View with images and charts A report on DHL Business LTD Section I: Organization Part
About DHL Express Ltd DHL Worldwide Express is the world’s largest and most experienced international air express network offering service to more than 120,000 destinations in the world. DHL maintains its position as the world‘s leading international air express network by continually expanding and upgrading its network of office, hubs and services, and by offering superior service through a well trained and dedicated workforce. DHL offers a full range of customized solution-from express documents shipping to supply chain management. They transport shipments rapidly, safely and on time all over the world. The basis for this is their comprehensive network, combining air and ground transport for optimal delivery performance. On the one hand, this gives them worldwide reach. On the other hand, there is a a strong local presence and unique understanding of local markets and customers. In the logistics area, globalization is creating ever mote complex supply chains. Again DHL‘s combination of global reach and local knowledge is key competitive edge. We also offer a wide range of standardized services as well as tailor made industry solutions. This is the only way to deliver to the high standards that our global customers are demanding. DHL serves 220 countries and territories and 4.2 million customers. Some of DHL’s global customers are Unilever, Philips, Lucky Goldstar, Sony, Panasonic, General Motors, Samsung, Lucent Technologies, Siemers, Motorola, Nokia, Ericsson, IBM Hewlett Packard, Ford, Toyota, Volvo etc/They have 285,000 employees 76,200 vehicles and more than 420 aircrafts. They have around 65,000 offices worldwide with 450 hubs, warehouse and terminals and 240 getaways. On yearly basis DHL sends more than 1.5 billion shipments to destinations throughout the world and gained over 33 billion Euros revenue.
A Brief History of DHL DHL was formed in San Francisco, California on 22 September 1969 by three individuals; Adrian Dalsey, Larry Hillblom and Robert Lynn (D, H, and L). They created an entirely new industry by starting door-to-door express service between San Francisco and Honolulu. DHL was incorporated on 25th September 1969. They planned a system for time sensitive materials. For almost two years, one of the founders, Larry Hillblom performed all the courier work, traveling both ways and eating and sleeping on the plane. The DHL Network continued to grow at an incredible pace. The company expanded westwards from Hawaii into the Far East and Pacific Rim, then the Middle East, Africa and Europe. By 1988, DHL was already present in 170 countries and had 16,000 employees. In the year 1998, DHL formed partnership with Deutsche Post World Net – Europe’s largest postal company. This proved to be a success through co-branding of their services. DHL also
has an award winning partnership with Lufthansa that continues to offer customers innovative shipping solutions. Moreover, DHL and Japan Airlines work together to provide combined express and general freight services to Japanese companies around the world. This made DHL position itself better to meet the growing aspirations of its many customers and ensure that there market leading standards of service throughout the world stayed in front. Later, Deutsche Post increased its stake on DHL and has taken the control from the previous management. When Uwe Dorken assumed the responsibilities of Chief Executive officer of DHL International on 1st April 2001, he emphasized that in order to continue this success, it is necessary to manage, develop and maintain the brand values of DHL that is a passion for the customer, the drive for excellence, honesty and integrity and a respect for people. At present, DHL is 100 % owned by DPWN. Table 1: Steps to Success 1969 DHL founded by Adrian Dalsey, Larry Hillblom and Robert Lynn in San Francisco. 1971 DHL expands its network rapidly and becomes a trusted partner of many companies. Expansion into the Far East and Pacific Region 1972 Services introduced in Japan, Hong Kong, Singapore and Australia. 1974 The first UK office is opened in London. Globally, DHL now had 3,052 customers and 314 staff.
1976-1978 Expansion in three major regions as DHL launches in the Middle East, Latin America and Africa. 1977 The first German DI-IL office is opened in Frankfurt. 1979 DHL extends its services to delivering packages. Only document services had been
available until now. 1983 DHL is the first air express forwarder to serve Eastern European countries. An international distribution center (hub) is opened in Cincinnati, USA. 1985 A state-of-the-art hub is opened in Brussels. More than 165,000 shipments are handled per, night. 1986 DHL enters into a joint venture with the Peopleâ€™s Republic of China and becomes the first express company active in China. 1990 DHL enters into strategic alliances with Lufthansa, Japan Airlines and Nissho Iwai. 1991 DHL becomes the first international express company to restart service to Kuwait after the Gulf War. 1993 DHL invests US$60 million in a new hub facility in Bahrain. 1998 Deutsche Post becomes a shareholder in DHL A major IT centre is opened in Kuala Lumpur. 1999 DHL Worldwide Express invests over 1 billion euros in a new state-of-the-art air Cargo fleet in the European and African network. 34 new Boeing 757SF cargo planes are acquired: these planes cut noise at take off by 77% and CO2 emissions by 13% compared to the fleet of B737Fs they replace. 2002
Deutsche Post World Net becomes the major shareholder in DHL from 1 January. A 100% shareholding is completed by the end of the year. Network expansion in Asia: in October, DHL enters into a joint venture with Cathay Pacific for express air cargo. A new global IT center is opened in Scottsdale, USA. 2003 DHL increases its share in Sinotrans to 5%, thereby becoming Sinotrans’ largest strategic investor. Deutsche Post, DHL and Postbank make up the Group’s current brand architecture. DHL now serves as the exclusive brand for all express and logistics activities. DHL’s corporate colors become yellow and red. In April, the worldwide visual transformation of all vehicles, packing materials and buildings begins. Through the purchase of Airborne Express (2002 revenue: USD 3.3 billion), DHL vll be the third largest express service provider in the USA. DHL bridges the last gap in its US/American network with Airborne’s overland transport network. October sees the launch of a five-year investment program in China: DHL will significantly expand its capacities through an investment of USD 200 million. 2004 New global IT facility opens in Prague, Czech Republic. It replaces the facility in London. DHL becomes the new brand for all Deutsche Post’s international mail business. About 4,000 employee’s worldwide work for DHL Global Mail. Acquisition of 68 percent stake in Blue Dart, the premium domestic courier and Integrated air express package distribution Company in India. 2005 From August, DHL introduces its new corporate wear. Over the next nine months, 110,000 DHL employees in over 200 countries and territories are to be provided with new uniforms. More than 1.4 million garments will be shipped by DHL. The design has been tested through interviews and extensive trials with 3,600 drivers and couriers. Deutsche Post World Net acquires Exel, the British logistics corporation, in December for 5.5 billion euros. Around 111,000 employees work for Exel in 135 countries. Exel. Primarily offers transport and logistics solutions for key customers. The company concluded the first half of 2005 with a 55 percent leap in profits to 172 million pounds
(251 million euros).
