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Firms' Desire to Acquire and Sustain Competitive Advantage Essay Example

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Firms' Desire to Acquire and Sustain Competitive Advantage

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Firms' Desire to Acquire and Sustain Competitive Advantage. The sales revenues of Fedex showed an upward trend in 2008 as compared to 2007, the reason for this was the rapid pace of globalization and global trade. As the world trade increased, the freight delivery and transportation worldwide increased, as a result, the performance of FedEx increased as customers started taking their services to deliver their goods to other countries. The increase in FedEx's revenues in 2008 was also due to the growth in average daily volume in Asia, particularly China and India while at the same time, outbound shipments from USA and Europe also showed an upward trend (Bonacich, E. 2009). However, the skyrocketing increases in oil prices in 2008, from $92 per barrel in 2007 to $147 a barrel in July 2008 (Melick, WR.

2009), resulted in high operating costs for the company which resulted in total gross profit less than expected. Nevertheless, the company still managed to make the high return in the year 2008.
            2009 showed a completely different picture. The world was going into recession due to the financial crisis that hit the world in late 2008. The recession resulted in a sharp decline in global trade network. As a result, the financial performance of FedEx also declined, both in domestic and international markets. Although the decline in oil prices in 2009 to less than $40 a barrel (Melick, WR. 2009), helped the company control its operating costs but still, due to the decrease in demand for logistics services due to decline in global trade, FedEx suffered from decreasing revenues and a deteriorating return on equity and return on assets. Although the company managed to remain profitable, the net income of the company fell by 91%. According to the concept of supply and demand, any change in the external factors other than the price and quantity shifts the demand and supply curve. In the case of FedEx, the demand for FedEx services was adversely affected due to the financial crisis.  . Firms' Desire to Acquire and Sustain Competitive Advantage.

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