INTERNSHIP STUDY IN LOGISTICS SECTOR

A Draft
Submitted in the partial fulfilment of the requirements for the award of
the Degree in Master of Business Administration of the
University of Kerala

Submitted By
AKHIL A NARAYANA
59520810008

Under the Guidance of

Dr. JAYARAM NAYAR
Director-TKMIM

T.K.M INSTITUTE OF MANAGEMENT

KARUVELIL POST, KOLLAM - 691585
2021 NOVEMBER
 DECLARATION

I declare that the internship Draft “LOGISTICS SECTOR” submitted by me for the award of
the degree of Master of Business Administration of the University of Kerala is my own work.
The report has not been submitted for the award of any other degree of this University or any
other University for the award of any degree, diploma, associateship, fellowship. I also declare
that this report has been checked for plagiarism and that it maintains the plagiarism standards
prescribed by the University of Kerala.

Place: Kollam AKHIL A NARAYANA

Date: 09-09-2021
 ACKNOWLEDGEMENT

With a grateful heart I first thank God for his invisible guidance and grace for the successful
completion of the project.

I would like to express my heartfelt gratitude to the Director, TKM Institute of Management,
Kollam for permitting me to undergo this summer project study at DHL, FLIPKART, XPO.

I am extremely thankful to Dr. JAYARAM NAYAR, Director-TKMIM who gave me guidance

and suggestion for the preparation of this summer project study report.

I owe special gratitude to extend my thanks to all faculty members of TKM Institute of
Management, Kollam, for their help and encouragement.

I take this opportunity to acknowledge all the help rendered to me by Librarian and also to all
staff of TIM Library for helping me in successfully completing the research work.

My special thanks to my parents and my close friends and all my well-wishers.

AKHIL A NARAYANA
 TABLE OF CONTENTS

Contents Title Page Number

Chapter 1
1.1 Introduction to Study 1-2
1.2 Objective of Study 2
1.3 Scope of Study 2
1.4 Limitation of the Study 2-3
Introduction 1.5 Methodology 3
1.6 Analysis Tools 3
1.7 Limitation of the Study 3

2.1 Introduction 4
2.2 Logistics Activities and Fields
Chapter 2
• 2.2.1 Procurement logistics
• 2.2.2 Distribution logistics
• 2.2.3 After-sales logistics
• 2.2.4 Disposal logistics
• 2.2.5 Reverse logistics
• 2.2.6 Green logistics
• 2.2.7 Global logistics
• 2.2.8 Domestics logistics
• 2.2.9 Concierge service
• 2.2.10 Reliability, availability,
and maintainability
Industry • 2.2.11 Asset control logistics
Profile- • 2.2.12 Point-of-sale material
Logistics logistics
Sector • 2.2.13 Emergency logistics
• 2.2.14 Production logistics
• 2.2.15 Construction logistics
• 2.2.16 Capital project logistics
• 2.2.17 Digital logistics
• 2.2.18 Humanitarian logistics 4-8
2.3 Types of logistics
 • 2.3.1 Inbound logistics
• 2.3.2 Outbound logistics
• 2.3.3 Reverse logistics 8-11

2.4 Different Kinds of Logistics strategies

• 2.4.1 Green logistics

• 2.4.2 Integrated logistics
• 2.4.3 Omnichannel logistics
• 2.4.4 Logistics 4.0 11-12

2.5 LOGISTICS – GLOBAL VIEW 12-13

2.6 LOGISTICS – INDI PERSPECTIVE 13-15

3.1 Flipkart Company Overview 16

3.2 Flipkart History 16-19

Chapter 3
3.3 Flipkart Acquisitions & Partnerships
• 3.3.1Acquisitions
• 3.3.2Partnerships 19-20

3.4 Flipkart Mobile retailing 20

Company
Profile – 3.5 Acquisition by Walmart 21
Flipkart, 3.6 Awards and Recognition 21-22
DHL, XPO
3.7 Flipkart Video 22

3.8 Flipkart Video Originals 22

4.1 DHL Company Overview 23-24

4.2 DHL History

• 4.2.1 Origins
• 4.2.2 Name Origins
• 4.2.3 Domestic expansion
• 4.2.4 Deutsche Post purchase 24-25

4.3 After 2001 25-27

4.4 Career development 27

4.5 A professional HR team 27-28

 4.6 The recruitment and hiring procedures 28-29

4.7 Sponsorship 29

4.8 Overview Express 29

4.9 Customers 30

5.1 XPO Company Overview 31

5.2 Planned Spin-off of the Logistics 31

Segment

5.3 Transportation Segment Overview 32

5.4 Logistics Segment Overview 32-34

5.5 Operating Philosophy 34-35

5.6 XPO Strategy 35

5.7 Competition 35-36
5.8 Human Capital Management 36
5.9 Employee Profile

5.10 Health and Safety 36-37

4.1 SWOT Analysis 38-40

Chapter 4
4.2 The BCG Matrix 40-41

4.3 SWOT Analysis of Flipkart

4.3.1 Strength
4.3.2 Weakness
Environmental 4.3.3 Opportunities
4.3.4 Threats 41-43
Analysis
4.4 BCG Matrix of Flipkart

• 4.4.1 Stars
• 4.4.2 Cash Cow
• 4.4.3 Question Mark
• 4.4.4 Dogs 43-46

4.5 SWOT Analysis of DHL

 • 4.5.1 Strength
• 4.5.2 Weakness
• 4.5.3 Opportunities
• 4.5.4 Threats 46-48

4.6 BCG Matrix of DHL

• 4.6.1 Stars
• 4.6.2 Cash Cow
• 4.6.3 Question Mark 48-51
• 4.6.4 Dogs

4.7 SWOT Analysis of XPO

• 4.7.1 Strength
• 4.7.2 Weakness
• 4.7.3 Opportunities 51-55
• 4.7.4 Threats

4.8 BCG Matrix of XPO

• 4.8.1 Stars
• 4.8.2 Cash Cow 56-59
• 4.8.3 Question Mark
• 4.8.4 Dogs

4.9 Porter’s Five Forces 60-62

• 4.9.1
• 4.9.2
• 4.9.3 62-65
• 49.4

Chapter 5 5.1 Flipkart Future Prospects and

Conclusion 66-67
Learning, 5.2 DHL Future Prospects and
Future Conclusion 67
Prospects & 5.3 XPO Future Prospect and Conclusion 67-68
Conclusion 5.4 Learning Experience 68
5.5 Conclusion 69

Bibliography
 CHAPTER 1
INTRODUCTION

1.1 INTRODUCTION TO STUDY

An internship is a professional study as well as an experience that offers meaningful and

practical work related to a field of study or a career interest. This offers me, as a student, the
opportunity for career exploration and development, and to learn new matters about a particular
sector or an industry. An internship usually provides practical work experience to the candidate
but due to the special incidence of the pandemic, Covid 19, secondary data are used instead of
the practical work experience.

This internship was begun with a quest for new experiences as well as new knowledge. This
internship was considered to be a stepping stone for my career development.

This internship is about the logistics sector. Information regarding the industry is obtained
online.

The main aim of this internship is to understand and study the logistics sector. From among
several, companies in this sector, I selected DHL, FLIPKART, XPO.

I gained a lot of information regarding those companies directly and in the process about the
logistics sector. I selected this sector because

(a) logistics sector is undergoing substantial and structural changes in the pandemic and post-
pandemic times.

(b) Supply chains are crucial to growth.

(c) Supply disruptions hurt the economy and so are crucial.

(d) Logistics is crucial to producers and services industry as they need then in inbound logistics
and outbound logistics.

(e) Logistics is critical to economic flow operations, offering a source for consumers to buy
goods and services from different types of vendors.

Logistics and supply chain management covers activities involved in getting a product to the
producer and eventually consumer. These activities include:
• Customer service management

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 • Account management
• Inventory planning
• Inventory control
• Manufacturing
• Materials handling operations
• Purchasing
• Sourcing
• Traffic or transportation management
• Warehouse operations
• Warehouse management

1.2 OBJECTIVES OF STUDY

The key objectives of the internship are

(i) to study and then to provide relevant up to date supplementary and complementary
knowledge about the logistics sector

(ii) to develop the necessary knowledge prior to stepping into the managerial career after post-
graduation.

(iii) To look into the historic origins of the selected companies.

(iv) To undertake a SWOT analysis the strength, weakness and opportunities of the 3
companies, DHL, Flipkart and XPO.

(v) To draw conclusions and make recommendation on the basis of the study conducted.

1.3 SCOPE OF STUDY

It provides an opportunity to know about a particular sector of Industry. It helps to gain detailed
information regarding the companies that are selected for the study. This study helps to gain
various information regarding the company such as DHL, FLIPKART, XPO. This study may
be helpful for the researchers of the logistics sector because most of the information is collected
for this study.

1.4 LIMITATIONS OF THE STUDY

• Personal bias may have occurred.

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 • Company may not publish all the details; they keep some information as confidential.

• Time constraints.

• The study confined to one particular sector of Industry.

• Usage of secondary data only no direct visit experience due to COVID 19.

1.5 METHODOLOGY

I manly used secondary source of data for the compilation of the report.

Source:

• Internet.

• Newspapers and Journals.

• Annual Reports.

• Financial Report.

1.6 ANALYSIS TOOLS

• SWOT

• BCG Matrix

• Porters Five Force Model

1.7 LIMITATIONS OF THE STUDY

➢ Due to time limitation many of the aspects could not be discussed in the present
report.

➢ To understand the organization and study its various functions and ups and downs a
period of 30 days is not enough.

➢ In many cases, up to date information was not published.

➢ non-availability of reference books is another limitation.

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 Chapter 2

INDUSTRY PROFILE – LOGISTICS SECTOR

2.1 INTRODUCTION

Logistics refers to the overall process of managing how resources are acquired, stored, and
transported to their final destination. Logistics management involves identifying prospective
distributors and suppliers and determining their effectiveness and accessibility. Logistics
managers are referred to as logisticians.

"Logistics" was initially a military-based term used in reference to how military personnel
obtained, stored, and moved equipment and supplies. The term is now used widely in the
business sector, particularly by companies in the manufacturing sectors, to refer to how
resources are handled and moved along the supply chain.

In military science, logistics is concerned with maintaining army supply lines while disrupting
those of the enemy, since an armed force without resources and transportation is defence less.
Military logistics was already practiced in the ancient world and as the modern military has a
significant need for logistics solutions, advanced implementations have been developed. In
military logistics, logistics officers manage how and when to move resources to the places they
are needed.

Logistics management is the part of supply chain management and supply chain
engineering that plans, implements, and controls the efficient, effective forward, and reverse
flow and storage of goods, services, and related information between the point of origin
and point of consumption to meet customer's requirements. The complexity of logistics can be
modelled, analysed, visualized, and optimized by dedicated simulation software. The
minimization of the use of resources is a common motivation in all logistics fields. A
professional working in the field of logistics management is called a logistician.

2.2 Logistics Activities and Fields

Inbound logistics is one of the primary processes of logistics concentrating on purchasing and
arranging the inbound movement of materials, parts, or unfinished inventory from suppliers to
manufacturing or assembly plants, warehouses, or retail stores.

