Political Factors and Impact on FedEx

The business environment of an organisation is comprised of internal and external factors. In order to manage a business, knowledge of the external environment is needed as external environment poses a significant impact on the business process. Each of the external factors can influence the business that can lead to the change in management’s decision-making process (Mowday et al. 2013). In this report, postal and courier activities related organisation FedEx has been chosen. The aim of the report is to explore the external environmental factors on the organisation and organisational activities in postal and courier sector related to the CSR. There are two tasks in this report, first one is evaluated the external environmental factors on FedEx’s position and responses. The following part is based on FedEx’s decision and strategies on corporate social responsibilities. In this part, CSR’s relevance on FedEx is evaluated with effectiveness on organisation’s responses. In addition, areas of improvement in CSR are also justified in the final section of the report.

FedEx is a courier company that is operating worldwide and it commonly executes the service on-time. The external environment of the organisation FedEx needs to be discussed in a global perspective as it has to operate in a worldwide basis. The overnight service of the FedEx provides a commitment to the users to deliver the service exquisitely. It has also used airlines, freight and vehicles in order to deliver the services of postal and courier on time.  

FedEx uses the transportation of products, goods and packages through the airlines and sea across many boundaries of countries, therefore, FedEx is bound to fall under the political rules and regulation. FedEx grants permission in order to do the business worldwide basis and they do not face tough regulation as they get approved for the privilege of doing business on an international basis. Political factors can impact the business in case two or more countries may go through hot debates and issues. Political stability is needed for the business, industrial factors and business standards should be followed. There is a risk in military invasion and level of corruption in the regulation of government. As stated by Hill et al. (2014), the legal framework of a country can influence the contract enforcement as FedEx uses its vehicles and trading partners’ vehicles in some of the countries. In a global perspective, taxation laws are not same; therefore, the taxation laws can impact on the business profit. If the tax is high, FedEx can incur lower profit. In each of the countries, bureaucracy and interference in Freight services and air delivery are observed by the government. Moreover, pricing regulations are different and it varies country wise, therefore the pricing regulatory mechanism can impact the business of FedEx. However, FedEx’s name is associated with the political donation and lobbying as in the United States, FedEx gave donation 45% to Democrats and 55% to Republicans. The firm has strong relation to White House in order to access the tax cut rebate in international trade and the firm also wants to rule the United States Postal Service (USPS), the instance was the deal of $9 billion in the year 2001 with USPS (Investprs.fedex.com 2017).

Economic Factors and Impact on FedEx

Economic factors can impact on the business of FedEx as high taxation and increase in GDP may result in the economic growth. FedEx is operating in more than 220 territories in worldwide. In economical factors, inflation rates can impact on the business as the business has to cut down the operation cost on that particular sector (Allen 2012). The monetary policy of a country can impact on the business of FedEx as the organisation is bound to face the impact of any changes in monetary policy like currency exchange rate, demonetisation, change in repo rate of the bank and fiscal policy. The customers of the FedEx are common people, e-commerce and corporate sectors. FedEx has gained the consumers’ confidence through its overnight services. This confidence boosts the profitability of the organisation. FedEx can face an issue when the exchange price of currency alters. The firm provides money in campaigns and it gives dollars in political agenda also. It is the 21^st largest firm in campaign contributor in the world (Litvin 2015). It has been doing the advertising since 1978 and it provides sponsorship money in football and motorsports. However, for the economic agenda, the firm is flexible with the changes in the economic condition of a country. Revenue of the organisation in this year is US$60.56 billion and the net asset is US$48.52 billion.

Table 1: Economic performance of FedEx

(Source: Wang et al. 2015)

Social factors of education of population can affect the organisation’s business in the international and macro-economical society (Wang et al. 2015). If a country has a good economic condition with multinational companies and the people of the country are educated, in such scenario, FedEx can meet the demands of specified numbers of customers. Populated countries are favourable for FedEx as more customers will be there for the firm to take the services and good economical condition needs to be there to be profitable for the business (Crew and Kleindorfer 2013). The factors of the socio-cultural element are literacy rate, demographic and skill level, class structure, a culture like gender roles, attitudes and leisure interest. In order to deliver the services, the firm does a partnership with local logistics companies and the employees of the FedEx need to be skilled to increase the demand among the people. In the global arena, the employees of the FedEx are more than 400,000. Without damaging the packet, equipment and goods, the services need to be delivered perfectly. In case, the demand for the services gets lower, the firm can face the trouble of profitability as the cost of airlines and freights are higher (Valaei et al. 2016).

