income Airborne (1994-1996): [(21/380)^(1/2)]-1= -.1571 UPS (1994-1996): [(1146/943)^(1/2)]-1=.1024 FedEx (1995-1997): [(361/238)^(1/2)]-1=.1006...
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4101 - • Cut cost by not advertising in the mass media...

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