Deutsche Post World Net (DPWN) Deutsche Post World Net (DPWN) is the world’s largest transport and logistics company and is based in Bonn, Germany. DPWN’s is listed on the Frankfurt Stock Exchange. DPWN’s revenues in 2004 amounted to Euro 43 billion with profit from operating activities of Euro 3.35 billion. DPWN consists of a group of companies with wide ranging operations in mail, express, logistics and financial services. Deutsche post is in charge of the mail business and Postbank is in charge of the finance business. Three companies called Deutsche Post Euro Express, Danzas and DHL Worldwide Express operated DPWN’s express and logistics business. Towards 2003, DPWN realized that DHL has a very strong brand image. So, they decided to represent Deutsche Post Euro Express, Danzas and DHL Worldwide Express under the DHL brand name as DHL Express, DHL freight, DHL Danzas Air and Ocean and DHL Solutions. In Bangladesh, DHL Express was brought by Homebound and Trade Clippers Cargo Ltd. Brought DHL Danzas on a small scale. IN 2005, DHL Freight DHL Danzas Air and Ocean and DHL acquired Excel, the largest contract logistic company. The enlarged logistic unit will operate under the DHL brand and use DHL’s red and yellow colors. After the merger, DHL will operate with two logistics sub-brands: DHL Exel Supply Chain and DHL global Forward.
History of DHL in Bangladesh DHL’s country office is located in Gulshan. At present, DHL has two service centers in Guishan and Motijheel in Dhaka and seven outside the capital in Chittagong, Natayanganj, Savar, Khulna, Sylhet and Comilla. Three of these are in the Export Processing Zone (EPZ) of Chittagong, Comilla and Savar. Here, the shipments and documents are packed and dispatched to their addressed destinations. DHL has six express centers in Mirpur Road, Kawran Bazaar, Rokeya Sharani, Uttara, Mohakhali and Rampura. They have three other express centers in Chittagong, Narayanganj and Gazipur. In the service centers, customers can have their shipments or documents both picked up and dropped off but in the express centers only provide the service of dropping shipments to their customers. DHL also has a Gateway in Zia International Airport. Gateway is the airport warehouse where shipments coming into and goin(out of Bangladesh are stored till they are inspected by the customs and are ready to be dispatched. DHL Express Bangladesh is headed by Desmond Quiah. Today, with over 250 employees and more than 40 operational vehicles, DHL Express Bangladesh is the largest Air Express Company operating in the country. DHL Bangladesh not only delivers documents and heavy weight parcels, but also provides value-added and innovative services to its customers. With its experience in local and regional markets, you can expect the highest level of quality, service and more in total logistics solutions.
Certain percentage of DHL Bangladesh’s revenue goes to DHL Worldwide and a certain percentage goes to Homebound (DHL’s agent in Bangladesh). Moreover, Homebound also gets a commission from DHL Bangladesh. Some of the remaining amount is used in the day-to-day running of the DHL Bangladesh and the excess is stored as reserve Strategic and day-to-day decisions of DHL Bangladesh are controlled by DHL Worldwide Express. DHL Worldwide Express provides certain rules and regulations, which are to be followed by DHL Bangladesh. However, in case of emergency DHL Bangladesh may need to make some decisions. Although Homebound is the agent of DHL in Bangladesh, however they have no control in DHL’s decision making. Services of DHL Express Ltd in Bangladesh DHL Bangladesh provides a wide range of services to its customers and these are mentioned below: Table 2:
Services of DHL Worldwide Express
Worldwide Document Urgent international documents reach the destination on time Express (DX) Worldwide Express (WPX)
Parcel Dutiable international goods reach the destination safely and timely.
Import Express (IMP)
Customers get more control over deliveries from their suppliers in a cost effective and simple way.
Goods that weigh up to 25 KGs are shipped in a simple and innovative way.
Goods that weigh up to 1OKGs are shipped in a simple and innovative way.
Customers receive insurance coverage for shipping valuable goods.
24 hr Customer Service
Customers get service for 24 hours a day, seven d week, and 365 days a year.
Worldwide Express Fashion First
Medical Perishable pharmaceuticals are shipped in a new packaging solution. Textiles and apparels reach the destination safely and timely and receive speedy customs clearance.