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Outbound logistics is the process related to the storage and movement of the final product and
the related information flows from the end of the production line to the end-user.

Given the services performed by logisticians, the main fields of logistics can be broken down
as follows:

• Procurement logistics
• Distribution logistics
• After-sales logistics
• Disposal logistics
• Reverse logistics
• Green logistics
• Global logistics
• Domestics logistics
• Concierge service
• Reliability, availability, and maintainability
• Asset control logistics
• Point-of-sale material logistics
• Emergency logistics
• Production logistics
• Construction logistics
• Capital project logistics
• Digital logistics
• Humanitarian logistics

2.2.1 Procurement logistics

Procurement logistics consists of activities such as market research, requirements planning,

make-or-buy decisions, supplier management, ordering, and order controlling. The targets in
procurement logistics might be contradictory: maximizing efficiency by concentrating on core
competences, outsourcing while maintaining the autonomy of the company, or minimizing
procurement costs while maximizing security within the supply process.

Procurement management is the umbrella that encompasses all of the processes involved in
managing the incoming materials needed for manufacturing. Some of these processes include

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obtaining bids from, and negotiating and creating contracts with, third-party logistics providers.
It also includes hiring employees, including drivers, marketing and business professionals.

2.2.2 Distribution logistics

Distribution logistics has, as main tasks, the delivery of the finished products to the customer.
It consists of order processing, warehousing, and transportation. Distribution logistics is
necessary because the time, place, and quantity of production differ with the time, place, and
quantity of consumption.

2.2.3 After-Sales logistics

They integrate their systems with the schedules and forecasts of its customers. After-sales
logistics, sometimes called after-sales service, is any service provided after a customer has
purchased a product. After-sales support may be provided by a retailer, manufacturer, or a
third-party customer service or training provider.

2.2.4 Disposal logistics

Disposal logistics has as its main function to reduce logistics cost(s) and enhance service(s)
related to the disposal of waste produced during the operation of a business.

2.2.5 Reverse logistics

Reverse logistics denotes all those operations related to the reuse of products and materials.
The reverse logistics process includes the management and the sale of surpluses, as well as
products being returned to vendors from buyers. Reverse logistics stands for all operations
related to the reuse of products and materials.

It is "the process of planning, implementing, and controlling the efficient, cost-effective flow
of raw materials, in-process inventory, finished goods and related information from the point
of consumption to the point of origin for the purpose of recapturing value or proper disposal.

More precisely, reverse logistics is the process of moving goods from their typical final
destination for the purpose of capturing value, or proper disposal. The opposite of reverse
logistics is forward logistics."

2.2.6 Green Logistics

Green Logistics describes all attempts to measure and minimize the ecological impact of
logistics activities. This includes all activities of the forward and reverse flows. This can be

6
achieved through intermodal freight transport, path optimization, vehicle saturation and city
logistics.

2.2.7 Global Logistics

Global Logistics is technically the process of managing the 'flow' of goods through what is
called a supply chain, from its place of production, to other parts of the world. This often
requires an intermodal transport system, transport via ocean, air, rail, and truck. The
effectiveness of global logistics is measured in the Logistics Performance Index.

2.2.8 Domestic logistics

Domestic logistics is the allocation of goods within a country, while international logistics is
the distribution of goods beyond the country boundaries. Managing logistics domestically is
very diverse from managing logistics internationally because of the much narrower geographic
scope in a domestic operation.

2.2.10 Reliability, Availability, and Maintainability Logistics

RAM Logistics (see also Logistic engineering) combines both business logistics and military
logistics since it is concerned with highly complicated technological systems for
which Reliability, Availability and Maintainability are essential, ex: weapon systems and
military supercomputers.

2.2.11 Asset Control Logistics

Companies in the retail channels, both organized retailers and suppliers, often deploy assets
required for the display, preservation, promotion of their products. Some examples are
refrigerators, stands, display monitors, seasonal equipment, poster stands & frames.

2.2.12 Point-of-Sale Material Logistics

POS logistics goes well beyond the standard storing and transport services. For example, we
carry out the logistics processes for brand article manufacturers right through to the point-of-
sale, including the desired assembly and service provision.

The professionally trained and flexible staff can provide services of the highest quality on-site
and to the absolute satisfaction of our customers.

2.2.13 Emergency Logistics

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Emergency logistics refers to the logistics activities caused by emergencies, including
emergency logistics demand generated by emergencies and emergency logistics supply
activities to meet these logistics needs, pursuing the purpose of maximizing time efficiency
and minimizing disaster losses.

2.2.14 Production Logistics

Production logistics is part of both logistics and production. As a business term, it describes
the planning, management and control of the internal storage, handling and transport processes
of purchased parts, auxiliary materials, raw materials, spare parts, operating materials and other
products that are required for production within a company.

2.2.17 Digital logistics

Digital logistics, as it relates to the supply chain, takes traditional data collection, which is often
manual and prone to human error or delay, and digitises it to improve and expedite your
logistics processes, strategies and systems.

2.2.18 Humanitarian logistics

Humanitarian logistics refers to the processes and system involving the mobilization of people,
resources, and expertise to help vulnerable communities affected by natural disasters and
complex emergencies, reducing the loss of lives and relieving human suffering.

2.3 Types of logistics

Logistics has three types; inbound, outbound, and reverse logistics.

2.3.1 Inbound logistics

Inbound logistics is concerned with activities related to the incoming flow of resources needed
to make a product or a service. Inbound logistics processes may include managing suppliers,
costs, inventory, and transportation to ensure the right components or subassemblies arrive in
your factory on time. Inbound logistics is generally complex because hundreds of parts are
coming in to manufacture one final product, therefore, it tends to be more intricate than
outbound flow.

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Procurement is the major element in inbound logistics as it deals with sourcing and transporting
raw materials from the supplier to buyer’s factory.

The size and nature of procurement affects inbound logistics in many ways. For example, a
company who purchase simple items such as office supplies does not require much resources
to manage its inbound logistics. While a firm who buys machineries or perishable goods from
overseas would have a complex inbound logistics as products need to be handled, stored, and
transported according to required handling, packaging, or temperature.

To reduce risks and improve your inbound logistics, it is best to;

1. Conduct a supply chain mapping

❖ Identify and map out your material sources. Where did they come from?

❖ Use a spreadsheet or software to model your map for complete full supply chain
visibility

2. Find alternative sources

❖ Research potential suppliers from other locations. Leverage the data gathered in the
supply chain mapping.
❖ Match your requirements with the potential suppliers to ensure the vendor meets your
supply chain needs.

3. Determine challenges and opportunities

❖ Determine potential risks each supplier and supplier’s suppliers (tier 1, 2, 3) are exposed
to
❖ Identify constraints – long lead time, regulatory, supplier responsiveness, capability,
etc.
❖ Develop plans to address constraints (e.g., find alternatives to reduce lead time and cost)
❖ Discover potential suppliers you think can support your requirements
Engage direct or indirect suppliers for improvement efforts

4. Strategic distribution location for inbound shipments

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 ❖ Locate distribution centre close to shipping ports
❖ Locate distribution centre close to manufacturing sites

5. Consolidate shipments

❖ Integrate operations requirements/production schedule with distribution center to avoid

frequent or expedited delivery
❖ Use FCL wherever possible. Combine items in a single shipment

6. Consider working with third-party logistics (3PL) providers

❖ 3PL companies are expert in the local market, identifying capacity constraints, and
regulations
❖ Buyer can focus on core business competencies
❖ 3PL reduces costs in inventory, transportation, and warehousing

2.3.2 Outbound logistics

Outbound logistics refers to activities in delivering the right product at the right time to
customers at a minimum cost. Customer satisfaction is the primary objective of outbound
logistics, that is why many organizations especially e-commerce companies are competing for
last-mile or same-day delivery to their customers. Companies bring out their value proposition
to their customers and back it up with their outbound logistics capability.

Distribution system plays a critical role in outbound logistics. The distribution channels and
transportation system should support the value the company is trying to provide to customers
(e.g., quick response to the customer, customer service level, etc.). The prevalence of e-
commerce in the retail industry intensifies the need for an optimized outbound logistics flow.
Retail e-commerce sector operates heavily in outbound logistics than any other industries. Look
at Amazon, Walmart, and Lazada, they take bold steps innovating technologies and building
facilities to accelerate their logistics performance.

2.3.3 Reverse logistics

Reverse logistics is the process of moving products from end-user back to the origin to recover
value or for proper disposal. The value is recaptured from products recovered from customers

10
through rework, refurbishment, reuse, scrap recycling, or government incentives for recyclable
products.

A refurbished iPhone is a good example of reverse logistics. If an iPhone sold to the customer
is found defective within the warranty period, the customer returns it to the carrier network and
then send it back to the Apple factory for refurbishing. Apple inspects the iPhone to determine
the issue and replace it with new parts or software. A new iPhone is then labelled with a new
serial or model number for reselling. A refurbished iPhone is re-sold to the customer, thus,
creating value to Apple.

Product returns come in different forms including the commercial return, recall, refurbishment,
or product’s end-of-life. Companies must have systems and infrastructure in handling returns
to minimize recovery costs, increase recaptured value, and increase visibility.

In e-commerce retail industry, the rising return rates make retailers suffer from costs associated
with returns because customers get refunded for returned products (especially seasonal goods)
that cannot be resold at the original price due to wear and tear, obsolescence, or damage.
Implementing a return policy can mitigate reverse logistics costs as it controls and limits
customers from returning goods.

2.4 Different Kinds of Logistics strategies

The four types of logistics phases are often confused with the various practices each company
can adopt to employ a comprehensive business approach. In this sense, we can highlight the
following logistics strategies:

2.4.1 Green logistics. Also called environmental or sustainable logistics, green

logistics ensures that sustainable activities are carried out and that the environmental footprint
is reduced.

2.4.2 Integrated logistics. In integrated logistics, all the business’s activities and
departments are coordinated for the purpose of delivering orders with the utmost effectiveness.

2.4.3 Omnichannel logistics. This encompasses the practices adopted by a company to

tailor its installation to meet new digital consumer needs (the fact that a product can be

11
purchased online and returned in-store, for example). In omnichannel logistics, warehouses
manage large volumes of daily orders containing few units and work with very tight time
frames.

2.4.4 Logistics 4.0. This concerns the commitment to automate and digitize all logistics
operations. The Logistics 4.0 concept not only includes automated systems, but also fosters the
automated management of warehouses through interconnectivity, information digitization, and
the use of cloud-based IT apps.

Why Logistics is Important...?

Although many small businesses focus on the design and production of their products and
services to best meet customer needs, if those products cannot reach customers, the business
will fail. That’s the major role that logistics plays. But logistics also impacts other aspects of
the business, too.

The more efficiently raw materials can be purchased, transported, and stored until used, the
more profitable the business can be. Coordinating resources to allow for timely delivery and
use of materials can make or break a company.

And on the customer side, if products cannot be produced and shipped in a timely manner,
customer satisfaction can decline, also negatively impacting a company’s profitability and
long-term viability.

