This paper gives an overview of the situational analysis, recommends the entry strategy, and mentions a few Corporate Social Responsibility activities for the company. The situational analysis of Chile identifies several opportunities and challenges. For instance, the country has a fragile political order featured with massive protests by its citizens. The economy is weak and may not guarantee the best possible start for a new company. Fortunately, FedEx is an established company with financial resources to support its launch. Market research and big data can guide the entry process and segmentation. They make clear the customers’ expectations and help in fashioning effective strategies.
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Market entry can initially focus on the urban areas and places with proper infrastructures, such as roads. With time, FedEx can advance with a sourcing strategy in which it collaborates with local logistics companies to ensure the services are efficient and affordable. The company can reach out to its potential customers through promotions that resonate with the customers. Because Chile is a developing country, discounts and flexible pricing can be a competitive advantage. This strategy can help the company to gain more customers in the process. A good marketing strategy can be a great asset in global expansion.
Table of Contents
Global Marketing Plan: FedEx Expansion Strategy in Chile
Global marketing is essential for multinational corporations because it can be a competitive advantage. In the era where businesses can seamlessly sell products and services to customers across the globe within days, it is possible to forget how tedious it was for firms before the digital age. Before the digital age, companies had to rely on physical presence to interact with their customers. Today, it is possible to connect with customers in different countries and ship products with ease. One possible means of achieving this is through an integrated marketing communications campaign. FedEx has taken advantage of communication strategies to expand to major markets in the world. Today, it provides transportation services to more than 200 countries in all parts of the world. Its marketing plan is one of the most successful in the modern world. This paper aims to analyze the environmental situation of FedEx in the global arena, situational analysis of Chile as the target market, and the entry strategy. Next, the paper highlights the entry strategy, how to improve its competitiveness in the Chilean market, and examples of CSR activities.
FedEx competes with many companies at local and international levels. As the transportation market is highly competitive, it is very responsive to price (Lester, 2008). FedEx competes with financially stable companies, such as UPS. It is an advantage for a company to have the ability to implement its strategy faster because of sufficient financial resources and the ability to sustain the process. Economically, Chile is a developing nation. It has a volatile economy because of politics and a high rate of unemployment. Chile has few multinational corporations offering transportation services, which is favorable for its growth. If the pricing environment becomes untenable, it could limit the ability to grow or maintain its market share. Additionally, if the competitors offer a broader range of services and products than FedEx, they could impede FedEx’s ability to maintain or expand its market. It is crucial for multinationals, such as FedEx, to remain sustainable and pay greater attention to sources of competitive advantage.
Society’s culture impacts an organization’s culture. Shared beliefs and attitudes in Chile can influence how FedEx understands its customers in the market and how to design the marketing message. FedEx should understand the demographics and skill level of the population in the target market. Doing so can help in developing a localized marketing campaign. It is crucial to determine the trends and tastes in a new market, lifestyle, and demographics. Sociocultural forces have become so vital in this era, particularly in the context of marketing. FedEx has managed to maintain a good social image that has contributed towards its sustainability, and its commitment has been unique to its rivals.
In this era, the law is growing more and more significant to the business. Complying with a country’s legal requirements is a crucial factor in business success. Today, this process is complex because of diversity and increased government intervention in business operations. While laws ensure business operations are ethical and acceptable, resilient laws can impede business operations and limit a company’s growth. Business laws and regulations are increasingly becoming a burden for companies like FedEx because they increase operational costs. Labor and environmental laws also affect FedEx.
Political forces can impact how a company performs in a new market. Businesses are facing more compliance demands from government agencies, which can compromise a strategy if not well-crafted. Political stability determines economic stability. Chile has experienced several protests in the last few years. These events are unfavorable for business expansion because a politically stable environment is associated with economic prosperity. FedEx is a global business, so political stability matters. A company’s decision to expand to a new country must factor in political stability.
Market research provides quicker yet more accurate data for decision-making purposes by a company. It is possible to use market research to aid the expansion process and marketing campaigns by focusing on; Who is the customer? What problems do the customers experience in Chile? Do the customers have information about the available choices? When do they make purchases, and what do they buy? This kind of information can be crucial in providing a clear picture of the Chilean market can channel required data to the information systems.
In the international market, FedEx would require information necessary for strategic and tactical decision-making. In the Chile region, using an information system can result in significant benefits because it can provide vital information. It can point out the market potential, competitor information, foreign exchange, prescriptive information, resource information, and general market conditions. FedEx can use an information system to analyze the balance of payments in Chile, laws, regulations, availability of human, financial and physical resources, consumer behavior, and functional strategies. This information can be obtained from executives abroad in FedEx branches, consultants within Chile, or prospective new employees.
Globalization involves the identification of the most profitable market segments. Customer segmentation could help adopt a more systematic approach when making plans (Hollensen & Opresnik, 2015). Thus, the product or service can get designed in a manner that satisfies a selected segment. Chile has a diverse culture, encompassing people from different continents, such as Europe. The best segmentation for FedEx in Chile is geographical because it focuses on regions that have proper infrastructures, such as roads and airports. The company could begin by offering transportation services to customers in urban centers or close to airports. The next stage could be sourcing and collaboration with local logistics companies. Such segmentation can ensure a high adoption rate among potential customers.
