Strategic Report for DHL Express

Strategic Report for
DHL Express
Module:
Applied
Strategic
Management
May 8
2015
BY:
Aanchal Saxena
UOB: 12032303
Module Tutor: Mr. Niranjan Shetty

2
Contents
Executive Summary:...........................................................................................................................3
1. Introduction:..................................................................................................................................5
2. Internal and External Analysis..........................................................................................................5
3. Strategic Options Available..............................................................................................................8
4. Strategy Implementation:................................................................................................................9
5. Recommendations for changes in Policies/Structures/Systems:.......................................................10
6. Conclusion:...................................................................................................................................11
References.......................................................................................................................................12

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Executive Summary:
The concept of CEP (courier,express, parcel) services has caught on globally. No
matter whether a person is in Sydney, Shanghai, Istanbul, Paris or New York - the
streets are filled with yellow, brown or orange vehicles bearing familiar lettering.
Customers around the world can use the fast CEP services and send their shipment
anywhere in a very short time.
Deutsche Post began to acquire shares in DHL in 1998, finally reaching
majority ownership in 2001. Following the completion of the purchase in 2002, Deutsche
Post effectively absorbed DHL into its Express division, while expanding the use of the
DHL brand to other Deutsche Post divisions, business units and subsidiaries.
DHL Express is a division of the Deutsche Post DHL Group.Deutsche Post AG,
operating under the trade name Deutsche Post DHL is a multinational company that
operates in more than 220 countries and territories across the world with its
headquarters in Bonn. The company workforce is estimated at 480,000 and provides
solutions to its customers (DHL, 2013). DHL deals in three divisions:
 DHL Mail
 DHL Express
 DHL supply chain/ Corporate Information Systems
 DHL Global forwarding
 DHL Freight
This assignment delineates on DHL Express Company which is one of the strategic
business units of the DHL Group with the focus being on the European Market. An
internal and external environment of the company was carried out in its European
market. Having conducted these, strategies were suggested to them. At present the
DHL group follows 3 collective strategies as mentioned in their report Strategy 2020,
these are:
 Focus: The Company is a logistics and postal company and will continue to focus on
this aspect as this is what has made them successful.
 Connect: The company plans to have optimum interconnectivity across all its
divisions to absorb the best possible intellectual capital, resources and expertise
available
 Grow: The main aim is to expand in the postal and logistics arena with focus on the
emerging markets and e-commerce markets.

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Along with suggested strategies, recommendations were provided on how DHL Express
can improve itself further. These recommendations included the changes in the
strategies and policies which DHL Express would require to incorporate in the future.

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1. Introduction:
DHL Express offers standardized products and services likecourier, express and parcel
(CEP) locally and globally. The services offered by DHL Express services are divided
into the following categories:
 Same Day
An instantaneous pick-up of a shipment by a devoted courier, with an
emergency delivery within the same day via a committed network.
 Time Definite
Express door-to-door delivery by a certain time on an overnight or next possible
business day basis.
 Day Definite
Reliable door-to-door delivery within a certain number of days
 Optional Services
Shipping convenience with a range of optional services to support your express
transportation
2. Internal and External Analysis
Strengths:
 DHL Express has built a strong brand name for itself and has been in the
logistics business for over 40 years and has been awarded ISO 9001:2008
certification for quality globally. DHL Express is a market leader within Europe
with 19% share, UPS 16%, TNT 12% and FedEx 5%. (DHL Press release, 2015)
 DHL express works in cooperation with other divisions like global forwarding and
freight, mail etc., and this helps all the divisions to act upon customer needs in
the most satisfied manner. (Deutsche post DHL Strategy 2020, 2015)
 Technology is one of the core competences behind DHL group’s success. They
recently awarded Sama Excellence Award 2015 for the use of social and
business technologies (Association, S,2015)
 Innovation at DHL group is of high importance for each of its divisions. The group
has an innovation centre(DHL.com, 2015)along with holding several workshops
for its customers. The group collectively holds innovation awards to reward the
sustainably efficient ideas. (Dpdhl.com, 2015).