A safe, secure and affordable option for customers to send their heavy weight shipments door-to-door.
Time Definite Delivery Goods or documents that will reach the desired destination (TDD) within a certain time.
DHLâ€™s (Bangladesh) Major Export Partners all over the World
Major Export Partners
17% Netherlands Canada 4% 4%
Source: Export Promotion Bureau
Figure 1: Major Export Partners all over the World
DHLâ€™s (Bangladesh) Major Import Partners all over the World Major Import Partners
Singapore 12% Source: EIU Report
China HK 12% 5%
Figure 2: Major Import Partners all over the World Capacity of the organization Their maximum capacity is 8870 tons approximately on their own aircrafts carriers. And with the help of agreements with other â€œInternational Airline Companiesâ€? they can handle upto 15,000 tons. Number of countries/territories
Asia Pacific/Middle East
Number Of Offices
Asia Pacific/Middle East
Asia Pacific/Middle East
Number of Employees
Number of Courier Vehicles
Asia Pacific/Middle East
Number of Owned/Leased Aircrafts
Asia Pacific/Middle East 7 The Americas
Number of Hubs & Sub-Hubs
Asia Pacific/Middle East
Vision, Mission, Strategy, Values, and Culture of DHL DHL’s Vision “Customers trust DHL as the preferred global express and logistics partner, leading the industry in terms of quality, profitability and market share” DHL is already most reliable and preferred global express and logistics partner in Bangladesh. In future, the company wishes to continue being the market leader in terms of quality profitability and market share. DHL is already fulfilling and will continue to fulfill the following missions: • •
DHL enhances the business of our customers by offering the highest quality express and logistics solutions based on strong local expertise combined with the most extensive global network presence. DHL attracts develops and retains exceptional people by creating a truly global working environment and placing value on our multi cultural heritage.
DHL delivers above average returns by providing superior quality and solutions at all levels of business processes.
DHL is a responsible corporate citizen in all countries in which we operate, taking into account the social an environmental needs of our employee, local communities and the public
To meet this vision and mission, the company’s strategy is based on a few tactical imperatives: • •
Absolute dedication to understanding and fulfilling their customer’s needs with the appropriate mix of service, products and price of each customer. Ensuring die long-term success of the business through profitable growth and reinvestment of earnings
An environment that rewards achievement, enthusiasm and team spirit, and which offers each person in DHL superior opportunities for personal development and growth.
A state-of-art worldwide information network for customer billing, tracing, tracking and management information/ communications.
Allocation of resources consistent with the recognition that they are one worldwide business.
A professional organization able to maintain local initiative and local decision making wile working together within a centrally managed network.
Seven Corporate Values: challenge and guidance at the same time DHL’s corporate culture creates added value and leads us on the way to become stronger than DHL’s competitors. This is an obligation that we have to our shareholders. DHL’s corporate culture unites the excellence of DHL’s individual subsidiaries and their unique company cultures to produce a shared strength. An active, open corporate culture makes DHL an attractive employer for highly talented people and strengthens DHL’s position as a responsible global corporate citizen in this world. DHL is committed to the values defined in this corporate culture. They are both a challenge and a guidepost. They support the evolution of DHL’s business while DHL and they continue to develop. I. II. III. IV. V. VI. VII.
To deliver excellent quality To make our customers successful To foster openness To act according to clear priorities To act in an entrepreneurial way To act with integrity internally and externally To accept social responsibilities
Organizational Structure DHL has an Executive Management Committee that takes all the key decisions, sets the objectives and implements the policies as well as rules and regulations of the central network.
The Country Manager heads this committee. The other members are the Managers of HR, Finance, Operation, Marketing, and Planning, Customer Services and Information Technology Departments. The organogram of the Executive Management committee of DHL Bangladesh is presented below
Desmond Quiah Country Manager
Kazi Sayeed Faruqui
Ershat Islam NationaIS Manager
National National marketing operation Manager Manager
Md Miarul Haque National Sales Manager
Different departments have different structure according to their functions and responsibility. The head of every department carries out their functions with the help of the line manager. An outline of each of the distinct departments with their structure and activities are discussed below: Human Resource department The Human resources department of DHL is comprised of four positions. The Human resource Manager Heads the HR unit. He is responsible for coordinating the activities of thee other Human Resource Personnel.
Human Resource officer
Some major functions of Human Resources Department are:
• • • • • •
Recruitment of staff Maintenance of personnel records Training and Development Compensation and Benefits Employee communication Career Development
Finance Department The Finance Department of DHL is comprised of ten positions. The National Finance Controller heads this Department. He is responsible for coordinating the activities of six other officials. An administrative coordinator, credit control executive and an accounts officer work under the supervision of an administrative officer, credit controller and a billing manager respectively.
Manager A/C Payable
Competitive Conditions A number of global and local companies are engaged in providing air express services in Bangladesh, apart from the major dominate player, DHL in me industry. The global competitors of DHL are FedEx, UPS and TNT and the local competitors are Skynet, Aramex, OCS, EMS etc. the local competitors are mostly worldwide document express based companies who operate in the financial DOX market. Their main customers are nationalized commercial banks where corruption is rampant. These operate through local agents who operate with very limited investment in infrastructure. All these companies have some share of the market, but DHL clearly dominates the market in Bangladesh. In 2006, the perceived usage share of total shipments of DHL is approximately 56% in Bangladesh. The share of all other companies in Bangladesh is shown in the table below.