Social Factors and Impact on FedEx

FedEx is one such organisation that keeps itself updated always and since the beginning of the organisation, it has been following the strategy of a technology upgrade. Technological innovation is needed in FedEx to keep itself competitive in the market and to send the courier on time to the customers (Islam et al. 2013). FedEx is a successful organisation in worldwide basis because of fantastic maintenance of technology and advancement of technological services. FedEx is the first company in courier and postal that started automated customer service centre. Like Royal Mail, FedEx has been trying to digitalise the system and it took the expansion benefit of the internet (Fiat et al. 2016). It provides a real-time update of the products and it provides electronic services to the consumers and users anytime. FedEx uses the software called SuperTracker, handheld computers and it records the transit of shipment of the courier. Customers can track the products or courier in three ways, FedEx website and FedEx World shipping software and FedEx Ship manager (Myers 2015). With the help of technology, the people can transact the money to the organisation and the e-commerce companies are using the technology making a partnership with FedEx. FedEx does a business-to-business transaction with the e-commerce and other corporate sectors which use the services of FedEx. FedEx uses SCAC code (Standard Carrier Alpha Code) to identify Transportation Company. FedEx uses COSMOS (Customer Operations Service Master Online System), it is a computerised tracking system that can review and monitor the products (Fedex.com 2017).

FedEx organisation operates in many countries; therefore, it has to follow all the regulation and laws. Legal frameworks of the countries can impact on the business of FedEx as the vehicles, freights and airlines cross various boundaries (Christopher 2016). FedEx needs to be careful in order to run the business in different part following all legal requirements. Intellectual property laws should be followed in different geographical regions and like other multinational organisations, some of the common laws that should be followed are Discrimination law, Employment laws, Health and Safety Laws and Data protection laws (Allen 2012). In the US, FedEx has been facing the issue of labour fight as some of the labours proclaim that FedEx does not follow the labour right. The growing labour fight can increase the chance of an increase in operating cost.

Most of the courier and post-transportation of the organisation is done through air and water transport. Therefore, climate change issue of the environment can affect the delivery process, FedEx works hard to sustain the environment and it encourages other organisations to take actions to make the environment-friendly business. The leaders of the FedEx and management also encourage the employees and the overall work process to do in environmentally friendly way. Weather and laws regarding the environment can influence the organisation FedEx as they need to deliver the posts and courier on time. FedEx supports the renewable energy in the delivery process and the vehicles that they use mostly use the renewable energy. As suggested by Valaei et al. (2016), global warming issue is growing importance for most of the firms and it makes the rising question of CO₂ emission in Carbon Capture in Transportation and Storage (CCTS) of posts and courier. FedEx can face the issue of long-term effects of transportation activities that can strongly impact on the environmental policy decision. In addition, sustainability is an important factor in courier and postal activities as the organisations follow the sustainable development to do the transport operation (Watson 2015). Three most important factors in courier and post activities in sending them to the desired location are environmental preservation, social development and economic development.

Technological Factors and Impact on FedEx

a. Analysing relevance of CSR to FedEx and how CSR and Sustainability influence policies and decision-making within FedEx or industry-sector 

In the last few years, customers have been expecting to seek the benefits not only in services and products they receive with good pricing, but also they want the services or products to be socially and environmentally respectful (Suliman et al. 2016). Corporate social responsibility can be referred to as triple bottle line and it has seen growth in the post and courier transportation industry. Since 2011, most of the organisations started releasing the CSR reports. In post and courier activities, most of the works are related to supply chain and logistics. In recent time, companies do not follow the 4Ps of marketing strictly and they try to nullify the negative external factors. The organisations are using 4 Rs’, and relationship as they can add real value to the logistics and transportation of the courier and posts. Responsiveness is providing a response to the customers on time is needed in sending the urgent courier and posts. The customers want a more customised solution and they want more flexibility in payment and time duration. Reliability is about giving the products to the customers’ safe with quality materials through courier. To meet the delivery promise, FedEx has improved the performance. In today’s marketplace, the organisations are trying to dodge the volatility and turbulence, the supply of couriers and post can be interrupted by the unexpected shocks of climate change and any other technical faults. Resilience refers to cope up with the ability to support the system in any case of disturbance, FedEx uses high-cost solution and they can solve the issue (McWilliams 2014). Relationship means one-to-one or one-to-many relationships with individual customers that can generate the opportunities for the organisation. FedEx uses partnership sourcing in increasing the innovation sharing, improved quality, reduced cost and integrated scheduling. 