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 Corporate responsibility is another important aspect by the DHL group and they
have a partnership with the United Nations for disaster relief management.(DHL
Press release, 2015). The company also helped during the Nepal earthquake
2015 and sent their Disaster Response Team to help with logistics. (DHL press
release, 2015).
 Marketing and sales are highly looked after departments and brand image is
believed to be highly important.
 DHL Express has received numerous awards for its Human Resource activities
and their staff are highly trained and competent. Various activities are undertaken
for their development (Dpdhl.com, 2014)
Weakness:
 Handling a large workforce can be hard. Strikes are common in big firms.
However the company needs to ensure that they are minimized. Sometimes jobs
can be cut off if the company implements technology which replaces workforce.
(Postandparcel.info, 2014)
 Prices are considered asmain weaknesses of DHL. Their average prices for
delivery within EU ranges from EUR 49.5 to EUR 289.5. According to their
customers, DHL pricing is considered high compared to its competitors such as
FedEx or USP. Thus, customers tend to choose its competitors over DHL
express. (DHL.de, 2015)
 With every operation being dependent on technology, it is a major weakness for
the firm in case of any disruption. Packages are being handled and shipped
worldwide and cannot be misplaced. The operations are vast and need to be
handled well.
Opportunities:
 In order for DHL express to increase their market share and strengthen their
position in European markets, they can merge and takeover other companies
which would give them the competitive advantage in order to compete with its
competitors. They have had several successful acquisitions, for example the
PPL-DHL Express Deal of 2005. PPL is a private express company in Czech
Republic. (Dpdhl.com, 2015)

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 Partnerships are another opportunity with DHL Express to further capture the
marketplace. DHL express had partnered with Cyro express in the year 2008.
This partnership would help DHL express to supply dry ice and cooled services
to customers who are involved in Clinical research organizations and
laboratories.(DHL.com, 2015)
 In 2015, DHL express which a leading international express provider plans to
invest around Euro 114 million in Brussels airport. This investment would help to
strengthen the Brussels positions within the European countries and among the
world wide DHL network. This investment in Brussels hub would increase the
capacity of shipments from 12,000 to 39.500 and also help DHL to reinforce their
status as major employer and also is expected to create 200 new jobs in Belgium
by 2020. Similar investment was also made in Leipzig in 2013, which would help
DHL to double their shipments per hour and create 400 new jobs. (DHL.com,
2015)
Threats:
 Currently DHL has 19% market share, followed by UPS – 16%, TNT – 12%
FedEx- 5%. This year FedEx proposed a deal to buy its rival TNT Express and is
almost close to sealing it. Once FedEx closes the deal with TNT in 2016, they will
be the second largest logistic player in Europe with 17% market share.
Therefore, due to increase competition and substitutes, DHL express are likely
going to face these threats.(Team, T. 2015)
 In 2012, DHL express were impersonated by a cybercrime gang. This cyber-
gang used to send emails regarding about the DHL tracking parcel notifications
to their customers and clients. These emails consisted of several malwares
which would affect the customers and other corporate organizations and are also
considered as a threat to DHL express. (Tools.cisco.com, 2015)
 In CEP market, there are increase number of new entrants into the market which
are considered a threat towards DHL express. Threat of substitutes is high with
so many companies offering the same products and customer retention can be
low due to lack of loyalty within customers in this market.

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3. Strategic Options Available
After having made the internal and external analysis of the DHL express, some
strategies that can be suggested for options are:
1. Sustainable Competitive Strategy:
A sustainable competitive advantage should be difficult to imitate and based on
rare resources or capabilities. Resources include assets, information and
knowledge. Differentiation will also help thrive over competition. To do so, it is
important to analyse the strength of the current competitors, regularly. Gerhardt
(2002). The bid by FedEx to take over TNT Express to expand its hold on the
European market has sparked several speculations regarding the future of the
competitors like DHL Express and UPS. A similar bid was made by UPS for the
TNT Express in 2013, but it was rejected by the European Commission. Thus, if
FedEx is successful is cracking the deal, DHL Express needs to come up with a
sustainable competitive strategy to overpower the synergies created by the TNT-
FedEx Merger(Flemings. S, 2015).
2. Differentiation Strategy
The CEP market in Europe has a lot of companies offering similar products and
services and thus, DHL Express needs to differentiate itself in terms of service,
experience from its competitors in order to remain as a market leader.
3. Marketing Strategy:
A company like DHL Express which has many substitutes options to replace it
and thus needs to have a strong marketing strategy to remain on top of the mind
of the costumer and capture as much market base possible.
4. Employee Management Strategy:
A firm as vast as the DHL Express with so many employees needs have an
effective employee management system. The workforce is the main factor in the
long-term success of the company. A happy workforce means a job carried out
well.
5. Environmental Sustainability Strategy
Close importance needs to be paid to the environment the company operates in.
Since all business is transport related, efforts need to be made to reduce carbon
footprint and be appreciated by customers for it.