DHL is currently the number one Air Express Company in the country by every means. DHL counters competitor’s strategy by enhancing outdoor visibility of DHL, increasing counters, developing a list of competitor’s customers, and focusing to win their accounts. Competition exists in the market place but the level of competitor’s varies in terms of express documents and express packages. Such as for express documents DHL occupied the majority of 64%, while FedEx occupied only 15% in 2005. In the same year, for express packages weighing less than 25 kg and more, 35% used DHL and 31% used FedEx. The perceived usage shares by product of both DHL’s global and local competitors are given below. DHL also has a very strong brand image. The company’s trademark, proprietary know-how, installed customer base. Brand equity and the reputation it possesses allow the company to create a competitive advantage in relation to their competitors. Moreover, DHL is the only company to offer Import Express in Bangladesh. DHL is also an excellent employer in terms of employing skilled and efficient workforce by providing an excellent compensation package. DHL has also earned the fame as a highly socially responsible company; both in Bangladesh are as follows • •
Supporting tribal weavers in Bangladesh. Supporting 700 families with food and other essentials during the 2004 floods. SWOT Analysis
The SWOT analysis of DHL provides a comprehensive scanning of the internal and external environment in which the company operates. Environmental factors internal to DHL are its Strengths (S) or Weakness (W), and those external to the organization are the opportunities (O) or threats (T) that is confronts. Such an analysis of the strategic environment enables the company to evaluate the environmental factors and internal situation and gain a thorough insight and its current position in the industry compared to its competitors. Strengths As a door-to-door air express service provider operating in Bangladesh, DHL has a lot of strength. The following are the strengths that DHL enjoy in this country: •
• • •
• • •
DHL is the only international Air Express Company to use its own staff of trained professionals in Bangladesh. This means that the shipments are more secure with DHL because it does not hand over the shipment to someone else, unlike the competitors who use agents. Highly trained DHL staff performs customs clearance while competitors use agents. This means DHL clears shipments faster and with more control because the shipments never leave the hands of DHL employees. DHL is open 365 days a year, 7 days a week, 24 hours a day. By offering convenient pick up times, DHL remains to be flexible for shippers in Bangladesh. DHL uses innovative transportation method for getting through congested downtown areas by using pedicabs in addition to vans. The pedicabs give DHL couriers the flexibility to move through busy business centers to deliver important packages without delay. It also doubles its courier van fleet to boost its operations. DHL has computerized on-line shipment tracking which means DHL can track urgent shipments fast and accurately. DHL is the only company to offer Import Express in Bangladesh. DHL expanded its operations in Bangladesh by opening more express centers in Dhaka. This demonstrates DHL’s commitment to support future growth in
Bangladesh so customers can count on DHL to be there for them today and in the future. DHL has very strong brand image. The company’s trademark, proprietary know how, installed customer base brand equity and die reputation it possesses allows the company to create a competitive advantage in relation to their competitors.
Weakness The absence of certain forces may be viewed as a weakness for the company and they are: • • • •
DHL services are not being use on a mass level. DHL is too much compliance driven company. DHL invests tremendously in system development, but the work process has not been simplified. Since the ownership issue with Homebound has not been settled yet, so more investment is not possible. As a result, the customers are being deprived of better service.
Opportunities The external environmental analysis reveals certain new opportunities for profit and growth for DHL and they are: Since DHL is a little expensive, so die general mass cannot avail it. DHL can introduce a new package and parcel shipping price which the mass people can afford. Due to the increase in GDP, DHL’s customers may expand their business, which will result in more shipments. Threats Changes in the external environment may pose threats to DHL in terms of its operation: • •
Niche players such as continental air express services may pose a problem. These are small players who do briefcase business. The political strikes and unrest arc one of the major concerns for any organization in Bangladesh. Thus, if DHL is unable to operate properly cue to strikes than it becomes difficult for them to pull alongside with other DHL companies operating along the globe. The frequent natural disasters in Bangladesh are threats for the company because it affects every sector of Bangladesh as well as the overall GDP. Natural calamities such as flood hamper businesses to send or receive shipments, since most of the roads are flooded. The slow pace in the customs reforms operation is a major threat for DHL’s efficient handling process. The two days holiday declared by the government has become a problem for DHL to clear its parcel on holidays. Only documents can be cleared on these two days. As DHL operates 24 hours, 7 days a week. Industry Attractiveness
Poter’s five forces is a powerful tool for critically analyzing the principal competitive pressures in an industry and evaluating how strong and vital they are. This model aids in
finding out the nature and intensity of competitive forces, as the state of competition in an industry is a composite of these five forces In order to find out whether the air express industry is attractive or not poter’s model has been used to examine these five competitive forces. The air express Industry can be divided into two parts – global competitors and local competitors. The global competitors of are DHL, FedEx, UPS and TNT and the local competitors are skynet, Aramex, OCS, EMS etc. RIVALRY WITHIN THE INDUSTRY At present, the air express industry is in the growing stage all over the world. Expert’s opinion is that the air express industry and the air freight industry will merge and they will grow further and will finally reach maturity. The air express industry’s growth rate 8-10%in Bangladesh. As a result the rivalry among the companies is very intense. In Bangladesh, the air express Industry is growing and opening the door of opportunity for local competitors, who have very limited investment in infrastructure. These competitors have low fixed cost and as a result are able to offer lower price these niche players take up a noticeable chunk of the air express business. However a lot of customers think that they are not reliable. Since DHL is a service provider so rivalry mostly depends on the quality of service provided rather than price. The types of service offered by the air express service are quite similar. However, the quality of service offered by the local and global competitors is very different. As a result not much rivalry exits between them though the degree of rivalry between the global competitors is very high. To achieve economies of scale is not possible in this industry, since they have make deliveries even if their capacity is not full. In that case their variable cost of fuel is very high. As a result the degree of rivalry is not that high in this respect. All the global competitors of the air Express Industry are represented by some agents in Bangladesh. So, the agency will suffer since they will have to sell and liquidate the fixed assets like courier vans and other shipping equipments. High severance has to be paid to the workers who are made redundant. From this point of view, the exit barrier is high, which results in high rivalry. However, the local competitors have made limited investment and so their exit barrier is low. As a result rivalry between the global and local competitors is low. Overall rivalry within the industry From the above analysis it can be seen that the players in the industry were faced with intense rivalry among the global competitors even though there was negligible rivalry between the global and local competitors. There is moderately high rivalry within the industry and hence attractiveness of the industry is low.