Market targeting follows market segmentation. In market segmentation, the company evaluates the market needs and wants (Camilleri, 2017). The aim is to ensure only the profitable segments are selected and nurture a long-lasting relationship with them. The focus should be on the untapped needs in the marketplace. Because of the risk of the entire process, the targeting should apply concentrated marketing. Finally, there is a need to specify the position it wishes to occupy in its target customers’ minds relative to the competitors. FedEx could differentiate itself in the region as the only transportation service offering superior service in the market.
FedEx’s entry strategy should involve sporadic exports, representatives and agencies, sales through knowledge agreements with domestic firms, and foreign direct investment. The focus should be on creating alliances with domestic firms or outsourcing from established transportation firms in Chile. This strategy can cut unnecessary costs in launching and running a subsidiary. Outsourcing means that FedEx will have to analyze the established brands in Chile and select whichever offers the highest potential.
With sufficient resources, FedEx has a competitive advantage over small firms that provide similar services. It is hard for domestic firms in Chile to outcompete FedEx in the region based on financial capabilities. This advantage results from the numerous branches and subsidiaries that FedEx has in established economies. These act as the engine of the entire corporation. FedEx can also reduce the influence of rivals in the market by investing in superior infrastructure.
Suppliers can become a threat if they have many options. By giving the suppliers the best deals and offers, it becomes even harder to lose them to the costly service providers in the market. For this reason, the suppliers will not have a significant impact on the prices of the services and products.
FedEx should focus on uniquely providing affordable services. The company’s delivery should correspond to the customer’s demands. Buyers have fewer options if they get offered the best deal by a company while the competitors are incapable of doing the same.
When a business expands to a new region and begins making significant profits, it can attract more entrants into the market, which causes overcrowding. In such a scenario, if it is easy for everyone to access company strategy and practice, they can become a substitute which may be disastrous in terms of growth and market share.
A successful business expansion can attract more rivals in the region, rising competition. The more the Chile market is proven to be profitable, the more young firms sprout. FedEx can achieve a low threat of new entry by prioritizing unique product propositions.
FedEx can package the product in various ways; Home delivery services to the customer convenience, Prompt services using its large fleet of planes, Customer care centers and ship centers and Post delivery services, and third-party logistics.
Aircraft help FedEx provide timely and efficient services to its customers. Desk executives offer all related information about the parcels to the customers. The company can provide potential customers with booking facilities connected with the internet, especially for those without access to the internet.
Keeping the rates low can be a competitive advantage, and this is possible with economies of scale. It is possible to gain more customers from rival service providers by offering a flexible pricing policy with discounts and schemes at different periods.
The use of digital media in advertising has dominated the modern business world. For this reason, FedEx can leverage the internet and social media to reach as many people as possible in the market. The best strategy is to use a localized marketing campaign that resonates with Chileans. With digital media, customers can channel their complaints to many followers and users of the service while interacting with brand representatives. In integrated marketing communications, promotion becomes communication. It is this reason why modern marketing has become a dual conversation between brands and their customers. It involves listening to customers’ needs and making decisions informed decisions.
Helping local businesses grow and create jobs that boost the living standards of the people. It is one way in which FedEx can get involved in improving the livelihoods of Chile. FedEx requires goods roads to deliver goods to customers efficiently and fast. Improving local roads not only boosts its performance as a brand but helps connect the rural and urban places to essential amenities. FedEx has engaged in environmental campaigns for quite a period. Using donations, the company can participate in environmental protection initiatives in the country. During the global economic recession caused by the COVID-19 pandemic, FedEx can support small businesses with donations and guidance through seminars and education programs.
Multinational companies require an effective marketing strategy. Modern businesses will have to deal with a wide range of factors that challenge profitability and sustainability. There are times when a company is unprepared for unprecedented events, such as the present COVID-19 pandemic. These call for a flexible strategy that provides means of steering clear of their impacts. A successful marketing campaign can help companies get past these challenges and become successful brands. Such a company can expand into new markets effortlessly because it can take advantage of economies of scale and powerful resources. FedEx is a benchmark for most multinationals in global marketing because of its success in more than 200 countries to date. The company has arguably one of the best-integrated marketing campaigns that have made its internationalization a success. Businesses will have to rethink their marketing strategies to achieve what every company desires in the long run, expansion.
Camilleri, M. A. (2017). Market Segmentation, Targeting, and Positioning.
Hollensen, S., & Opresnik, M. O. (2015). 3.2 market segmentation, targeting, and positioning. Marketing, 183-208. https://doi.org/10.15358/9783800649297-183
Lester, D. L. (2008). Making the case for sustainable strategic management: An assessment of FedEx. International Journal of Sustainable Strategic Management, 1(1), 82. https://doi.org/10.1504/ijssm.2008.018128