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4. Strategy Implementation:
Though formulation of new strategies is an important step, it is not enough. The
management must also be able to convert strategic vision into concrete steps to get the
things done. Strategy implementation has to be tailored to the organisations over all
condition and structure. The following section deals with how competitive strategy and
the marketing strategy be adopted at DHL Express.
1. Sustainable Competitive Strategy:
Competitive Advantage can be gained by providing attractive insurance and
liability claims to the customers. Currently most competitors offer very limited
liability for the goods transported. In 2013, DHL profits were 2.1 Billion
Euros,(Postandparcel.info, 2014), thus DHL has the capacity to tie up with
insurance companies in the Europe and offer attractive rates to customers and
expand customer base.
Usage of innovative practices for delivery of good can also add to the competitive
advantage. DHL Express has tried out Cubicycles for delivery of their goods. It
was a pilot program which DHL can implement across its vast. Itcan also help in
reducing costs of fuel and transportation along with being environment friendly.
(Dpdhl.com, 2015)
DHL Express can have a more efficient customer complaint handling system.
This can be done by recruiting staff that are qualified in handling customer
complaints well and ensure that the customers are not lost. With competition
being strong, retaining customers is of utmost importance. Having operating in
the age of social media, where one bad point can jeopardise the company image
It is important to handle customer complaints most efficiently.
Pricing also needs to be incorporated in the strategy. DHL prices are
comparatively higher than the others which will prove to be a disadvantage with
the increasing competition. DHL currently has different prices based on United
Kingdom, EU members in Europe, Non EU members in Europe. (Jawna, 2015).
The customers in Non EUEuropean countries are at a disadvantage due to this.
Thus DHL needs to make the prices similar across Europe and cover up for their
costs in the international express deliveries (by the end of the day) as that is
where the company has an established foundation of being the only company
among FedEx UPS and TNT offering the service.(Reid.C, 2012).

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2. Marketing Strategies:
The marketing team needs to understand that the services offered by their
company are similar to what is offered by the others. Thus the marketing
should help in making the customers realize how DHL Express can prove to
be an optimum option for them. The services offered by the entire DHL group
can be used as an advantage when marketing. DHL Express can position
itself as a one stop solution to its customers when compared to the
competitors. Marketing strategy need not always be an expensive affair.
Innovation here is again the key. For example, the DHL group once made all
its competitors advertise for it in a much cheaper way as highlighted in the
video.(Beltrone, 2015).
5. Recommendations for changes in
Policies/Structures/Systems:
Having implemented the options and strategies will bring about a positive change in
DHL Express. The strategies listed will help the company retain its market
leadership in the European context. The strategies need to be analysed to every
minute detail before being implemented. It should be tested in the pilot market
before making it available all over. If DHL Express adopts the competitive
sustainability strategy, it will help them in the near future to tackle competition which
is going to increase significantly after the FedEx - TNT deal. Merger of two major
competitors is a grave issue and the management needs to be focussed on tackling
this issue. The directors have to implement and continuously follow up on these
strategies. Innovation also always helps the company in the long-run. Structural
changes will be required to make with regard to their pricing mechanism. High prices
with cheaper substitute options available elsewhere cannot be a feasible option for
long. Human Resource department needs to run an employee satisfaction program
to ensure the contentment of their workforce. Central employee complain system
can be set up to identify the faulting management and improve upon it. A country
wise analysis is necessary to improve on the not so successful outlets. The
marketing strategies cannot be adopted in the same way all over the continent. It
needs to be tailored respecting the cultures and values and situation in each
country.

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6. Conclusion:
DHL express is a current market leader in Europe and can continue on being that if
they are aware well of the internal and external environment they operate in. In CEP
markets, being proactive is the key. Market leadership is not fixed and can be lost if
the company does not analyse the environment on continuous basis and adopts an
emergent approach due to the constant entry of new players in the market along
with mergers and acquisitions. Strategies should be set for short terms rather than
long, in order to constantly be updated with the ever changing market.
Appendix 1
Appendix 1 shows how DHL Express is the only company offering worldwide
express delivery. Source: (Reid.C, 2012)