Figure 1: Four Rs’ of CSR in Post and Courier Service providers

(Source: Hoi et al. 2013)

In logistics and supply chain, the organisations want to keep the customers informed their initiatives through CSR activities. In sending the posts and courier, FedEx uses freights, airlines and vehicles, most of the vehicles are operated by FedEx itself. In the transportation and logistics, firms are expected to track the carbon footprint in transportation activities, procurement and distribution activities (Hond et al. 2014). As the concerns on rising of the fuel price, availability of the energy and the companies are trying to focus mainly on reducing of carbon emission. The first concern is the expenses of supply and second concern is the society as the vehicles release a large amount of carbon. The main factor in the post and courier services is to use more energy efficient supply and logistics.  In supplying the courier and posts, the firms need to monitor the extended supply chain to follow the diversity and inclusion in recruitment and selection process. Corporate social responsible management in the sending the courier and posts can be described as functional perspective including stakeholders’ engagement and transparency. In sending the parcels to different locations, the organisations need to follow purchasing management, packaging, warehousing and transportation and reverse logistics. The organisations must pay attention to the pillar of environmental sustainability to deal with the negative impact of pollution and fuel consumption (Cha et al. 2016). There is growing competitiveness in the market and customers’ favour goes to the reduction of the carbon footprint company as the large segment choose the environment and society friendly organisation. FedEx must follow the issue of sustainability in policy-making and decision-making process as the management must focus on the eco-efficiency and social productivity (Hsueh 2015). In transportation and logistics social responsibility, the aim of the organisations is to reach the sustainability in a practical way. In a previous time, courier and posts service providers used the method of optimisation to reduce the costs in logistics and warehousing. This optimisation can represent the largest proportion of reducing the logistics cost. In giving the supplies to the products through courier, FedEx has a relationship across various complex networks and the organisation has already made a win-win situation in making the partnership that would not harm the society and environment (Pai et al. 2015).

Legal Factors and Impact on FedEx

Each of the organisations follows CSR and CSR is a conception of the responsibility of profit that can play an impact in broader questions of community welfare. In economic responsibility, the organisation needs to make money and it can be considered as a business version of survival instinct of human beings (He and Lai 2014). In post and courier services, the organisations have to follow the legal framework and they should adhere to the laws and regulations. Responsibility is not like controversy and it is the obligation to understand proactive duty. FedEx organisation plays the role of the responsible organisation to follow the social good and faith. In addition, the organisations must follow the ethical obligation to follow the coherent corporate culture. The organisations normally follow the logic of corporate world to take the business activities as the citizen of the society. Finally, the business must follow the philanthropic responsibility to contribute to the society’s wellbeing (Tai and Chuang 2014). FedEx like other international organisation must do welfare for the society in various ways understanding the needs of the community.

In today’s marketplace, the maximum focus is on the shipping things that go from origin to destination. In post and courier services, climate change can disrupt the shipment process and the annual cost would be high for the organisation. Climate change will make the train track heat, the aeroplanes will be more expensive to fly and highways will be softer, rising seas can impact on the bridges and roadways and rising oceans can bring storm (Stocker 2014). Therefore, heavy risks are associated with the shipping of courier and posts. Cambridge University disclosed the report stating to make the intergovernmental panel to anticipate the problem in supply and logistics. The post and courier services need to make solution designed by with the technologies that can help the organisation to save from the disaster.

The concept of sustainability is also important for the FedEx organisation as this concept intersects the economics and ethics. Sustainability of the organisation means long-term maintenance of balance. Economic sustainability means long-term financial profit. FedEx is one of the largest organisations in courier and posts services, the business plan of the organisation must follow the stable and prolonged actions. Social sustainability is associated with the people’s lives and the way people live. In supplying of the courier, the organisation should not harm the way of people’s living (Hond et al. 2014). FedEx needs to decide their social responsibility to help the people if the imbalance increases the rich section will be richer and poor will be poorer. Environmental sustainability starts with the affirmation of the natural resources. The organisation needs to use the natural resources and energy carefully and ensure people’s quality of life. The transport system must be green using renewable energy and conservation of resources is important for both organisation and nature. 

Environmental Factors and Impact on FedEx

Figure 2: Sustainability strategies of FedEx

(Source: Self-developed)

b. Critically Evaluating the Effectiveness of The FedEx’s Response  

FedEx understands the importance of CSR and they spread their network across six continents. FedEx believes that it is the responsibility of the organisation to deliver the best resources that can improve the lives of the people (Turker and Altuntas 2014). When FedEx enters the new market, it makes the job opportunity for the people and it boosts the standard of living for the community. FedEx invests in safer and sustainable transportation system to improve the footprint and make the community a living place. The aim of the FedEx is to make a community that sparks with innovation and they can share the ideas of technologies to transform and interact the lives of the people and work (Muller 2014). FedEx management believes in connected world to make a prosperous and sustainable earth.