2.5 LOGISTICS – GLOBAL VIEW

Global Logistics Industry includes all activities of the supply chain such as transportation,
customer service, inventory management, flow of information and order processing. Other
activities of the supply chain are warehousing, material handling, purchasing, packaging,
information dissemination and maintenance among others. The Logistics market in terms
of revenue was valued at US$ 8185.46 billion in 2015 and is expected to reach US$15522.02
billion by 2023, growing at a CAGR of 7.5% from 2015 to 2024.The market in terms of volume
was valued at 54.69 billion tons in 2015 and is expected to reach 92.10 billion tons by 2024
growing at the CAGR of 6% from 2016 to 2024.1

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Transparency Market Research "Logistics Market - Global Industry Analysis, Size, Share,
Growth, Trends and Forecast, 2016 – 2024’

The Global Logistics Industry in 2017 is equally subject to global geo political machinations
but that apart countless disruptions threaten to tip the balance of global trade as we knew it.
These could be stated as follows: -
• Robotics, automation, 3 D /4 D printing will offset low-cost manufacturing advantages.
• Rampant protectionism favours localisation and also sustainability.
• Digitisation and demand driven logistics are pushing supply chains closer to demand.
• Middle class growth in developing markets is altering supply demand dynamics.
• Global E Commerce will challenge traditional borders and boundaries.

Thus, there are countless locations with compelling value propositions. Whether it is pureplay
distribution facility, manufacturing centre of excellence, transhipment port, regional E
Commerce hub or new market to sell in/ source from, retailers and manufacturers have no
shortage of options. On top of that if we consider global volatility and hypersensitivity to
supply chain exceptions then what emerges is that supply chain modelling, simulation and
optimisation is fast becoming core competencies.

2.6 LOGISTICS – INDIAN PERSPECTIVE

The Indian logistics sector is valued at USD$ 150 billion, contributing 14.4 % of country’s
GDP. With the easing of FDI norms, proposed implementation of GST, increasing
globalization, growth of ecommerce, positive changes in the regulatory policies, and
government initiatives such as “Sagarmala”, “Make in India”, the sector is expected to touch
$200 billion by 2020. In the World Bank’s Logistics performance ranking 2016.

Out of this USD 150 billion logistics cost, almost 99% is accounted for by the unorganized
sector (such as owners of less than 5 trucks, affiliated to a broker or a transport company, small
warehouse operators, customs brokers, freight forwarders, etc.), and slightly more than 1%,
i.e., approximately USD 1.5 billion, is contributed by the organized sector.

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However, the industry is growing at a fast pace and if India can bring down its logistics cost
from 14% to 9% of the GDP (level in the US), savings to the tune of USD 50 billion will be
realized at the current GDP level, making Indian goods more competitive in the global market.
Moreover, growth in the logistics sector would imply improve service delivery and customer
satisfaction leading to growth of export of Indian goods and potential for creation of job
opportunities.

LOGISTICS INDUSTRY INDIA - GROWTH DRIVERS

Rapid industrial growth: Rapid growth in industries such as automobiles, pharmaceuticals, fast-
moving consumer goods (FMCG) and retail demand for movement of consumer and capital
goods across the country, from entry ports to manufacturing or distribution locations or from
manufacturers and distributors to consumers and exit ports. The volume of freight traffic is
positively related to the GDP of the country.

Globalisation
The initiative to construct a trilateral highway connecting India, Myanmar and Thailand
represents an important step in the establishment of connectivity between India and Southeast
Asian countries.
The Government of India has initiated several policy measures and programmes to attract
investments in developing the logistics infrastructure of the country. Some of the key reforms
undertaken by the Government of India include the following: FDI regulations: The
government allows 100 per cent FDI under the automatic route for all logistics services, except
air cargo and courier services. For air transport services including air cargo services, the limit
was increased from 49 per cent to 74 per cent in 2008. Also, FDI of up to 100 per cent is
permitted for courier services, subject to Foreign Investment Promotion Board (FIPB)
approval.
Greater investments in development of logistics infrastructure. The government has
significantly increased the investment allocated for the development of logistics infrastructure
including ports, airports, national highways, logistics parks, freight stations and corridors.
Private sector partnerships: Several measures have been undertaken by the Government of
India to encourage private sector participation in the logistics industry across all modes.

14
Increasing targeted contributions of private players in the investments set aside for the
development of logistics infrastructure, tax exemptions and duty-free imports. Apart from
speeding up capacity creation, this is also aimed towards incorporating latest technologies and
better management practices.
Streamlining indirect tax structure: The introduction of the Goods and Services Tax (GST) is
expected to significantly bring down the total costs of the logistics industry.

Entry of global players: Several global players view the Indian logistics market favourably and
have announced intentions to increase their capacity of transporting goods from/to Indian
markets. Several large global logistics companies have entered India by the way of mergers
with or acquisitions of Indian logistics companies and joint venture agreements. For example,
FedEx Express Kintetsu World Express, a Japan-based air and ocean freight services provider.

15
 Chapter-3
Company Profile- FLIPKART

Flipkart company logo

3.1 Company Overview

Flipkart is an Indian e-commerce company, headquartered in Bangalore, Karnataka, India, and

incorporated in Singapore as a private limited company. The company initially focused on
online book sales before expanding into other product categories such as consumer electronics,
fashion, home essentials, groceries, and lifestyle products.

The service competes primarily with Amazon's Indian subsidiary and domestic
rival Snapdeal. As of March 2017, Flipkart held a 39.5% market share of India's e-commerce
industry. Flipkart has a dominant position in the apparel segment, bolstered by its acquisition
of Myntra, and was described as being "neck and neck" with Amazon in the sale of electronics
and mobile phones. Flipkart also owns PhonePe, a mobile payments service based on
the Unified Payments Interface.

In August 2018, U.S.-based retail chain Walmart acquired a 77% controlling stake in Flipkart
for US$16 billion, valuing Flipkart at around $20 billion.

3.2 Flipkart History

Flipkart was co-founded by Sachin Bansal and binny Bansal in oct 2007. Both are graduates
from IIT- Delhi and have work experience in Amazon.com. they both were solid and wanted
to open a portal that compared different e-commerce website, but there were hardly any such
sites in India and they decided to give birth to their own e-commerce venture – Flipkart.

16
Thus, was born Flipkart in oct 2007 with an investment of 4lac (co-founders saving). It was
never going to be easy since India has had bad past experience with e-commerce trading. It was
not an easy segment to break into, people were very particular in paying money for something
which they had not seen and received. The trust was missing in the Indian customers.

Flipkart began with selling books, since books are easy to procure, target market which reads
books is in abundance, books provide more margin, are easy to pack and deliver, do not get
damaged in transit and most importantly books are not very expensive, so the amount of money
a customer has to spend to try out ones’ service for one time is very minimal. Flipkart sold only
books for the first two years.

Flipkart started with the consignment model (procurement based on demand) i.e., they had ties
with 2 distributions in Bangalore, whenever a customer ordered a book, they used to personally
procure the book from the dealer, pack the book in their office and then courier the same. In
the initial months the founder’s personal cell numbers used to be the customer support numbers.
So, in the start they tried their best to provide good service, focus on the website- easy to browse
and order and hassle-free, and strove hard to resolve any customer issues. Since there were not
any established players in the market, this allowed them a lot of space to grow, and they did
grow very rapidly.

Flipkart had a revenue of 4 crore in FY 2008-2009, 20 crores in FY 2009-2010, 75 Crore in

FY 2010-2011, and the revenue for FY 2011-2012 which ends on 31-march-2012 is expected
to be 500 crores. This is indeed a massive growth. The company targets revenues of 5000 crore
by 2015.the company started from 2 employees and now has around 4500 employees.

Flipkart started with consignment model as discussed above, since most of the customer issues
like delivery delays etc. result from procurement model, the company started opening its own
warehouses as it started getting more investment. The company opened its first warehouse in
Bangalore and later on opened warehouse in Delhi, Kolkata and Mumbai. Today the company
works with more than 500 suppliers. As on date more than 80% orders of Flipkart are handled
via warehouses which help in quick and efficient service.

A humble beginning from books, Flipkart now has a gamut of products ranging from: cell
phone, laptops, computer, cameras, games, music, audio players, tv’s, healthcare products,
washing machine, etc. still Flipkart drives around 80%. The electronic items have a larger
number of players like Naaptol, Letsnuy, India plaza, Tradus, Infibeam, Yebhi etc. the
electronic market share its distributed among them in different unknown proportions.

17
India has around 13.5 crore internet users today where as the number of homes with cables and
satellite television is 10.5 crore. The expected internet users will reach a figure of 30 crore by
2014 and C&S homes are expected to be 14 crores by 2014. Thus, India has a tremendous
internet growth and with the customers getting accustomed to e-commerce, the future of e-
commerce sector is definitely rosy. An approximated 25 lac people have transacted online this
year, the numbers is all set to increase with time.

Also, to mention most of the Flipkart customers use internet from PC’s/Laptop to order goods.
The use of mobile internet is very less at the moment, but with the advent of smart phones the
use of mobile internet for e-commerce transaction will soar with time. Indian has 8 crore mobile
net users at the moment, the numbers is expected to swell to 22.5 crore.

In the financial year 2008-09, Flipkart had made sales to the tune of 40 million Indian rupees.
This soon increased to 200 million Indian rupees the following year. Flipkart targets to hit the
one billion marks by 2015. Going by their ever-increasing popularity, it does not seem like a
farfetched thought.

Back at the time when Flipkart was launched, any e-commerce company faced two major
difficulties. One was the problem of online payment gateways. Not many people preferred
online payment and gateways were not easy to setup. Flipkart tackled this problem by
introducing cash on delivery and payment by card on delivery in addition to others.

The second problem was the entire supply chain system. Delivering goods on time is one of
the most important factors that determines the success of an ecommerce company. Flipkart
addressed these issues by launching their own supply chain management system to deliver
orders in a timely fashion.

Flipkart also acquired few companies like Myntra.com, Letsbuy.com, etc., to better their
presence in the market. With the entry of Amazon.com in India, the competition between the
companies has seen many takeovers.

Flipkart’s journey from a small book e-retailer to India’s largest e-commerce platform inspires
a generation of start-ups. In a country where stereotypes are common. Flipkart managed to
break the norm and change the ecommerce industry in India for ever, Flipkart’s story proves
that if you have a great idea, and a doer and not a thinker, success is not far off.

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 3.3 Flipkart Acquisitions & Partnerships
3.3.1 Acquisitions

In 2011, Flipkart acquired the digital distribution business Mime360.com and the digital
content library of the Bollywood portal Chakpak. Following this acquisition, Flipkart launched
their DRM-free online music store Flyte in 2012. Because of competition from free streaming
sites, the site was unsuccessful and shut down in June 2013.