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References
1. Association, S. (2015). DHL and SKF awarded 2015 SAMA Excellence
Awards™. [Online] Prnewswire.com. Available at:
http://www.prnewswire.com/news-releases/dhl-and-skf-awarded-2015-sama-
excellence-awards-300051117.html [Accessed].
2. Beltrone, G. (2015). Agency's Ice-Cold Prank Turns DHL's Rivals into DHL
Advertisers. [Online] AdWeek. Available at:
http://www.adweek.com/adfreak/unauthorized-stunt-agency-stages-ice-cold-
prank-dhls-rivals-155868 [Accessed 1 May 2015].
3. Dhl.com, (2015). DHL | Innovation | English. [Online] Available at:
http://www.dhl.com/en/about_us/innovation.html [Accessed14 April 2015].
4. Dhl.com, (2015). DHL | Press Release | English. [Online] Available at:
http://www.dhl.com/en/press/releases/releases_2013/express/dhl_express_recei
ves_global_iso_9001_2008_certification.html [Accessed 10 April 2015].
http://www.dhl.com/en/press/releases/releases_2010/other/141210.html
[Accessed 11 April 2015].
http://www.dhl.com/en/press/releases/releases_2015/group/dpdhl_group_sends_
disaster_response_team_to_nepal_within_48__ours_after_earthquake.html
[Accessed 1 May 2015].
http://www.dhl.com/en/press/releases/releases_2014/express/dhl_cryo_express.
html#.VUteGPkiqM8 [Accessed 24 April 2015].
http://www.dhl.com/en/press/releases/releases_2015/express/dhl_invests_in_ne
w_hub_at_brussels_airport.html [Accessed 17 April 2015].

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9. Dhl.de, (2015). DHL EXPRESSEASY Retail Services. [Online] Available at:
https://www.dhl.de/en/express/filialservices.html#tabs-0 [Accessed14April 2015].
10.Dpdhl.com, (2005). Deutsche Post DHL Group | DHL to acquire leading domestic
express company in the Czech Republic. [Online] Available at:
http://www.dpdhl.com/en/investors/investor_news/financial_news_archive/2005/d
hl_uebernimmt_fuehrenden_tschechischen_expressanbieter.html [Accessed 7
May 2015].
11.Dpdhl.com, (2014). Deutsche Post DHL Group | Apr 07, 2014: Employee
engagement delivers rewards for DHL Express. [Online] Available at:
http://www.dpdhl.com/en/media_relations/press_releases/2014/employee_engag
ement_delivers_rewards_for_dhl_express.html [Accessed 7 May 2015].
12.Dpdhl.com, (2015). Deutsche Post DHL Group | Apr 29, 2015: DHL introduces
Cubicycle, an innovative cargo bike for urban distribution, to its Netherlands
operations. [Online] Available at:
http://www.dpdhl.com/en/media_relations/press_releases/2015/dhl_introduces_in
novative_cargo_bike_cubicycle_netherlands.html [Accessed 7 May 2015].
13.Dpdhl.com, (2015). Deutsche Post DHL Group | DHL Innovation Award. [Online]
Available at: http://www.dpdhl.com/en/career/graduates/innovation.html
14.Dpdhl.com, (2015). Deutsche Post DHL Group | Strategy 2020. [Online]
Available at: http://www.dpdhl.com/en/about_us/strategy.html [Accessed 7 May
2015].
15.Fleming, S. (2015). The FedEx / TNT deal – the industry’s take. [Online]
eDelivery.net. Available at: http://edelivery.net/2015/04/the-fedex-tnt-deal-the-
industrys-take/ [Accessed 7 May 2015].
16.Jawna, 3. (2015). Parcel Delivery with DHL Service Point - Size & Price | DHL
Express. [Online] Parcel.dhl.co.uk. Available at: http://parcel.dhl.co.uk/dhl-
service-point/size-and-price-guide [Accessed 7 May 2015].

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17.Postandparcel.info, (2004). DHL strikes at Brussels airport continue to disrupt
mail network « Post & Parcel. [Online] Available at:
http://postandparcel.info/12189/news/dhl-strikes-at-brussels-airport-continue-to-
disrupt-mail-network/ [Accessed 7 May 2015].
18.Postandparcel.info, (2014). Deutsche Post DHL profits surpass €2bn in 2013 «
Post & Parcel. [Online] Available at:
http://postandparcel.info/60388/news/companies/deutsche-post-dhl-profits-
surpass-e2bn-in-2013/ [Accessed 7 May 2015].
19.Reid, C. (2012). iGlobal Academy | International Shipping Services for UPS,
FedEx and DHL. [Online] Academy.iglobalstores.com. Available at:
http://academy.iglobalstores.com/2012/01/05/international-shipping-services-for-
ups-fedex-and-dhl/. [Accessed 7 May 2015].
20.Team, T. (2015). Why TNT Acquisition Is A Good Deal For FedEx. [Online]
Forbes. Available at:
http://www.forbes.com/sites/greatspeculations/2015/04/08/why-tnt-acquisition-is-
a-good-deal-for-fedex/ [Accessed 7 May 2015].
21.Tools.cisco.com, (2015). Threat Outbreak Alert: Fake DHL Online Shipping
Advisory Notification Messages on July 5, 2012. [Online] Available at:
http://tools.cisco.com/security/center/viewThreatOutbreakAlert.x?alertId=26351

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