THREAT OF NEW ENTRANTS Significant Brand loyalty makes it difficult for the new companies 10 take away market share from existing companies. It reduces the threat of new entrants because it is very costly to break down well established consumer preferences.
Certain amount of capital investment is required to enter the Air Express Industry. Huge amount of capital is required for the courier vans, heavyweight container trucks, forklifts, NGS scanners and various other equipments. Moreover the existing players in the industry are already heavily competing with each other. If the new entrants do not have the capital requirements to compete in the similar way, they would surely lose. Access to distribution acts as a major entry barrier. To access the industry, the new entrants must have access to the channels of distribution network. For a new entrant, it would be costly to set up its own distribution network. Furthermore, channel members become loyal to the existing air express companies and hence they might prefer to work only for them and not for any new entrants to the industry. Therefore, the entry barrier becomes hard-hitting. DHL is the first Air Express Company in Bangladesh. So, absolute cost advantage is enjoyed by DHL with proprietary technology or favorable access to raw materials, such as packaging materials, and with operating experience. It makes the industry a bit more challenging for the new entrants to enter. Since the Air Express Industry is a time sensitive industry, so the switching cost of new entrant who wants to change his supplier is very high. Therefore, the threat of new entrant is low. The government policy of 2-day holiday disrupts the proper functioning of all the existing Air Express companies. So this may act as an entry barrier thereby, reducing the threat of new entrants. Overall Threat of New Entrants From the above analysis it can seen that entry barrier was present and thus threat from new entrants was low because the existing players had strong access to distribution channels, strong established brands and the capital requirements were strong enough to protect new entrants. Hence the existing companies had power to restrict the entry of the potential entrants, and thus the industryâ€™s overall attractiveness is high.
THREAT OF SUBSTITUTE SERVICES Price, quality, performance, perceive value of the product and brand image are the key factors for brand substitution. The local competitors with readily available and attractive price substitutes create competitive pressure. However, among the global competitors, quality, and service image is key for substitution. Consumers in this segment are brand loyal. Apart from the threats from substitute brands there are some other substitute products of the air express services and they are internet and fax these are less expensive and time efficient. However, these can only be used for documents. Moreover, the original documents cannot be sent or received through these means and so it is not legally acceptable.
Overall Threat of Substitute Services It can be concluded that, as the substitute for the air express services are not that strong, therefore the threat from substitute is comparatively lower. Hence, the industryâ€™s attractiveness is high
BARGAINING POWER OF SUPPLIERS Suppliers can be viewed as a threat when they are able to force up the price up the price that the company must pay for its input and therefore have negative impact on the firmâ€™s profitability. On the other hand, if the suppliers are weak the companies get the opportunity to force down prices and demand higher input quality. Some of the raw materials of DFIL are their packaging materials, printing, of different invitation cards, banners etc. although the industry is growing but the number of air express companies is not as high as the supplier of these raw materials. As a result the bargaining power of suppliers is less. Since the air express industry is expanding, new companies are entering the industry. So suppliers can easily switch from one company to another company. Hence, the switching cost of suppliers is low. The threat for forward integration and substitute raw materials is very low in this case.
Overall Bargaining Power of Suppliers: Since suppliers bargaining power in the air express industry is moderately low, the attractiveness of the industry is relatively high.
