Essay on Airborne Express Harvard Business case

1230 Words May 13th, 2014 5 Pages
Executive Summary:
Airborne Express the current underdog in the express mail business has been able to compete with market leaders due to innovation and optimization strategy. The company built on cutting cost and emphasizing reliability now faces pressure from the leaders UPS and FedEx to change their pricing strategy. This change from standard rate pricing to distance-based pricing puts Airborne in a dilemma in which they must choose to match the competition which will make them lose what sets them apart in the market or stay with the current strategy. Changing will increase their flexibility and could open them up to new consumers while staying the same
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If they follow they will incur more cost but if they don’t they will become a long distance only company and have to resort to planes more often and incur cost as well. Both options seem to move Airborne away from what has made them able to compete with UPS and FedEx this long. They must decide whether to stay or match.
#3- Problem/Opportunity Analysis: The main problem that Airborne is facing is whether to follow industry leaders UPS and FedEx by switching to a new pricing system. The decision to do so is complicated both by the innovative nature of the shipping business as well as the fact that the new pricing system may not fit the nature of Airborne Express’ niche market. The advantages to switching the pricing system lie in the brand’s image of flexibility as well as the fear that UPS and FedEx, companies with large market share, will be able to meet Airborne’s low price competitive advantage as they move to the newer system. Industry history shows that innovation is highly valued by consumers and the flexible pricing system directly aligns with brand image making switching systems an appealing choice. However, implementing the new system would be a costly endeavor. Further, large portions of Airborne’s customers are small businesses, which due to contract pricing would not gain from a distance-based system.
4. What are some viable alternative solutions, and what is a recommended solution?

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