Marketing

DHL WORLD WIDE EXPRESS

CASE SUMMARY

The company was formed in San Francisco in September 1969 by Adrian Dalsey, Larry Hillblom and Robert Lynn. DHL legally comprised two companies : DHL Airways and DHL International was based in Brussels and managed all operations outside the united states. Revenues for 1990 were split : $ 600 Million for DHL Airways, and $ 1,400 Million for DHL International. One DHL executive commented, the main reason DHL is involved in domestic shipping within the United States is to lower the cost and increase the reliability of our International shipments. DHL was the world’s leading International express delivery network.

Sarrafzadeh, DHL’s Worldwide sales and marketing manager. Sarrafzedah wanted to make recommendations on pricing strategy, structure, and decision making. The former meant DHL would charge premium prices and aim to deliver superior value вЂ" added service in all markets. He considered his three options to be centralized, decentralized, or hybrid approach. A decentralized approach would continue the present policy in which country / region managers set all prices and headquarters offered counsel and support. Under centralized approach.

The growth of the air express industry was expected to continue, air express companies serviced a geographic region either by using their own personnel or by hiring agents. DHL’s principal competitors in door to door international air express delivery were Federal Express, TNT, and UPS. Founded in 1973, Fedex focused for many years on the U.S domestic market. During the late 1980s, the company began to expand internationally through acquisitions and competitive pricing, sometimes undercutting DHL published prices by as much as 50 % between 1987 and 1991, Fedex also entered the international air freight business through the acquisition of Tiger international ( Flying Tigers ). Thomas Nationwide Transport ( TNT ) was a publicly owned Australian transport group which had historically concentrated on air express delivery of documents. TNT focused mainly on Europe and had low profile in North. To participate in the North American Market, TNT held a 15 % stakes in an American shipper вЂ" Airborne Freight Corporation.

United Parcel Service ( UPS ) was privately held U.S. company, most of whose equity was owned by its employees. UPS had traditionally been known as a parcel shipper that emphasized everyday low prices rather than the fastest delivery. DHL, UPS sometimes held a package back to consolidate several shipments to the same destination in the interest of saving on costs.

DHL offered two services : Worldwide Document Express ( DOX ) and worldwide parcel express ( WPX ), DOX was DHL’s first product and featured door to door service at an all inclusive price for nondutiable/nondeclarable items. WPX was a parcel transport service for nondocument items that had a commercial value or needed to be declared to customs authorities. DHL had 20 years of experience in dealing with customs procedures and, 1990 was electronically linked into an international customs network. All shipments were be coded, which facilitated computerized. DHL also commissioned the independent research company to ascertain how it was rated by customers against its key competitors,