1.10.5 BARGAINING POWER OF BUYERS With the Industry still growing, the number of air express companies is increasing. As a result the bargaining power of the buyers is also increasing, buyers gain power when their needs can be met by substitute products or by the same product offered by other suppliers. Moreover, the switching cost of the buyers is very low as there are many companies in the industry, buyer can easily switch from one Air Express company to another without any subsequent delay. The threat of backward integration and substitute product is low Overall Bargaining Power of Buyers From the above analysis, it can be seen that the bargaining power of buyers is high and hence the attractiveness of the industry is low. The whole discussion can be summarized thought the following figure:
Threat from New Entrants
Low Threats of new Entrants Relative low Bargaining Suppliers
Rivalry without the Industry
Bargainin g Power
Relative Low Bargaining Power
Buyers Bargainin g Power
Low Threats of Substitutes product
Threat Of substitutes product
HENCE THE OVERALL ATTRACTIVENESS OF AIR EXPRESS INDUSTRY IS MODERATELY HIGH Section II: Project Part Problem Statement Like most multinational companies (MNCs), DHL Express (BD) Ltd suffered the impact of global financial crisis in 2009. Its saw is growth reaching a stagnant condition and experienced significant decline in its profitability ratios. However, with recovery of world economy in 2010, DHL looks forward to prosperous year with significant growth in market share and increased revenues. Its rivals are also moving on with similar strategy. Thus, in the face of fierce competition to bag as many clients as possible, DHL Express (BD) Ltd must offer superior service to its existing and prospective customers. For this purpose, DHL needs to determine what drives customer satisfaction and its standing in meeting customer expectation in comparison to its rivals. Thus an in-depth study of the level of customer
satisfaction can serve as both a qualitative and quantitative compass for improving the quality of service of DHL Express (BD) Ltd. Objectives Broad Objective To identify the satisfaction level of corporate clients of DHL Express Bangladesh Specific Objectives I. To identify the most critical factors affecting the level of customer satisfaction II. To measure the customer satisfaction level based on the identified variables III. To develop and Customer Satisfaction Index to rank and determine the critical factors affecting demand for express logistics industry SCOPES AND LIMITATIONS Scopes This research paper is strictly limited to studying the level of satisfaction regarding the quality of the service delivery of Express Logistics companies, mainly DHL Express (BD) Ltd within business hubs Dhaka like Baridhara DOHS, Mohakhali DOHS, Matijheel, Tajghon and Uttara. The majority of the respondents are corporate clients. Thus, they will serves as representative sample of all the customers of express logistics service for this study. Limitation Geographical barriers are the most significant limitation that is responsible in narrowing down the scope of this study. There are many more customers located in other parts of Dhaka city as well as other major cities of Bangladesh. However, due to financial and human resource constraints, it was not possible to reach these customers. This study may not provide the real picture of the current satisfaction level of the customers of express logistics service because of two assumptions. Firstly, the satisfaction level of the customers are considered to be homogeneous regardless the difference in size and nature of business. Secondly, 35 customers located in Dhaka is regarded as the representative sample of the research. Methodology Data Collection
Primary Data Primary data has been collected through carrying out survey based on the questionnaire. The data was collected by Self Administered Surveys. The questionnaire was given face to face to the respondents. Secondary Data
Both Printed and electronic media have been used to develop the initial problem statement and current scenario of Bangladesh Express Logistics Industry. Several books, journals, and online journals have been used as sources of secondary data. Sampling Design
Sampling Frame Inability to access any specific records on customers maintained by the Express Logistics companies has meant that there werenâ€™t any pragmatic sampling frame available for the conduct of the research. Concurrently, no viable sampling frame is available for employing probabilistic sampling techniques. Sample Size A sample size of 35 had been determined for the study. Although the ideal sample size for the research should be much more, due to time and resource constraint, the final sample size of 35 was decided. Sampling Method Convenience sampling was performed in order to seek the respondents. The key person, i.e. person in charge of supervising international accounts or in charge of merchandising, in each organization is given the questionnaire. The respondents were chosen on a convenience basis i.e. the persons who were available for interview. Questionnaire development A Focused Group Discussion (FGD) is conducted with Territory Officers from Sales Department of DHL Express (BD) Pvt. Ltd. Territory Officers are very knowledgeable persons and have invaluable personal experience in regards to handling customers. Due to time constraints, only three territory officers were included in the FGD. The findings from FGD and secondary research were used to develop the Conceptual Framework that later was used to develop the Coordination Schema, which acted as the foundation for the questionnaire. III.5
DHL is currently the market leader if Express Logistics Industry in Bangladesh with 40% market share. However, it faces fierce competition each day from its rivals as each player tries to snatch away the existing customers from rival firms and secure new clients before any other. Thus, in order to maintain its position and expand its market share, DHL must strive to provide better service to its customers. It must understand the changing demands of the customers and the best way to satisfy them. DHL Express (BD) Ltd is undoubtedly a direct beneficiary of this report as this study will help them realize the true value of the service delivery of the organization. The satisfaction levels of their researched under this study will aid DHL in understanding its true potential as a business organization. It will help DHL to understand the critical factors that determines customer satisfaction and its standing in fulfilling these requirements in comparison to its rivals. It will also help DHL analyze the areas of its shortcomings, consumerâ€™s perceptions and learn about the improvements they want to.
Literature Review Customer satisfaction is defined as consequence of comparing expectation with perceptions of performance (Oliver, 1981). It appears to result from a dynamic process. However, expectations, perceptions of performance, and the difference between the two are typically measured simultaneously despite evolving at different points in time. Nevertheless, until thee is no disconfirmation implying that satisfaction will remain constant over repeated purchase and consumption cycles, even when there is consistent objective product performance. Varying satisfaction can influence the probability of switching to a competitor’s product.
Kotler (1998) stated that customer satisfaction depends in the offer’s performance in relation to buyer’s expectations. Customer satisfaction is the result of the product of service meeting a certain set of customer requirements. Chang (1994) mentioned that customer satisfaction is the watchword for all business. Griffin (1998) stated that every business must find ways to make customers happy by meeting or even exceeding their expectations.
Over the years of development of express logistic industry, all the successful firms invested significant resource of identify how to satisfy the customers. Big players like DHL and FedEx purchased and integrated transports services to their core operation in order to speed up the delivery process and intake more delivery as well reducing cut-off time. However, there are multiple instances which showed that such integration further led to inefficiency and customer dissatisfaction. James J. valentine in his report “DHL experiences Airborne pains” investigated how DHL tried to integrate a air-transport service into its operation and experiences inefficiency.
