Case Discussion Questions 1.What aspects of DHLs strategy for entering the United S t a t e s r e f l e c t a l o w - c o s t strategy? A differentiation strategy?

The section in the text titled Evaluating Cost Leadership Opportunities (pages 234-242) will help with this discussion, and identifies ways to achieve low-cost advantagesand how to evaluate differentiation advantages as well. Right now, DHL is a newentrant into the U.S. market, but it does have significant market shares in both Europe 186 and Asia as the dominant provider of its logistics/delivery services in those regions.DHLs skills and resources that foster cost leadership include: Sustained capital investment and access to more capital from its parent company Excellent integration skills and an ability to effectively pursue acquisitions for expansion Tried and proven logistics systems Structure within the organization for one, the company is trying to improve itsservices by hiring the right people in the first place The organization has some quantitative measures of successDHLs skills and resources that support differentiation include: Strong marketing abilities and an aggressive, competitive ad campgaign Strong management Reputation for doing what others in the industry wont or cant afford to Willingness to travel to small- to mid-size companies in more remote areas inorder to provide delivery service Inclusion of some qualitative, subjective measures of success2 0 . A r e t h e r e a n y a s p e c t s t h a t a p p e a r t o r e f l e c t a f o c u s s t r a t e g y ? Right now, DHL is just trying to get established as a viable carrier in the U.S. markets.It is focusing on a small market share, but trying to grow that

market share as well as itcan. DHL is serving the niche that others have not or do not want to. For instance, it iswilling to send drivers to more remote areas to deliver and pick up packages or providelogistics services. Right now, the firm is applying elements of the differentiation andlow-cost approaches in combination form to serve a more narrow market niche. Whilethis is not necessarily its long-term aim (it wants to serve this niche and serve the broader market), it is part of the current approach.3 . H o w h a s D H L i n c o r p o r a t e d s p e e d i n t o i t s o v e r a l l s t r a t e g y ? The company has a corporate reputation in international markets for quality andleadership. The company is flexible, and has strong financial backing from its parentcompany. Its customer service personnel are good at meeting face to face withcustomers to provide service and arrange logistics, instead of doing everything online or via telecommunications options. For more, refer to Exhibit 8.4, Evaluating aBusinesss Rapid Response (Speed) Opportunities, o n page 241.4 . W h a t a p p e a r t o b e DHLs most important competitive advantages? Are they best s u i t e d to a mature industry or a growth industry? Which way would you characterize the U.S. parcel market and the global parcel market?Right now, DHLs most important competitive advantages appear to be their strength inlogistics and resources in the airborne parcel market, their strong management background and success in other international markets, and their willingness to focus onservice for all clients not just big name companies. Because of globalization and thesubstantial increases in demand to make deliveries across international borders aroundthe world, the global parcel market can be considered a growth industry. DHLs 187 strategic strengths in this market include the ability to establish strong brandrecognition, the ability to scale up to meet demand with its strong capital resources, anability to differentiate the firms services, and its strong marketing skills. (Refer toCompeti tive Advantages and Strategic Choices in Growing Industries, page 248.)The U.S. parcel market is more evolved and is undergoing what is cited in the text as thetransition to maturity (page 248). Some growth remains in niche markets that are notserved by either of the big two providers: UPS and FedEx. DHL has identified theunderserved niche and included those individuals and businesses in its marketingapproach. DHL is establishing itself through marketing as a known alternative in theU.S. market, and is t rying to

differentiate itself from the domestic carriers as the viablealternative for domestic and international shipping needs. In this industry, thecompanys horizontal integration skills and international expansion strategies supportthe firms success.5 . W h a t a p p e a r s t o b e t h e l i k e l i h o o d t h a t D H L w i l l s u c c e e d ? W h a t k e y f a c t o r s w i l l determine that?DHL will likely succeed because of several reasons and resources. First, the companyhas significant support and resources from its parent company and the strongmanagement skills of those directing the company. Second, it is very successful dominant even in the two largest international economies after the U.S. Europe andAsia. DHL plans to invest heavily in the U.S. and realizes that it must make a long-termcommitment to establishing itself despite the higher costs to penetrate this market in theface of strong incumbents. Its success will hinge on commitment of financial resourcesand the ability to reshape its HR function to hire the right people to provide custom er service.6 . D H L c o m e s t o y o u f o r a d v i c e o n w h e t h e r t h e y s h o u l d c o n t i n u e a g l o b a l f o c u s o n p a r c e l s and express mail or diversify their business activities into other types of businesses.What would you advise and why?Because the global parcel and express mail industry offers growth, and because it hasthe financial and managerial resources to commit to establishing success in the U.S.market, DHL should continue its global focus. Because the company is so skilled athorizontal integration, it should stay within this market focus. The company is notspecialized at other forms of diversification, and their management focus should remainon the current U.S. problem rather than diverting managements attention to new business endeavors. 188