FedEx Cares:

FedEx is going to invest $200 million in more than 200 territories across the globe in order to create opportunity and deliver the positive change (Fedex.com 2017). This initiative is about delivering the goods using the global network where people need the most in time of calamity and FedEx uses special shipment. In addition, the organisation is using the sustainable transportation to connect the earth resourcefully and responsibly, especially in the urban-based area. Moreover, FedEx takes the CSR activity to create employment pathways for the people for an underserved population. FedEx takes the road safety issue carefully and protecting pedestrians is a vow of the organisation. FedEx takes the initiative to make the road safer for the people worldwide (Fedex.com 2017). Moreover, global entrepreneurship is another initiative from FedEx and the organisation is trying to advance the minority and women to make small businesses and entrepreneurship across the globe. FedEx does charitable work and it is a part of FedEx culture. FedEx wants team members to do the charitable works and investment for improvement of the local community. FedEx supports the local community taking help from volunteers and team members contribute their skills and they do hard work to develop the communities.

FedEx believes that future of environment and success of the business is deeply connected. This is because the organisation is trying to connect the world in a resourceful and responsible way. ErathSmart is a technology used by FedEx that enables the organisation to integrate the sustainable practices in work and services to offer the customers around the world (Fedex.com 2017). FedEx invests in a solution that can advocate the change to improve the industry. FedEx installs the solar panel to make the biofuels and this provides a tangible benefit to the environment, customers, employees and business. FedEx asks the customers and employees to make the responsible choices for the business that can help the organisation to lead from the grass root level of sustainability, recycling and e-waste and clean-up projects. FedEx gives the option of environmentally responsible packaging and the customers can choose from this. 

Figure 3: CSR leadership of FedEx

(Source: Self-developed)

CSR Policy Statement of FedEx

FedEx policies ensure that the organisation must adhere the highest standards in environmental sustainability, ethical behaviour and data security. Code of Business Conduct and Ethics of FedEx sets the high standard of employees’ behaviour that must include the safety and environment, human rights, discrimination, harassment and workplace health. FedEx management tries to inform these rules to all employees to report the suspect violations. Apart from this, FedEx has Environmental Policy recognising the long-term health of the business to lessen the carbon footprint issue and the organisation works as setting an example for other organisations. FedEx has Environmental Management System (EMS) which is based on Key Elements of ISO 14001 (Quarshie et al. 2016). Each of the offices that is present across the globe must identify the environmental factors to minimise the relevant environmental impact. FedEx follows Data Security and Privacy as the management can understand the importance of Security and Privacy that can affect the business operation. FedEx takes safeguard and operation regarding the sensitive information. Customer Protection Centre can highlight the online Privacy Policy and FedEx have been protecting the customer privacy to mitigate the risks. Furthermore, FedEx keeps the data of suppliers and contractors and it takes the zero-tolerance policy in human trafficking and slavery (Fedex.com 2017). The organisation informs all the contractors and suppliers about the principle and they have FedEx Alert Line to prohibit such cases.

c. Demonstrating Some Areas for Improvement in the Response of the FedEx 

FedEx can invest more in climate protection as this could be helpful for the organisation in future. FedEx cannot wipe out the issue of carbon dioxide emission or other greenhouse gas emission, however, they can offset this emission by participating in the voluntary emission trading scheme. In this scheme, the organisation needs to purchase the carbon credits via specialists’ providers. The providers use the revenue benefitted to finance climate. Moreover, investment in climate protection can help FedEx to support the Gold Standard requirement in Kyoto Protocol as this protocol says that third party can monitor the emission of greenhouse gas. FedEx needs to extend the portfolio of green products so that the delivery process of posts, mail and couriers must be climate friendly.

It is very much important to focus on the right issue as there are wide ranges of issues. Crisis and environmental relevant issues are more important than local economic advantages. Smart prevention and measure to provide effective assistance during a disaster can be another programme of FedEx. FedEx has a volunteer team that provides help to the people and FedEx has a strong employee base that could be helpful to take the initiative to manage the partnership with any Non-governmental organisations. FedEx can play important role in the worldwide humanitarian community to support the global relief efforts by volunteering in logistics expertise and making a global network.

FedEx’s top management needs to focus on business value, not always philanthropically. Management of FedEx needs to think carefully how to use CSR in making money to increase profitability. FedEx needs to focus on creating shared value by acting in its best interests. FedEx tries to fulfil the societal needs and this provides help in creating intangible assets regardless of financial flaws. FedEx can link the CSR to its core purposes as successful companies always have reason-for-being beyond money.

Conclusion 

This report has been assessed the impact of external business environmental factors on FedEx and it evaluates the position of FedEx. In postal and courier activities, political and environmental factors can impact the most on the organisation. FedEx has been working in the postal and courier services for long and it works across the globe. Therefore, the political rules and regulation can impact the business. Climate change issue and societal perspective of the consumers can impact on FedEx. FedEx also follows a large range of Corporate Social Responsibilities strategies that help the organisation to increase its brand image. FedEx identifies the long-term health improvement of the business that can directly connect to the local communities and planet. FedEx has a code of business and ethics that are included workplace health, human rights, discrimination and harassment and safety environment. FedEx needs to improve in their focusing to manage the financial matters, climate change issues and disaster management.

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