With the advancement of internet technology, Logistics companies found that they that serve the customers better by allowing them to track their shipment at any moments. FedEx and DHL were the first to pioneer this service offer. Kevan Scholes (2003) noted in his case study on FedEx, how the company introduced its web-based services to give its customers the ability to track their shipments. With over 2 million customers at that time, the internet gave FedEx to become more efficient and opportunity to take business to new heights by building one-to-one customer relationships.
He further noted how FedEx aimed to engage customers on all channels and internet seemed as if not more effective than mail or phone. This new internet based service allowed FedEx to save cost and serve its customers better. Its experience in the industry made FedEx realized that logistics was the core issue for most businesses and, therefore, it capitalized on the fact that it was capable of bringing more to the table than just a van or a plane. So FedEx had redefined its relationships with various businesses by offering strategic consulting style solutions. It also developed a comprehensive set of web-based automated shipping solutions to meet the needs of small as well as large customers globally. With the advent of the internet, its information infrastructure allowed it to extend its services beyond pure transportation to address the other supply chain service needs of customers. This allowed FedEx to extend beyond giving customer access to real-time data, to become more involved in the customer’s internal processes. In 2000, it launched its FedEx Home
Services designed for the booming business to consumer e-tailers, taking the whole business of supply chain management away from these e-merchants, leaving them to concentrate on other areas such as marketing. Over the years, FedEx constantly redefined and increased its scope of product and service offering.
Logistics companies soon discovered the need to provide customized services to cater to different requirement of different customers. In recent times, DHL has become a stronger brand, providing total logistic solutions for its valued customers. It's a one-stop-shop with a wide range of standardized services as well as tailor-made industry solutions to meet its customer's needs. Products and services include, Import Express, Medical Express, Worldwide Parcel Express, International Document Express, Conference Express, Student Express, Mining First, Finance First, Domestic service and Economy Select (Express Freight). DHL Ghana Ltd. has put up a multi-purpose Gateway at KIA which serves as the main contingency Hub for DHL’s operations in the West Africa Sub-region. It also serves as an Express Logistics Centre (ELC) which is the very first of its kind at KIA. DHL Ghana has therefore become a best-in-class logistics and supply chain solutions provider, ahead of its competitors. (www.dhl.com). Subrata Mitra in his research paper “Logistics Industry: Global and Indian Perspectives” stated how outsourcing in logistics industry has led to reduction in response time and increased customer satisfaction.Section III: Report Findings
Market shares of different Express Logistics Companies in Bangladesh:
Fedex UPS TNT
Figure: Market share
As seen in the above figure, DHL Express is the market leader with about 37% market share. Its closest rivals are Fedex and UPS with 20% and 17% market share respectively.
Objective I: To identify the most critical factors affecting the level of customer satisfaction Critical Factors: Based on findings from FGD and secondary research, the questionnaire had been prepared in order to identify the critical factors that affect the customer satisfaction. This had been done by ranking the various factors. The ranking in turn is based on the response of the importance questions. The above table illustrates the relative importance placed by customers on each of the quality parameters considered in the research. Respondents were asked to rank each of the 9 variables considered in the research on a scale of 1 – 5 with 1 being designated as least important, and 5 being designated as most important. Transit time, price, pickup time appears to be at the forefront of the customer’s concerns. However, customer care and shipment tracking are also significantly important to the commuters. In contrast, same-day uplift, no customer delay network and hidden cost were given lesser importance by the respondents. However, there appeared to be only mild deviation in the overall mean scores, indicating that all the factors considered within the questionnaire ranged between moderately to very important.
OBJECTIVE II: To measure the customer satisfaction level of DHL Express BD based on the identified variables. To measure the satisfaction level regarding each of the variables defined the respondents were asked to rate their satisfaction about each of those factors in a 5 point scale. As the table below shows, zero hidden cost, worldwide network and shipments seem to be the highly Ranking
Same day uplift 4
No hidden cost6
No custom delay7
satisfactory variables with the highest means among all 9 variables. DHL’s performance in
transit time, same day uplift and zero custom delay seems to be moderating satisfying to its customer. On the other hand, customers are highly dissatisfied with price and pickup time and doesnâ€™t thing highly of DHLâ€™s customer care service. However, most of the customers seem dissatisfied with the overall services as most of the mean values for the index of satisfaction regarding the variables are below 3 or close to 3, which is an indicator of feeling indifferent about the service according to the questionnaire design. Very Unsatisfie d
Very Satisfie d
No custom delay
Same day uplift
No hidden cost
Besides the specific factors of satisfaction, customers were also asked to rate their overall satisfaction regarding the service of DHL. Statistics from this question verifies the findings from the above mentioned data as well. As is the case with the findings from the previous question, mean of overall satisfaction level is well-below 3 which is approximately 2.35. This helps to conclude that customers of DHL Express BD are not happy with the overall services that DHL has been proving. Later, in this research findings from both set of data have been analyzed in regression analysis method. Overall Satisfaction Of DHL customers in BD Frequenc y Percent
Valid Very Unsatisfied
Statistics Overall Satisfaction N
18 16 14 12
6 Very Unsatisfied 4 unsatisfied 2 0
Very satisfied Very unsatisfied
Figure: Overall satisfaction level of DHL BD customers
OBJECTIVE III: Customer Satisfaction index The major objective behind developing the Commuter Satisfaction Index (CSI), was to provide a viable standard, or a â€˜yardstickâ€™ against which the performance of DHL BD in the context of customer satisfaction can be measured periodically. In devising the CSI, inputs were taken in two parts. Primarily, the mean satisfaction was calculated based on questions 4 of the questionnaire (Appendix A). These scores were then weighted according to the rankings provided by the respondents in questions 2. The relative weights were extracted
from a possible by converting into percentage. The total possible score from the CSI is 100, and based on current respondents, DHL BD had scored a total of 63.97%, which is a moderately satisfactory level; however it leaves very large room for improvement.