With its eyes on India's retail market, Flipkart acquired Let’s buy, an online electronics retailer,
in 2012, and Myntra, an online fashion retailer, for $280 million in May 2014. Myntra
continues to operate alongside Flipkart as a standalone subsidiary focusing on separate market
segments. In April 2015, Flipkart acquired Appiterate, a Delhi-based mobile
marketing automation firm. Flipkart stated that it would use Appiterate's technology to enhance
its mobile services. In December 2015, Flipkart purchased a minority stake in the digital
mapping provider Mapmy India. In 2016, Flipkart acquired the online fashion
retailer Jabong.com from Rocket Internet for $70 million and the UPI mobile payments start-
up PhonePe. In January 2017, Flipkart made a $2 million investment in Tiny Step, a parenting
information start-up. Flipkart invested $35 million in Arvind Fashions Limited's newly formed
subsidiary Arvind Youth Brands for a 27% stake in the company. Arvind Youth Brands owns
Flying Machine.

Flipkart Wholesale recently launched a digital platform for kiranas and MSMEs. In October
2020, Flipkart acquired a 7.8% stake in Aditya Birla Fashion and Retail for $204 million.

3.3.2 Partnerships

In April 2017, eBay announced that it would sell its Indian subsidiary, eBay.in, to Flipkart and
invest $500 million in the company. While eBay suggested that the partnership would
eventually allow Flipkart to access eBay's network of international vendors, these plans never
actually came to fruition. In July 2017, Flipkart made an offer to acquire its main domestic
competitor, Snapdeal, for $700–800 million. It was rejected by Snapdeal, which was seeking
at least $1 billion.

In August 2019, Flipkart entered into a partnership with Authentic Brands to license and
distribute Nautica in India. Flipkart invested $4 million in the customer engagement and
rewards platform Easy Rewards on 19 November 2019.
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3.4 Flipkart Mobile retailing

In February 2014, Flipkart partnered with Motorola Mobility to be the exclusive Indian retailer
of its Moto G smartphone. Motorola also partnered with Flipkart on the Moto E, a phone
targeted primarily towards emerging markets such as India. High demand for the phone
following its midnight launch on 14 May caused the Flipkart website to crash. Flipkart
subsequently held exclusive Indian launches for other smartphones, including the Xiaomi Mi
3 in July 2014 (whose initial release of 10,000 devices sold out in around 5 seconds), the Redmi
1S and Redmi Note in late 2014, and Micromax's Yu Yunique 2 in 2017. Flipkart held a 51%
share of all Indian smartphone shipments in 2017, overtaking Amazon India (33%).

On 6 October 2014, in honour of the company's anniversary and the Diwali season, Flipkart
held a major sale that it promoted as "Big Billion Day". The event generated a surge of traffic,
selling $100 million worth of goods in 10 hours. The event received criticism via social
media over technical issues the site experienced during the event and stock shortages.

In October 2015, Flipkart reprised the Big Billion Day event as a multi-day event exclusive to
the Flipkart app. Flipkart bolstered its supply chain and introduced more fulfilment centres to
meet customer demand. Flipkart achieved a gross merchandise volume of $300 million during
the event, with the largest volumes coming from fashion sales and the largest value coming
from mobiles. In 2017, Flipkart sold 1.3 million phones in 20 hours on 21 September in its Big
Billion Days promotion, doubling the number sold on the first day of the same event in 2016.

In March 2015, Flipkart blocked access to its website on mobile devices and began requiring
that users download the site's mobile app instead. The following month, Myntra went further
and discontinued its website on all platforms, operating exclusively through its app. The "app-
only" model, however, proved to be unsuccessful for Myntra, reducing its sales by 10%, and
its main website was reinstated in February 2016. The experiment with Myntra led to rumors
that Flipkart itself would perform a similar move, but the company did not follow suit. In
November 2015, Flipkart launched a new mobile website branded as "Flipkart Lite" that
provides an experience inspired by Flipkart's app and runs in smartphone web browsers.

3.5 Acquisition by Walmart

On 4 May 2018, it was reported that the US retail chain Walmart had won a bidding war with
Amazon to acquire a majority stake in Flipkart for $15 billion. On 9 May 2018, Walmart

20
officially announced its intent to acquire a 77% controlling stake in Flipkart for
$16 billion. Following the purchase, Flipkart co-founder Sachin Bansal left the company. The
remaining management team now reports to Marc Lore, CEO of Walmart eCommerce
US. Walmart president Doug McMillon cited the "attractiveness" of the market, explaining
that their purchase "is an opportunity to partner with the company that is leading transformation
of eCommerce in the market". Indian traders protested against the deal, considering the deal a
threat to domestic business.

In a filing with the U.S. Securities and Exchange Commission on 11 May 2018, Walmart stated
that a condition of the deal prescribed the possibility that Flipkart's current minority
shareholders "may require Flipkart to effect an initial public offering following the fourth
anniversary of the closing of the transactions at a valuation no less than that paid by Walmart".

Following the announcement of Walmart's deal, eBay announced that it would sell its stake in
Flipkart back to the company for approximately $1.1 billion and relaunch its own Indian
operations. The company stated that "there is the huge growth potential for e-commerce in
India and significant opportunity for multiple players to succeed in India's diverse, domestic
market." Softbank Group also sold its entire 20% stake to Walmart without disclosing terms of
the sale.

The acquisition was completed on 18 August 2018. Walmart also provided $2 billion in equity
funding to the company.

On 13 November 2018, Flipkart CEO Binny Bansal resigned after facing an allegation of
"serious personal misconduct". Walmart stated that "while the investigation did not find
evidence to corroborate the complainant's assertions against Binny, it did reveal other lapses in
judgment, particularly a lack of transparency, related to how Binny responded to the situation.

3.6 Awards and Recognition

1. Sachin Bansal was awarded Entrepreneur of the Year, 2012–2013 from The Economic
Times, a leading Indian economic daily newspaper.
2. In September 2015, the two founders entered Forbes' India Rich List, debuting in the
86th position with a net worth of $1.3 billion each.
3. In April 2016, Sachin and Binny Bansal were named to Time magazine's annual list of
The 100 Most Influential People in the World.

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3.7 Flipkart Video

Flipkart launched an in-app streaming service called Flipkart Video in August 2019, so as to
compete with industry rivals like Amazon who were also offering premium video options. The
initial line up of content was curated from the service providers like Viu, Voot and TVF.

3.8 Flipkart Video Originals

To strengthen its content offering on Flipkart Video, Flipkart forayed into original content
production, known as Flipkart Video Originals. The first show was launched on 19 October
2019. Named Back Benchers, it was a Bollywood celebrity quiz show hosted by Farah Khan.

22
 Company Profile- DHL Logistics

DHL company logo

4.1 Company Overview

DHL Logistics Pvt Ltd is recognized among India's Best Companies to Work For 2019.
Every year, Great Place to Work identifies India's 100 Best Companies to Work For
(with employee strength more than 500) through an objective and rigorous workplace
culture assessment process. DHL Global Forwarding (DHL Logistics) is part of
Deutsche Post DHL Group, having 30,000 freight forwarding experts in 850 locations
globally to provide airfreight, ocean freight, road/rail freight and other standard and
customized logistics solutions. DHL Logistics Pvt Ltd has successfully created a Great
Place to Work FOR ALL their employees as they have excelled on the 5 dimensions that are
a hallmark of a High-Trust, High-Performance Culture™ – Credibility, Respect, Fairness,
Pride and Camaraderie.

In a rigorous assessment process conducted by the Great Place to Work Institute, DHL
Logistics Pvt Ltd met the minimum criteria on the Trust Index Employee Survey, on the
consistency of experience across all demographics and on the Culture Audit People Practices
Framework, to clear the first level i.e., getting Great Place to Work-Certified.

Great Place to Work is considered the ‘Gold Standard’ in workplace culture assessment and
recognition. As a certified organization, DHL Logistics Pvt Ltd became eligible to be
considered among 'India's Best Companies to Work For 2019' – a list that features the 'Best

23
of the Best’. The process of identifying India's Best Companies to Work For is based purely
on the assessment findings and does not involve any jury or opinion-based criteria.

4.2 DHL History

4.2.1 Origins

While Larry Hillblom was studying law at University of California, Berkeley's Boalt Hall
School of Law in the late 1960s, he accepted a job as a courier for the insurance company
Michael's, Poe & Associates (MPA). He started running courier duty between Oakland
International Airport and Los Angeles International Airport, picking up packages for the last
flight of the day, and returning on the first flight the next morning, up to five times a week.

After he graduated, Hillblom met with MPA salesman Adrian Dalsey and they planned to
expand MPA's concept of fast delivery to other business enterprises. They flew
between Honolulu and Los Angeles, transporting bills of lading for their first client, Seatrain
Lines.

4.2.2 Name origins

Hillblom put up a portion of his student loans to start the company, bringing in his two
friends Adrian Dalsey and Robert Lynn as partners, with the combined initials of their
surnames as the company name (DHL). They shared a Plymouth Duster that they drove around
San Francisco to pick up the documents in suitcases, then rushed to the airport to book flights
using another relatively new invention, the corporate credit card. As the business took off, they
started hiring new couriers to join the company. Their first hires were Max and Blanche Kroll,
whose apartment in Hawaii often became a makeshift flophouse for their couriers.

4.2.3 Domestic Expansion

In the 1970s, DHL became an international delivery company, similar to Loomis

and Purolator who were the only other international courier companies at the time. The only
major competitor in the overnight market was Federal Express (FedEx), which did not open its
first international service until 1981, expanding to Toronto, Ontario, Canada. Nevertheless, the
domestic market was extremely profitable, and DHL was the third largest courier behind FedEx
and UPS.

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4.2.4 Deutsche Post Purchase

Deutsche Post began to acquire shares in DHL in 1998, acquiring a controlling interest in 2001.
By the end of 2002, Deutsche Post had acquired all of DHL's remaining stock, and absorbed
the operation into its Express division. The DHL brand was expanded to other Deutsche Post
divisions, business units and subsidiaries.

Today, DHL Express shares its DHL brand with other Deutsche Post business units, such
as DHL Global Forwarding, DHL Freight, DHL Supply Chain, and DHL Global Mail.

• 1999: Deutsche Post World Net (DPWN) purchased the Dutch shipping
company Van Gend & Loos as well as Swiss freight forwarder Danzas.
• 2001: Deutsche Post acquires a majority (51%) of DHL's shares, and the remaining
49% in 2002. The new DHL is launched by merging the old DHL, Danzas, and
Securicor Omega Euro Express. The Pack station, an automated delivery booth,
was introduced as a pilot project in Dortmund and Mainz.

4.3 After 2001

In 2002, DHL Introduced a new red-and-yellow color scheme and logo.

DHL Airways, Inc., which handled all US domestic flights, was renamed ASTAR Air Cargo in
2003, following a management buyout. DHL's airline had over 550 pilots in service in October
2008. In August 2003, Deutsche Post acquired Airborne Express and began its integration into
DHL.

A planned expansion by DHL at Brussels Airport created a political crisis in Belgium in

2004. On 21 October 2004, DHL Express announced that it planned to move its European hub
from Brussels to Leipzig, Germany (Vatry, France, was also considered but rejected).
DHL's unions called a strike in response and paralyzed work for a day. On 8 November 2004,
DHL Express invested €120 million in an Indian domestic courier, Blue Dart, becoming the
majority shareholder in the company.

