To minimize initial costs, they should expand to Mexico, Central and South America first, and take advantage of emerging markets that would benefit from a service like FedEx Ground. The initial budget allocation in this phase should be towards an expansion to Brazil. Brazil is a country with 200 million inhabitants and the world’s 5th largest in land size, with only one parcel shipping system – the federal post office. The fact that the country only uses one entity to ship all letters and parcels throughout the country, make it very ineffective for Brazilians to ship parcels to each other.
The implementation of FedEx Ground, covering all of the country would give a tremendous advantage since they would only have one local competitor. The company will then continue to expand within South America by rolling out their service to adjacent countries, enabling neighbouring countries to send parcels to each other using SmartPost. Phase 2: The next step is to expand to Europe. The great quality roads and railroads connecting the European countries give FedEx Ground the ability to deliver cross-country parcels quickly and effectively.
The competition in Europe is fiercer with a few smaller competitors delivering parcels from one European country to the other. FedEx Ground will implement a muscle-flexing strategy to enter this market in order to steal market share away from its rivals. It is recommended that they have two main distribution centres: One for Western Europe and one for Eastern Europe. Phase 3: The final step of the implementation plan is to expand to China.
With many businesses moving to China and the country’s non-stop development, a service that can cover their territorial extension and deliver parcels in a low-cost, timely manner will have a great chance of success in that country. FedEx Ground’s expansion to China will be the first half of a full-Asia expansion that will cover other developing Asian nations as well. Since China is a 1 billion inhabitants country, the business implementation in that country must be well planned and targeting the main areas first, such as Hong Kong and Beijing.
The distribution facility placement in China should follow the American model, since they have almost the same land size. Next Steps: After FedEx Ground has successfully implemented the 3 expansion phases, they should focus on expand their business to cover other developing countries in the Asian continent, especially India and the UAE. The company will continue to revise their strategies twice a year and identify new opportunities for expansion into countries where the demand for a local low-cost parcel shipping company exists.