1. Team BethoveenMGT 693 Spring 2008

2. 2 Agenda Value Chain Industry Analysis Airborne Strategy Recommendations Current Situation Update

3. 3 Customers -Businesses -Individuals Express Mail Companies -Fed Ex -UPS -Postal Service -Airborne Express Ground Transportation -Vans -Trucks Air Transportation -Cargo planes -Hub & Spoke Sorting Facilities -Hub & Spoke Destination -Businesses -Individuals Express Mail Value Chain

4. 4 Industry Analysis Rivalry Fierce Competition Price is Basis for Competition Threat of Entrants Strong Brand Images Access to a Large Fleet of Transportation Vehicles Long-term Contracts with Customers Threat of Substitutes Low Threat of Traditional Substitutes Technology is Creating a New Threat

5. 5 Industry Analysis Power of Suppliers Fuel Suppliers Packaging Equipment Service Suppliers Power of Buyers Moderate Power due to Price Competition Dependent on Technology, Service, and Speed

6. 6 Airborne’s Differences & Sources of Advantage Owns Hub Airport in Wilmington, OH Operates nation’s only foreign trade zone in Wilmington Less automation, more human resources Runs aircraft 80% full Shippers/Receivers in major metro areas Majority afternoon & second day deliveries

7. 7 Airborne’s Differences & Sources of Advantage No retail service centers Pick-up and delivery by consultants Pick-up and deliver more parcels per stop Later delivery times Lower customer service levels Technology not always “cutting edge”

8. 8 Recommendations for Airborne and Robert Brazier Strengthen its alliance with RPS Form a similar alliance with an international partner Follow the industry lead and move toward distance-based pricing Continue to focus on cost- savings strategies to remain low price leader

9. 9 Recommendations for Airborne and Robert Brazier Continue a targeted marketing strategy aimed at logistics managers, etc. Maintain the niche philosophy-- “Since we can’t be all things to all people, we’ll pick our kind of customer deliberately.”

10. 10 Timeline: Airborne Express and DHL 200320022001200019991998 Enters Fortune 500 Start of ground service Old and new DHL merge Purchased by Van Gend & Loos Euro Express Airborne@Home alliance with USPS 10:30am Delivery, Airborne.com services Deutsch Post World Net (DPWN) acquires majority shares (51%). Remaining shares purchased in 2002. Shareholders approve DHL acquisition of $1 billion Acquires Airborne Express and begins to integrate it into DHL

11. 11 DPWN and DHL today Initial high cost to expand ground network to catch-up with FedEx and UPS No longer expect to meet target break-even of 2009 Struggle to integrate Airborne Express into DHL Write down of fixed U.S. assets $800 million in 2006, $900 million in 2007 Annual losses of nearly $1 billion $25 million class action settlement Paid to contractors over payment system trouble

12. 12 The Future of DHL John Allen, new CFO of DPWN (Nov ‘07) Focus on cutting costs and pleasing investors Rumors DPWN may give up control of DHL Await 2007 Annual Report (March 6, 2008) FedEx to acquire DHL? Anti-trust issues FedEx 49% of U.S. Market Share DHL 9% of U.S. Market Share

13. 13 Questions?