In 2005, Deutsche Post made an offer to buy the contract logistics company Exel plc, which
had just acquired Tibbett & Britten Group. On 14 December 2005, Deutsche Post announced
the completion of the acquisition of Exel. DHL integrated Exel into its logistics division,
rebranding the division's services as DHL Exel Supply Chain. Following that acquisition, DHL
had a global workforce of 285,000 people (500,000 people including DPWN and other sister
companies) and roughly $65 billion in annual sales.

25
In 2006, DHL won a ten-year contract worth £1.6 billion to run the NHS Supply Chain, part of
the United Kingdom's National Health Service. Under the contract, DHL was responsible for
providing logistics services for over 500,000 products to support 600 hospitals and other health
providers in the UK.

In a 50/50 joint venture with Lufthansa Cargo, DHL Express co-founded a new cargo
airline, Aerologic, in 2007, based at Leipzig/Halle Airport. The carrier operated up to
11 Boeing 777F planes by 2012.[16] In December 2007, DHL became the first carrier to
transport cargo via wind-powered ships, flying MS Beluga Skysails kites.

As part of the NHS contract, DHL opened a new 250,000 sq. ft (23,000 m2) distribution
centre in 2008 to act as a stock-holding hub for food and other products, with another
distribution centre planned for opening in 2012. The two new distribution centres created about
1,000 new jobs. In May 2008, DHL Aviation moved its central depot to Leipzig, Germany,
leading to improved service and timeliness to the European Union.

In the same month, DHL Express announced restructuring plans for its United States network,
including termination of its business relationship with ABX Air and a new contract with
competitor UPS for air freight operations. Its cargo hub was also shifted from Wilmington to
Louisville. The Air Line Pilots Association, International protested, but on 10 November 2008,
DHL announced that it was cutting 9,500 jobs as it discontinued domestic air and ground
operations within the United States due to economic uncertainty. However, it retained
international services and was still in talks with UPS to transport DHL packages between U.S.
airports.

DHL ended domestic pickup and delivery service in the United States in 2009, effectively
leaving UPS and FedEx as the two major express parcel delivery companies in the US. Limited
domestic service was still available from DHL, with the packages tendered to USPS for local
delivery. In April 2009, UPS announced that DHL and UPS had terminated negotiations
without an agreement for UPS to provide airlift for DHL packages between airports in North
America. DHL said in a statement, "We have not been able to come to a conclusive agreement
that is acceptable to both parties." DHL continued to use its current air cargo providers, ASTAR
Air Cargo and ABX Air.

In 2013, the company opened a newly expanded and upgraded global hub at
the Cincinnati/Northern Kentucky International Airport in Hebron, Kentucky.

26
In late 2020, DHL entered agreements to deliver the COVID-19 vaccine manufactured by
BioNTech and Pfizer.

In March 2021, DHL Aviation announced the relocation of hub operations from Bergamo
to Milan Malpensa Airport where DHL opened new logistics facilities.

4.4 Career development

Each employee has complete independence and career growth opportunities DHL Logistics
worldwide. We appreciate the personal interests, skills, and excitement of each employee.
Employees are encouraged to pay for their jobs beyond self and growth. Career creation of new
ways to help workers become experts in their fields and deliver more outstanding services to
clients on an ongoing basis, but also to assess our leading role in the retail sector.

Put ourselves in, DHL Logistics is the business to workers Connaught, the core principles of
reciprocity, to respect every employee, access to qualified assistance, provide an interesting
career, opportunities for self-development.

4.5 Professional HR team

Excellent staff is to ensure that the key to the successful development of DHL Logistics.
attract and retain the best talent, the company formed a team of professional human resources.
From the head office, regional headquarters until every one of our stores, has a professional
HR staff across the country in time for our nearly 18,000 employees service; in terms of
functions.

Human resources team is divided into recruitment, employee relations, compensation and
benefits training and development and organizational structure design, and to the company and
employees to ensure that we provide more professional and better service. Our recruiting team
gathered a group of rich experience in human resources professionals.

4.6 The recruitment and hiring procedures

The selection process within DHL is decentralized and divided into several phases. This means
that our business divisions organize their respective selection process independently.
Depending on the job, different selection tools. A written, interview and a series of screening

27
and evaluation procedures will be passed by the organisation that confirmed the last hiring of
eligible staff.

After being recruited by the approved officer, the personnel department shall report on the
relevant details to provide coverage for the entry procedures; at the same time the organisation
shall arrange a more detailed understanding of DHL Logistics for the orientation of new
workers to staff.

4.7 Sponsorship

For several years, DHL was the primary sponsor of the Porsche RS Spyder Le Mans
Prototypes in the International Motor Sports Association American Le Mans Series. DHL have
also sponsored Ryan Hunter-Reay's #28 IndyCar Series car for Andretti Autosport since 2011.
With DHL, Hunter-Reay won the championship for the 2012 IndyCar Series season as well as
the 2014 Indianapolis 500. DHL was the main title sponsor of the Jordan Formula One team
during 2002.

Since then, DHL has become a regular track-side sponsor at various Formula One races
throughout each year, as well as becoming the 'Official Logistics Partner' of the category. Since
2007, they have also sponsored the DHL Fastest Lap Award for the driver that achieves the
fastest laps in a season.

Manchester United Football Club announced them as their first training kit sponsor in August
2011, agreeing to a four-year deal with DHL reported to be worth £40 million; it is believed to
be the first instance of training kit sponsorship in English football. In 2014, FC Bayern
Munich agreed to a six-year sponsorship deal with DHL. In 2012, the company became the
main sponsor of League of Ireland club Bohemian F.C.

In 2011, DHL became the title sponsor of the South African Western Cape Rugby Union
teams Western Province and the Stormers. This came into effect on 1 January 2011 for a period
of three years. DHL were still the current sponsor for both teams as of the 2017/18 season.

For the 2011–12 Volvo Ocean Race DHL was one of four race partners providing logistics for
this event.

In 2014, the company sponsored, with IMG Fashion, DHL Exported, which was aimed at
"assisting designers who are already successful locally to gain momentum internationally".
DHL Exported will "sponsor a chosen designer for two consecutive seasons at" the Mercedes-

28
Benz Fashion Week in New York, London Fashion Week, Milan Fashion Week or Mercedes-
Benz Fashion Week Tokyo. IMG Fashion "will accept applications from February 17 through
April 2 at dhlexported.com".

Expanding its support to various cultural endeavors, in 2014 DHL signed as the Official
Logistics partner for Cirque du Soleil. DHL transports up to 2,000 tonnes and 80 freight
containers utilizing air, sea, and land to transport the equipment from one city to the next.

In 2015 DHL became the main sponsor of Italian volleyball club Modena Volley, covering the
whole men's Super Lega Italian championship and the CEV Champions League.

DHL is a major sponsor of Surf Life Saving Australia.

4.8 Overview Express

Business model

• Standardized, scheduled international network

• Self-operated infrastructure

• Door-to-door delivery capability globally

4.9 Customers

❖ ~70% Business, ~30 international eCommerce Volumes

❖ Strategic focus on Small & Medium Enterprises
❖ Market position/trends
❖ Global market leader in the international express market with 38%
❖ Strong presence in growth markets

29
 Company profile: XPO

XPO company logo

5.1 Company Overview

XPO Logistics, Inc., together with its subsidiaries (“XPO” or “we”), provides cutting-edge
supply chain solutions to the most successful companies in the world. The company is the
second largest contract logistics provider and the second largest freight broker globally, and a
top three less-than-truckload provider in North America. XPO was incorporated as a Delaware
corporation in May 2000. As of December 31, 2020, we had approximately 102,000 employees
and 1,523 locations in 30 countries, with substantially all of our services operating under the
single brand of XPO Logistics.

In January 2021, we acquired the majority of the logistics operations of Kuehne + Nagel in the
U.K. and Ireland, which increased our location count to 1,629 and our number of employees to
approximately 108,000. We use our highly integrated network to help more than 50,000
customers operate their supply chains most efficiently.

XPO have two reporting segments, Transportation and Logistics, each with robust service
offerings, leadership positions and growth prospects. In 2020, approximately 62% of our
revenue came from Transportation, and the remaining 38% came from Logistics. Within each
segment, we are positioned to capitalize on fast-growing areas of demand.

XPO continue to closely monitor the impact of the COVID-19 pandemic on all aspects of our
business, including how it affects our employees, customers and business partners. See
“Impacts of COVID-19” in Part II, Item 7, Management’s Discussion and Analysis of Financial
Condition and Results of Operations.

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5.2 Planned Spin-off of the Logistics Segment

In December 2020, we announced that our Board of Directors unanimously approved a plan to
pursue a spin-off of 100% of our Logistics segment as a separate publicly traded company. The
spin-off, which we intend to qualify as a transaction that is generally tax-free for U.S. federal
income tax purposes to XPO shareholders, would result in XPO shareholders owning stock in
both companies. If completed, the spin-off will result in separate public companies with clearly
delineated service offerings.

XPO will be a global provider of primarily less-than-truckload (“LTL”) transportation and

truck brokerage services, and the spun-off company will be the second largest contract logistics
provider in the world. Both companies’ stocks are expected to trade on the New York Stock
Exchange, and

XPO plan to consider a dual listing on the London Stock Exchange for the spun-off company
in due course. The transaction is currently expected to be completed in the second half of 2021,
subject to various conditions. There can be no assurance that the spin-off will occur or, if it
does occur, of its terms or timing. See “Risk Factors” in Item 1A below for further information.

5.3 Transportation Segment Overview

XPO Transportation segment primarily provides LTL and truck brokerage services in North
America and Europe. Our largest service offering within the Transportation segment is LTL,
which contributed 43% of 2020 segment revenue. We are a top three provider of LTL services
in North America, and we have one of the largest LTL networks in Western Europe.

Our other primary service offering within the Transportation segment is truck brokerage. We
are the second largest brokerage provider globally and the third largest brokerage provider in
North America. As of December 31, 2020, we had truck brokerage relationships with
approximately 75,000 independent carriers representing over 1,000,000 trucks. The results of
our truck brokerage operations are included as part of our freight brokerage services, which
include additional, asset-light services for expedite, intermodal and drayage.

31
5.4 Logistics Segment Overview

XPO Logistics segment, which we sometimes refer to as supply chain, provides order
fulfilment and other distribution services differentiated by our ability to deliver technology-
enabled, customized solutions. XPO logistics customers include many preeminent companies
that benefit from our scale, digital capabilities, expertise and range of solutions. Many of these
customers have long-tenured relationships with us, and frequently expand the scope and scale
of the services we provide to them.

XPO is the second largest provider of contract logistics globally, with the largest outsourced e-
commerce fulfilment platform in Europe, and a major platform for e-fulfillment in North
America. As of December 31, 2020, we operated 205 million square feet (19 million square
meters) of logistics warehouse space worldwide.

Approximately 101 million square feet (9 million square meters) was located in North America;
96 million square feet (9 million square meters) was located in Europe; and 8 million square
feet (1 million square meters) was located in Asia. Our January 2021 acquisition of Kuehne +
Nagel logistics sites in the U.K. and Ireland increased our global facility space to 212 million
square feet (20 million square meters).