Mean Score (x)
No custom delay
Same day uplift
No hidden cost
Total score (Score/highest possible)*100
Section IV: Recommendations Based on the analysis of the report findings the following recommendations are suggested:
I. Revised Price structure: Customers of DHL Express Bangladesh are highly dissatisfied with the price that DHL offers. In fact, this is the single biggest reason for losing customers to the competitors. All the customers complain that price of DHLâ€™s service is excessively higher that the competition and as such a significant number of new and smaller business choose other logistics express companies who can offer them lower prices. Sometimes even after acquiring DHLâ€™s service for first, clients switch to another company who offers lower rates.
Thus in order to retain the existing customers and gain new ones, particularly the new and smaller business, DHL Express BD must undergo a through revision of its pricing structure. It must take into consideration the perceived price of the customers and develop a better and competitive pricing strategy. In particular, it needs to revise its price/weight chart. Price/weight chart shows how much price is charged for certain amounts. DHL’s price/weight chart doesn’t show a through breakdown of price which leads to higher charges for the customers. For example, Fedex’s price/weight chart show price breakdown for every 0.25kg. Thus, DHL must revise its price/weight chart to offer more competitive prices.
II. Implement more cost-saving techniques: DHL must come up with innovative cost saving techniques. For examples, if DHL receives 50 documents delivery order, it will send these 50 orders in 50 different packages, which costs more processing, packaging and freight space. However, Aramex uses an effective method to combining 50 documents in a single package and deliver it as single order, thus effectively reducing cost.
IV. Improve Pickup Time: This is yet another major complaint lodged by the customers of DHL Express BD. Customers complain that the Delivery/pickup vans of DHL comes much later after the order is place, compared to pickup service of other logistics express companies. Thus DHL Express Bangladesh should invest more resources in it operations department to deploy more delivery vans and manpower to meet up with the expectations of the customers. Alternatively, DHL Express Bangladesh may follow the innovative methods of delivery used by its own Japanese Branch. In Japan, DHL uses special secured motorbikes, besides regular vans, to receive and deliver shipments. Since motorbikes are more agile and versatile, it can bypass congestion and reach some area faster that normal deliver vans. This method is very successful in Japan and DHL should consider implementing such methods in Bangladesh to improve pick-up time. Notes:
1. Transit time: It refers to time taken to deliver a shipment from place A to place B. 2. Pickup time: It refers to the time taken to pick up a shipment from customer’s place after the order is placed. 3. Shipment tracking: It refers to the facility to track the current position of the shipment via Global Position System and associated softwares. 4. No Custom Delay: It refers to the time taken to get clearance for a shipment through the custom office at the ports. 5. Same Day uplift: It refers to the ability of logistics express company to sent the shipment up in the freight on the very day the order is placed 6. Worldwide network: The capacity and infrastructural support of a company to deliver to all countries of the world.
7. No hidden cost: All the cost are mentioned and shown before the sign of contract. No extra costs are added later. APPENDIX Aâ€”Calculation of Importance of critical factors
Not required Not Important Indifferent Fairly Important Very Important 1 2 3 4 5 Transit Time 0 0 0 0 35 Price 0 0 0 21 14 No hidden Cost 0 5 15 11 4 Worldwide network 0 6 14 11 4 Shipment Tracking 0 0 0 27 8 Customer Care 0 3 5 15 12 Same day uplift 2 3 11 12 8 No custom delay 0 0 22 7 6 Pickup time 0 0 0 19 16
Mean 35 35 35 35 35 35 36 35 35
175 154 74 76 148 126 96 58 156
5 4.4 2.1143 2.1714 4.2286 3.6 2.6667 1.6571 4.4571
APPENDIX Bâ€”Calculation of satisfaction Level
Very unsatisfied Unsatisfied Indifferent Fairly satisfied Very satisfied 1 2 3 4 5 Transit Time 0 0 5 24 6 Price 19 8 5 3 0 No hidden Cost 0 0 0 18 17 Worldwide network 0 0 0 12 23 Shipment Tracking 0 0 0 13 22 Customer Care 3 5 6 11 10 Same day uplift 3 3 5 16 8 No custom delay 8 15 7 3 2 Pickup time 16 9 5 3 2
Total 35 35 35 35 35 35 35 35 35
Mean 126 47 157 163 162 107 113 60 56
3.6 1.342857 4.485714 4.657143 4.628571 3.057143 3.228571 1.714286 1.6
Reference: Chang,Richard Y Kelly, 1994, Satisfying internal Customer First, London, Richard Chang Associates
Griffins, Jill 1997, Customer loyalty New York, Jossey Bass
Kotler, Philip. 2000, marketing management, New Jersey, Prentice Hall