CLASS VOTE: WHICH FIRM IS DOING BETTER FINANCIALLY?

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Presentation transcript:

CLASS VOTE: WHICH FIRM IS DOING BETTER FINANCIALLY?

FedEx UPS Founded in 1971 from the idea of Fred Smith’s Yale economic term paper. What was innovative about the new approach and how did this differ from competition? Was this an operational success? Founded in 1907 What is meant by “Big Brown” What was the key UPS “pillar of success”? Held private until 1999 Historical Comparison

Competition How has competition in the air-express market effected both companies. What external factors are effecting the strategies of the firms? What internal factors are effecting the strategies of the firms?

Competition How has competition in the air- express market effected both companies. What external factors are effecting the strategies of the firms? What internal factors are effecting the strategies of the firms? Can either firm obtain and sustain a competitive advantage? Why or Why not?

Historical Trends By 2004 Air- frieght carried nearly 50% of international trade by volume. What about UPS and FedEx?

Change in the marketplace What happened in 2004 to alter the marketplace? How did this effect FedEx stock price compared to UPS? How are we to interpret the change in market value?

Performance Considerations: Financial Statements Financial Ratios Stock Performance Economic Profit

Results

Excellent, but why? How is financial excellence defined?  Operational excellence does not guarantee financial excellence  Consider corporate lifecycle (easier to grow a smaller firm than a larger one) FedEx? Why and what drives your decision? UPS? Why and what drives your decision?

Fast Forward to 2013 UPS: Continues to have higher Revenue, ROC, & ROA FedEx: Still a growth firm and is only at 23% Debt to Capital Long-term growth looks more promising for FedEx with a five-year earnings growth outlook expected to be well over 12 percent. UPS will likely see just over 9 percent growth over the same period.

CLASS VOTE: WHICH FIRM HAS BETTER OPERATIONS? WHICH FIRM IS DOING BETTER FINANCIALLY?