Our Logistics segment benefits from deep roots in the e-commerce sector, which continues to
show strong, secular growth. Many of our e-commerce facilities also manage merchandise
returns, also known as reverse logistics.

Before COVID-19, e-commerce was already growing globally at a double-digit rate, and that
growth has accelerated as more consumers opt to purchase goods online. This level of growth
makes it difficult for many companies to handle fulfillment and returns in-house while
providing high levels of service. We provide solutions for pure-play ecommerce companies,
omnichannel retailers and manufacturers with aftermarket distribution channels, including the
merchandise returns that have become a significant by-product of order fulfillment.

5.5 Operating Philosophy

XPO believe that rapid pace of innovation differentiates our services, enables us to better utilize
our assets and makes the most of the talent within our organization. Our proprietary technology

32
strengthens our relationships with customers by addressing their immediate supply chain needs
and anticipating future needs. Technology allows us to be a true partner to our customers by
helping them meet their objectives for efficiency, safety, customer service and growth.

When developing XPO technology, we concentrate our efforts in four areas that can create
value for our shareholders by serving our customers most efficiently: our digital freight
marketplace, automation and intelligent machines, dynamic data science, and visibility and
customer service, specifically in the e-commerce supply chain.

Environmental sustainability is a significant priority for us. In the U.S., XPO has been named
a Top 75 Green Supply Chain Partner by Inbound Logistics for five consecutive years. In
France, we have renewed our commitment to the CO2 Charter for another three years. In Spain,
all of our sites meet Leadership in Energy and Environmental Design (“LEED”) energy
certification standards for 100% consumption of renewable energy. In the U.K., the Digital
Distribution Warehouse of the Future we created with Nestlé became a reality in 2020,
operating with environmentally friendly ammonia refrigeration systems, energy-saving
lighting, air-source heat pumps for administration areas and rainwater harvesting.

In XPO Logistics segment, a number of our warehouse facilities are ISO 14001-certified, which
ensures environmental and other regulatory compliances. We monitor fuel emissions from
forklifts, with protocols in place to take immediate corrective action if needed. Our packaging
engineers ensure that the optimal carton size is used for each product slated for distribution,
and when feasible, we purchase recycled packaging. As a by-product of managing returned
merchandise, we recycle millions of electronic components and batteries each year.

In our Transportation segment, we have made substantial investments in fuel-efficient

Freightliner Cascadia tractors in North America; these use Environmental Protection Agency
(“EPA”) 2013-compliant and Greenhouse Gas 2014- compliant Selective Catalytic Reduction
technology. Our North American LTL locations have energy-saving policies in place and are
implementing a phased upgrade to LED lighting.

XPO modern road fleet in Europe is 98% compliant with Euro V, EEV and Euro VI standards.
We also own a large fleet of natural gas trucks operating in France, the U.K., Spain and
Portugal, and in 2020 we invested in 80 new tractors that use liquified natural gas (“LNG”).
This increased our alternative-fuel road fleet in France to more than 250 LNG vehicles. In

33
Spain, we own government-approved mega-trucks to transport freight with fewer trips, and our
last mile operations in Europe use electric vehicles for deliveries in certain urban areas,
reducing those emissions to zero.

5.6 XPO Strategy

XPO strategy is to help customers manage their goods most efficiently throughout their supply
chains, using our network of people, technology and physical assets. We deliver value to
customers in the form of technological innovations, process efficiencies, cost efficiencies and
reliable outcomes. Our services are both highly responsive to Table of Contents customer goals,
such as mitigating environmental impacts over time, and proactive in identifying potential
improvements. Most important, we have instilled a culture that focuses our efforts on delivering
mutually beneficial results for our customers and our company.

As part of our strategy, we have positioned XPO to capitalize on secular trends in demand,
such as the rapid growth of e-commerce and the heightened customer interest in outsourcing.

Management’s growth and optimization strategy for the Transportation segment is to:

• Market XPO solutions and vertical expertise to new and existing customers of all sizes;

• Leverage the advantages of our proprietary XPO Connect™ digital marketplace, which
synthesizes the shipper, carrier and consumer experiences using automation and real-time
visibility;

• Recruit and retain quality drivers for our fleets, and best utilize our driver and equipment
capacities;

• Attract and retain quality independent contracted carriers and independent brokered carriers
for our transportation network;

• Recruit and retain talented sales and customer service representatives and continuously
improve their productivity with state-of-the-art training and technology; and

• Integrate industry best practices into our operations, with a focus on automation and analytics
that drive productivity and share gains.

Management’s growth and optimization strategy for the logistics segment is to:

• Develop additional business in verticals where we already have deep expertise, enduring
customer relationships and a strong track record of successful performance;

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• Capture more share of wallet with existing customers who could use our logistics solutions
for more of their supply chain needs;

• Market the advantages of our proprietary technology for warehouse operations, which we use
to manage advanced automation, robotics, labour productivity, safety and changes in demand
in complex logistics environments;

• Partner with our customers in meeting their goals for supply chain performance, growth
management and stakeholder satisfaction, and help them overcome challenges specific to their
business; and

• Integrate industry best practices into our operations, with a focus on automation and analytics
that drive productivity and share gains.

5.7 Competition

Transportation and logistics are highly fragmented marketplaces with thousands of companies
competing domestically and internationally. XPO competes on quality of service, reliability,
scope and scale of operations, technological capabilities, expertise and price.

Our competitors include local, regional, national and international companies that offer the
same services we provide; some have larger customer bases, significantly more resources and
more experience than we have. In logistics, some of our competitors include Clipper Logistics,
Kuehne + Nagel and DSV.

In transportation, some of our competitors include Old Dominion Freight Line, Saia, FedEx
and C.H. Robinson. Additionally, some of our customers have sufficient internal resources to
perform the services we offer. Due to the competitive nature of our marketplaces, we strive
daily to strengthen existing business relationships and forge new relationships.

The health of the transportation and logistics industries will continue to be a function of
domestic and global economic growth. However, we believe that we have positioned XPO in
fast-growing sectors to benefit from secular trends, such as the demand for e-commerce,
omnichannel retail and supply chain outsourcing.

5.8 Human Capital Management

XPO success relies in large part on our strong governance structure and Code of Business
Ethics, our good corporate citizenship and, importantly, engaged employees who embrace our
values.

35
As a customer-centric company with a strong service culture, XPO constantly work to
maintain our position as an employer of choice. This requires an unwavering commitment to
workplace inclusion and safety, as well as competitive total compensation that meets the needs
of our employees and their families.

5.9 Employee Profile

They had approximately 102,000 employees worldwide as of December 31, 2020, with over
39,000 employees in Transportation and more than 61,000 employees in Logistics. In North
America, 79% of our employees occupy hourly roles and 21% are in salaried positions. With
locations spanning 30 countries, 45% of our employees are based in North America, 53% in
Europe and 2% in Latin America and Asia, combined. Across our operations, 27% of our
employees work as drivers and dockworkers, 46% as warehouse workers and 24% in field
supervisory and management positions. In addition, our workforce is supplemented with
approximately 18,000 temporary workers at our logistics sites in North America and an average
of 17,500 temporary workers in our logistics network in Europe.

As of December 31, 2020, 75.8% of our employees in Europe were represented by unions or
other employee representative bodies, while almost all of our employees in the United States
have chosen to remain union-free.

Throughout 2020, we made significant investments in the safety, well-being and satisfaction
of our employees in these and other areas.

5.10 Health and Safety

Our frontline employees provide essential services to keep goods flowing to the people who
need them. Their protection is always our foremost priority, and with the onset of COVID-19
in 2020, we began using a combination of protective measures, technology and virtual
communications to maintain a safe workplace environment.

There are many preventative measures and risk-mitigating actions we have taken to protect
employees, including offering 100% paid pandemic sick leave for eligible employees,
providing frontline employee appreciation pay to approximately 40,000 workers in the U.S.
and Canada, procuring ample supplies of personal protective equipment for employees in all
of our workplaces, instituting a contactless delivery policy for our customers, and providing
expanded access to mental health counseling services for employees and their dependents.

36
In addition to our COVID-19 response, we have numerous protocols in place to ensure a safe
workplace environment. We aim to maintain an Occupational Safety and Health
Administration (“OSHA”) total recordable incident rate (“TRIR”) that is less than half the
published rate for the Warehousing and Storage sector, based on the “Industry Injury and
Illness Data” of the U.S. Bureau of Labor Statistics (“BLS”). In 2020, we exceeded our target
expectation with a TRIR that was 74.5% lower than the BLS national benchmark.

Another way we work to decrease occupational injuries and illnesses is with our global Road
to Zero program. Road to Zero instills safety and compliance awareness through education,
mentoring, communication and on-the-job reinforcement. In addition to physical well-being,
we also consider emotional well-being to be an important part of workplace safety — our Code
of Business Ethics mandates zero tolerance of discrimination, harassment, retaliation, bullying
and other unacceptable behaviours.

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 Chapter-4

Environmental Analysis

4.1 SWOT Analysis

Analysis of SWOT is a framework used to determine the competitive position of a business

and to establish strategic planning. Analysis of SWOT measures internal and external variables,
as well as present and future prospects. A SWOT analysis is designed to promote a practical,
fact-based, data-driven look at an entity, its strategies, or an industry's strengths and
weaknesses.

SWOT analysis is a process of business analysis which ensures that goals for a project are
clearly defined and that all project-related factors are properly identified. Four areas are
included in the SWOT analysis process: strengths, limitations, opportunities and risks. When
doing SWOT Analysis, both internal and external components are considered, since they both
have the ability to influence the performance of a project or venture. The following is a brief
summary of SWOT Analysis components:

Strengths

Strengths in SWOT analysis are the qualities that are deemed important for the overall success
of a project within an organisation. Strengths are strengths and skills which can be used for
competitive advantage. Examples of frequently cited

strengths include:

• Strong brand names

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 • Good reputation

• Cost advantages of proprietary know-how

Weaknesses

Weaknesses are the variables within the SWOT analysis formula that could prevent effective
outcomes within a project. Factors such as an excess of departmental competition, a poor
internal communication system, lack of resources and an insufficient amount of materials are
weaknesses. A project can be ruined by Vulnerabilities before it even starts. Further
vulnerabilities include:

• Weak brand name

• Poor reputation

• Ineffective and high-cost structure

Opportunities

Opportunities are defined as external components that could be useful to achieve the objectives
set for the project. Such considerations may include suppliers that want to partner with the
company to help achieve success, the general public's favourable view of the company, and
business dynamics that could make the project attractive for the market segment.

Supplementary opportunities include:

• Arrival of new technology

• Unfulfilled customer needs

• Taking business courses (training)

Threats

The success of the project or business plan may be significantly affected by these external
factors. A negative public picture, no ready-made demand for the finished product and the
absence of suppliers who are willing to supply raw materials for the project are the potential
risks that are crucial to any SWOT study.

Some additional threats include:

• Trend changes

• New regulations

39
 • New substitute products

4.2 The BCG Matrix

The BCG matrix is a structure for assessing the competitive role and ability of the company
brand portfolio generated by the Boston Consulting Group. It classifies the portfolio of
companies into four groups based on the attractiveness and competitive position of the industry.

