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Examining A Business Failure: Dhl Essay

1087 words - 4 pages

AbstractDHL, a parcel delivery service, is popular in the global market for being a leader in international express and air freight. The company also is the world's number 1 in ocean freight and contract logistics. In 2003, DHL acquired Airborne express, in an attempt to capture a portion of the United States (US) market. Soon after in 2008 the company announced the suspension of its US operations and layoffs totaling 9,500 workers. Management and leadership issues can be attributed to the failure of this venture. The following will identify the management and leadership failures which led to the DHL failure, as well as how these failures could have been predicted. In addition, the following will also show how proper organizational behavior of management and leadership could have impacted the structure of DHL in a positive manner (Ewing 2008).DHL, controlled since 2003 by the privatized German postal service known as Deutsche Post World Net had a simple objective. The objective was to become a viable alternative in the US to industry leaders, Federal Express (Fed Ex) and United Parcel Service (UPS). Combined UPS and Fed Ex enjoy a total of 78% of the US market. DHL has had success overseas, controlling 40% of the European market and 40% of the Asian market. In an effort to build its presence in the US the corporation expanded its trucking routes, created air hubs, and developed a $150 million advertising campaign. DHL focused on aspects of the freight business in which the company felt were overlooked. The company focused on improving customer service while molding employees into more of a customer-friendly workforce (Ewing 2008).DHL FailsIn the five years since DHL purchased Airborne it has lost an estimated $10 billion. The company set modest goals hoping to capture 10-12% of the total US market. In its attempt to challenge FedEx and UPS fell short and it is reported that DHL only had 7% of the total US market. Despite its dominance worldwide, DHL was unable to put up much of a fight among the US market. In 2008 the company made the decision to withdraw from the US market, estimating a $1 billion loss for the year. Overall the organization expected a $4 billion loss when you factor in severance packages and corporate restructuring (Ewing 2008).Leadership FailureEstablishing DirectionDHL did attempt to establish the direction of the company in unfamiliar territory. The organization did develop a vision of the future and did establish strategies for producing the necessary changes in an effort to achieve this vision. DHL recognized the potential for growth and intended to capture a modest 10-12% of the market. DHL planned on expanding the service area and providing a more customer service based approach to the freight industry. Despite the changes it appears that DHL did not properly research the US market and mistakenly felt that because they were successful in the European market that success would come naturally in the US market (Ewing...

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