These two dimensions reveal the business portfolio's probable profitability in terms of the cash
required to sustain the unit and the cash generated by it. The general aim of the review is to
better clarify the products in which the company should invest and which should be divested.

Relative market share. Relative market share is one of the dimensions used to

measure company portfolios. The larger market share of companies results in higher cash
returns. This is because a business that generates more benefits from a higher curve of
economies of scale and experience, resulting in higher profits. However, it should be noted that
with lower production outputs and lower market share, some firms can experience the same
advantages.

Market growth rate. Relative market share is one of the dimensions used to measure
company portfolios. The larger market share of companies results in higher cash returns. This
is because a business that generates more benefits from a higher curve of economies of scale
and experience, resulting in higher profits. However, it should be noted that with lower
production outputs and lower market share, some firms can experience the same advantages.

There are four quadrants into which firms’ brands are classified:

Dogs

Compared to rivals, dogs hold a low market share and function in a steadily growing market.
In general, since they produce low or negative cash returns, they are not worth investing in.
This isn't always the case, however. Some dogs may be lucrative for a long period of time, may
provide synergies for other brands or SBUs, or may serve simply as a defence against moves
from rivals. Therefore, to ensure that they are not worth investing in or have to be divested, it
is often necessary to undertake deeper analysis of and brand or SBU.

Strategic choices: Retrenchment, divestiture, liquidation

Cash cows

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The most valuable brands are cash cows and should be 'milked' to produce as much cash as
possible. To help their further growth, the cash obtained from "cows" should be invested in
stars. Corporations should not invest in cash cows to encourage growth, according to the
growth-share matrix, but only to help them so that they can hold their current market share.
This again, is not always the facts. In general, cash cows are big companies or SBUs that are
able to invent new goods or processes that can become new stars. They would not be capable
of such inventions if there were no funding for cash cows.

Strategic choices: Product development, diversification, divestiture, retrenchment.

Stars

Stars work in markets with rapid growth and retain a high market share. Stars are cash
generators as well as consumers of cash. As stars are expected to become cash cows and
produce positive cash flows, they are the primary units in which the business should invest its
capital. Yet not all stars are cash-flowing.

This is particularly true in rapidly evolving markets, where new revolutionary goods will soon
be outperformed by new technical developments, so a star becomes a dog rather than becoming
a cash cow. Strategic choices: Vertical integration, horizontal integration, market penetration,
market development, product development.

Question marks

The brands that need much closer consideration are question marks. In rapidly rising
economies, they retain low market share, consuming vast sums of cash and incurring losses. It
is capable of gaining market share and becoming a star that would later become a cash cow.
Question marks do not always thrive and they fail to gain market share even after a substantial
amount of investment and ultimately become pets. Therefore, to determine whether they are
worth investing in or not, they need very close consideration. Strategic choices: Market
penetration, market development, product development, divestiture.

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 4.3 SWOT Analysis of Flipkart

4.3.1 Strengths in the SWOT analysis of Flipkart

1. India’s Largest E-commerce Retailer: Flipkart is the India’s largest E-commerce

company & had sold GMV (gross merchandising value) of $1 billion till now.
2. Experienced founders: The Founders of Flipkart, Sachin & Binny Bansal are Ex-
Amazon employees. Having prior experience in the E-commerce industry helped the
founders to work strategically and differentiate their business in a highly
competitive market.
3. Acquisition: With its series of acquisitions like Letsbuy.co, chakpak.com,
weread.com, Mine360 & the recent one Myntra in 2014 has helped the company to expand
in the E-commerce space & used the capabilities and existing resources of acquired
companies.
4. High Brand recall: Flipkart has established itself as a renowned E-commerce
company in India through TV ads, online branding and through its presence on social
media. Brand activities like the “Big billion day” have really increased the brand recall of
the company.
5. Own Payment gateway & Logistic arm: Having its own Logistics arm E-kart &
payment gateway Pay zippy has helped the company to control its Expenses. Thereby
passing the benefits to the end customers.
6. Exclusive & broad range of products: From having Exclusive rights to launch some
products like MotoG MotoX, Xiaomi Mi3 as well as personal designers’ segments in
garments category, has helped the company to differentiate and localize its offerings.

4.3.2 Weaknesses in the SWOT analysis of Flipkart

1. Limited Distribution channel reach: Although its logistics arm has kept cost’s low, the
reach has been affected which is a weakness for Flipkart. Due to use of outsourcing,
Global giants like Amazon & eBay can deliver the product anywhere in the country.
However, Flipkart is still struggling in this field.
2. Cost of Acquisition: Due to stiff competition in the market & low customer retention,
the cost of Acquisition is high because Flipkart acquires a lot of customers through

42
 online advertising. As per Flipkart data, the company spends R.s 400/- on acquiring a
new customer on an average.
3. Power in the hand of buyers: Since this industry is flooded with many players, buyers
have a lot of options to choose. Switching costs are also less for customers since they can
easily switch a service from one online retail company to another.

4.3.3 Opportunities in the SWOT analysis of Flipkart

1. Expansion of business: By targeting other emerging markets company can increase

their revenues as well as it can have Economies of scale.
2. Expanding their Product categories: This will increase their customer base & at the
same time will reduce the cost of acquisition and customer switch.
3. Changing mentality of Indian customers: With increasing numbers of customers
getting comfortable with online shopping & increase in numbers of Internet users in
India, there is huge potential in this Industry.
4. Supply chain: By optimizing their supply chain they can compete with the other players
& can manage the loosing sales on account of not making the product available due to
delivery constraints.
5. Establishing in other developing economies: Like Amazon, Flipkart can slowly start
expanding out of India and establish operations in other countries as well which will
help improve revenues.

4.3.4 Threats in the SWOT analysis of Flipkart

1. Competition: Stiff competition from the global players like Amazon, eBay as well as
local player like Snapdeal, Tolexo and Shopclues who are continuously trying to eat
each other’s market share.
2. Government regulations on the issues related to FDI in multi branding retail has been
a big hurdle in the success of the E-commerce industry in India.

4.4 BCG Matrix of Flipkart

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 The BCG Matrix for Flipkart com will help Flipkart com in implementing the business level
strategies for its business units. The analysis will first identify where the strategic business
units of Flipkart com fall within the BCG Matrix for Flipkart com.

4.4.1 Stars

• The financial services strategic business unit is a star in the BCG matrix of Flipkart com.
It operates in a market that shows potential in the future. Flipkart com earns a significant
amount of its income from this SBU.

Flipkart com should vertically integrate by acquiring other firms in the supply chain. This
will help it in earning more profits as this Strategic business unit has potential.

• The Number 1 brand Strategic business unit is a star in the BCG matrix of Flipkart com,
and this is also the product that generates the greatest sales amongst its product portfolio.
The potential within this market is also high as consumers are demanding this and similar
types of products.

Flipkart com should undergo a product development strategy for this SBU, where it
develops innovative features on this product through research and development. This will
help Flipkart com by attracting more customers and increases its sales.

• The Number 2 brand Strategic business unit is a star in the BCG matrix of Flipkart com as
Flipkart com has a 20% market share in this category. It also the market leader in this
category. The overall category is expected to grow at 5% in the next 5 years, which shows
that the market growth rate is expected to remain high. Flipkart com should use its current
products to penetrate the market. This could be done by improving its distributions that
will help in reaching out to untapped areas. This will help increase the sales of Flipkart
com.

4.4.2 Cash Cows

• The supplier management service strategic business unit is a cash cow in the BCG matrix
of Flipkart com. This has been in operation for over decades and has earned Flipkart com
a significant amount in revenue.

44
 The market share for Flipkart com is high, but the overall market is declining as companies
manage their supplier themselves rather than outsourcing it. The recommended strategy for
Flipkart com is to stop further investment in this business and keep operating this strategic
business unit as long as its profitable.

• The Number 3 brand strategic business unit is a cash cow in the BCG matrix of Flipkart
com. This is an innovative product that has a market share of 25% in its category. Flipkart
com is also the market leader in this category. The overall category has been declining
slowly in the past few years.

Flipkart com has the power to influence the market as well in this category. It should,
therefore, invest in research and development so that the brand could be innovated. This
will help the category grow and will turn this cash cow into a star. The overall benefit would
be an increase in sales of Flipkart com.

• The international food strategic business unit is a cash cow in the BCG matrix for Flipkart
com. This business unit has a high market share of 30% within its category, but people are
now inclined less towards international food. This change in trends has led to a decline in
the growth rate of the market.

The recommended strategy for Flipkart com is to invest enough to keep this strategic
business unit under operations. If it no longer remains profitable and turns into a dog, then
Flipkart com should divest this strategic business unit.

4.4.3 Question Marks

• The local foods strategic business unit is a question mark in the BCG matrix for Flipkart
com. The recent trends within the market show that consumers are focusing more towards
local foods. Therefore, this market is showing a high market growth rate. However, Flipkart
com has a low market share in this segment.

The recommended strategy for Flipkart com is to invest in research and development to
come up with innovative features. This product development strategy will ensure that this
strategic business unit turns into a cash cow and brings profits for the company in the future.

45
• The Number 4 brand strategic business unit is a question mark in the BCG matrix for
Flipkart com. This strategic business unit is a part of a market that is rapidly growing.
However, this strategic business unit has been incurring losses in the past few years.

It has also failed in the attempts made at innovation by research and development teams.
The recommended strategy for Flipkart com is to divest and prevent any future losses from
occurring.

• The confectionery strategic business unit is a question mark in the BCG matrix for Flipkart
com. The confectionery market is an attractive market that is growing over the years.
However, Flipkart com has a low market share in this attractive market.

The low sales are as a result of low reach and poor distribution of Flipkart com in this
segment. The recommended strategy for Flipkart com is to undergo market penetration,
where it pushes to make its product present on more outlets. This will ensure increased
sales for Flipkart com and convert this strategic business unit into a cash cow.

4.4.4 Dogs

• The plastic bags strategic business unit is a dog in the BCG matrix of Flipkart com. This
strategic business unit has been in the loss for the last 5 years. It also operates in a market
that is declining due to greater environmental concerns. The recommended strategy for
Flipkart com is to divest this strategic business unit and minimise its losses.
• The Number 5 brand strategic business unit is a dog in the BCG matrix for Flipkart com.
This is operating in a market segment that is declining in the past 5 years. The company
also has negative profits for this strategic business unit.

However, it is expected that the market will grow in the future with environmental changes
that are occurring. The recommended strategy for Flipkart com is to invest in the business
enough to convert into a cash cow. This will ensure profits for Flipkart com if the market
starts growing again in the future.

• The synthetic fibre products strategic business unit is a dog in the BCG matrix of Flipkart
com. The market for such products has been declining, and as a result of this decline,
Flipkart com has been facing a loss in the past 3 years. The market share for it is also less

46
 than 5%. The recommended strategy for Flipkart com is to divest this strategic business
unit to minimise any further losses.

4.5 SWOT Analysis of DHL

4.5.1 Strengths in the SWOT Analysis of DHL

1. DHL has a wide network operating in 220 countries. DHL is the world’s largest Logistic
Provider in the world. This offers an edge for DHL over the other international players.
DHL has been supported by good contact and outstanding in-house consulting to expand
its reach.
2. DHL is ranked among the best global brands with high brand equity.
3. DHL is growing its business in developed countries. In order to have a broad presence in
emerging economies, DHL has invested extensively in developing nations to set up and
extend their facilities.
4. DHL has a very strong financial record and it is considered to have enough finances to
back it up. As a consequence, more and more enterprises trust DHL and its services. This
financial status also lets DHL grow its year-on-year business.
5. DHL projects itself as a leader in Logistics. It has structurally engaged in the creation of
pattern analysis and solutions and has created a DHL Innovation Hub that offers a forum
for consumers and partners to connect with DHL experts. Resillience360 and Smart
Sensor were popular initiatives for logistics systems that originated from the centre of
creativity.

4.5.2 Weaknesses in the SWOT Analysis of DHL

1. Logistics industry requires huge investment to set up operations and grows. DHL also
require heavy investment to grow its business and to generate return on investment.
2. DHL is expected to act in compliance with regulatory guidelines and local authorities.
Regulations can be different in the source and destination locations, and so it can be
impossible to obey different rules.

47
 3. Logistic Market is filled with many local and international players and the market growth
is distributed among all the players and due to high pricing strategy DHL market share
is restricted in developed and developing economies.
4. Due to a very large market and a large network of delivery partners are required. DHL
also depends on small and local entities for delivery. And this has a direct influence on
DHL efficacy, and so teamwork becomes very necessary.
5. DHL has less marketing cost as compared to FedEx or UPS and does not spend much on
advertisement and branding practices. This impacts the success and recognition of
brands.

4.5.3 Opportunities in the SWOT Analysis of DHL

1. In order to extend its reach, DHL has the opportunity to acquire local payers in the target
market.
2. In almost all emerging markets, DHL has set its footprints but needs to grow to take
advantage of the opportunities in those markets. They need to concentrate on their foreign
supply chain, which is customer-focused.
3. Expanded electronic shopping also offers an incentive to expand into this market. E-
commerce is known as the future of retail; thus, it is important for DHL to expand its
logistic services for E-Commerce companies.

4.5.4 Threats in the SWOT Analysis of DHL

1. FedEx and UPS are the biggest competitors of DHL and are giving DHL tough
competition in all markets. Numerous local brands are also a major threat to DHL.
2. Logistics is one of the most hard-hit sectors in the area of an economic slowdown.
3. A big challenge to DHL is that the brand suffers from lower and penetrating costs against
local courier players. They are also able to offer excellent service to these local players.
4. Due to the introduction of technologies in industrialized and emerging countries,
traditional services, such as letters and posts, have deteriorated.
5. Government Rules and Regulations can directly or indirectly affect the delivery and
revenue of DHL.

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 4.6 BCG Matrix of DHL

The BCG Matrix for DHL will help DHL in implementing the business level strategies for its
business units. The analysis will first identify where the strategic business units of DHL fall
within the BCG Matrix for DHL.

4.6.1 Stars

• The financial services strategic business unit is a star in the BCG matrix of DHL. It operates
in a market that shows potential in the future. DHL earns a significant amount of its income
from this SBU. DHL should vertically integrate by acquiring other firms in the supply
chain. This will help it in earning more profits as this Strategic business unit has potential.
• The Number 1 brand Strategic business unit is a star in the BCG matrix of DHL, and this
is also the product that generates the greatest sales amongst its product portfolio. The
potential within this market is also high as consumers are demanding this and similar types
of products.

DHL should undergo a product development strategy for this SBU, where it develops
innovative features on this product through research and development. This will help DHL
by attracting more customers and increases its sales.

• The Number 2 brand Strategic business unit is a star in the BCG matrix of DHL as DHL
has a 20% market share in this category. It also the market leader in this category. The
overall category is expected to grow at 5% in the next 5 years, which shows that the market
growth rate is expected to remain high. DHL should use its current products to penetrate
the market. This could be done by improving its distributions that will help in reaching out
to untapped areas. This will help increase the sales of DHL.

4.6.2 Cash Cows

• The supplier management service strategic business unit is a cash cow in the BCG matrix
of DHL. This has been in operation for over decades and has earned DHL a significant
amount in revenue. The market share for DHL is high, but the overall market is declining
as companies manage their supplier themselves rather than outsourcing it.

49
• The Number 3 brand strategic business unit is a cash cow in the BCG matrix of DHL. This
is an innovative product that has a market share of 25% in its category. DHL is also the
market leader in this category. The overall category has been declining slowly in the past
few years.

DHL has the power to influence the market as well in this category. It should, therefore,
invest in research and development so that the brand could be innovated. This will help the
category grow and will turn this cash cow into a star. The overall benefit would be an
increase in sales of DHL.

• The international food strategic business unit is a cash cow in the BCG matrix for DHL.
This business unit has a high market share of 30% within its category, but people are now
inclined less towards international food. This change in trends has led to a decline in the
growth rate of the market.

The recommended strategy for DHL is to invest enough to keep this strategic business unit
under operations. If it no longer remains profitable and turns into a dog, then DHL should
divest this strategic business unit.

4.6.3 Question Marks

• The local foods strategic business unit is a question mark in the BCG matrix for DHL. The
recent trends within the market show that consumers are focusing more towards local foods.
Therefore, this market is showing a high market growth rate. However, DHL has a low
market share in this segment.

The recommended strategy for DHL is to invest in research and development to come up
with innovative features. This product development strategy will ensure that this strategic
business unit turns into a cash cow and brings profits for the company in the future.

• The Number 4 brand strategic business unit is a question mark in the BCG matrix for DHL.
This strategic business unit is a part of a market that is rapidly growing. However, this
strategic business unit has been incurring losses in the past few years. It has also failed in
the attempts made at innovation by research and development teams. The recommended
strategy for DHL is to divest and prevent any future losses from occurring.

50
• The confectionery strategic business unit is a question mark in the BCG matrix for DHL.
The confectionery market is an attractive market that is growing over the years. However,
DHL has a low market share in this attractive market. The low sales are as a result of low
reach and poor distribution of DHL in this segment.

The recommended strategy for DHL is to undergo market penetration, where it pushes to
make its product present on more outlets. This will ensure increased sales for DHL and
convert this strategic business unit into a cash cow.

4.6.4 Dogs

• The plastic bags strategic business unit is a dog in the BCG matrix of DHL. This strategic
business unit has been in the loss for the last 5 years. It also operates in a market that is
declining due to greater environmental concerns. The recommended strategy for DHL is to
divest this strategic business unit and minimise its losses.
• The Number 5 brand strategic business unit is a dog in the BCG matrix for DHL. This is
operating in a market segment that is declining in the past 5 years. The company also has
negative profits for this strategic business unit.

However, it is expected that the market will grow in the future with environmental changes
that are occurring. The recommended strategy for DHL is to invest in the business enough
to convert into a cash cow. This will ensure profits for DHL if the market starts growing
again in the future.

• The synthetic fibre products strategic business unit is a dog in the BCG matrix of DHL.
The market for such products has been declining, and as a result of this decline, DHL has
been facing a loss in the past 3 years. The market share for it is also less than 5%. The
recommended strategy for DHL is to divest this strategic business unit to minimise any
further losses.
• The artificially flavoured products strategic business unit is a dog in the BCG matrix for
DHL. These products were launched recently, with the prediction that this segment would
grow. However, with increasing health consciousness, people are now refraining from
consumption of artificial flavours. The market is shrinking, and DHL has no significant
market share. The recommended strategy for DHL is to call back this product.

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 4.7 SWOT Analysis of XPO Logistics

4.7.1 Strengths of XPO Logistics

• Distribution and Reach: XPO Logistics has a large number of outlets in almost every state,
supported by a strong distribution network that makes sure that its products are available
easily to a large number of customers in a timely manner.
• Cost Structure: XPO Logistics’ low-cost structure helps it produce at a low cost and sell its
products at a low price, making it affordable for its customers.
• Dealer Community: XPO Logistics has a strong relationship with its dealers that not only
provide them with supplies but also focus on promoting the company's products and
training.
• Financial Position: XPO Logistics has a strong financial position with consecutive profits
in the past 5 years, along with accumulated profit reserves that can be used to finance future
capital expenditures.
• XPO Logistics has a large asset base, which provides it with better solvency.
• Return on Capital Expenditure: XPO Logistics has been successfully able to generate
positive returns on the capital expenditure it has incurred on various projects in the past.
• Automation: of various stages of production has allowed the more efficient use of resources
and reducing costs. It also allows for consistency in quality of its products and provides the
ability to scale up and scale down production as per the demand in the market.
• Product Portfolio: XPO Logistics has a large product portfolio where it provides products
in a large range of categories. It has a number of unique product offerings that are not
provided by competitors.
• The geography and location of XPO Logistics provide it with a cost advantage in serving
its customers, when compared to that with the competition.
• XPO Logistics has a well-established IT system that ensures efficiency in its internal and
external operations.
• XPO Logistics owns a number of intellectual property rights that include trademarks and
patents. These allow it exclusivity over its products and competitors cannot copy or reverse
engineer them.
• XPO Logistics is a brand that has been in the market for years, and people are aware of it.
This makes its brand awareness high.

52
• Its products have maintained quality over the years and are still valued by customers, who
find it as good value for the amount of money that they pay.

4.7.2 Weaknesses of XPO Logistics

• Research and Development: Even though XPO Logistics is spending more than the average
research and development expenditure within the industry, it is spending way less than a
few players within the industry that have had a significant advantage as a result of their
innovative products.
• High Day Sales Inventory: The time it takes for products to be purchased and sold are
higher than the industry average, meaning that XPO Logistics builds up on inventory
adding unnecessary costs to the business.
• Rented Property: A significant proportion of the property that XPO Logistics owns is rented
rather than purchased. It has to pay large amounts of rent on these adding to its costs.
• Low current ratio: The current ratio that shows the company’s ability to meet its short-term
financial obligations, is lower than the industry average. This could mean that the company
could have liquidity problems in the future.
• The company has low levels of current assets compared to current liabilities, and this can
create liquidity problems for it in operations.
• Cash flow problems: There is a lack of proper financial planning at XPO Logistics
regarding cash flows, leading to certain circumstances where there isn’t enough cash flow
as required leading to unnecessary unplanned borrowing.
• Integration: XPO Logistics’ current structure and culture have resulted in the failure of
various mergers aimed at vertical integration.
• Market Research: XPO Logistics has not conducted market research within the market that
is serves since the past 2 years. As a result, it is making decisions based on 2 years old data,
while customer needs may have evolved over time.
• High employee turnover rates: XPO Logistics has a higher employee turnover rate
compared to competitors. This means that it has more people leaving the job, and as a result,
it is spending more on training and development as employees keep leaving and joining.
• Lack of legal experience and legal department employees are not highly qualified.
• A few products have a high market share, while most of the products have a low market
share. This reliance on a few products makes XPO Logistics vulnerable to external threats
if these few products suffer for any reason.

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• The workload is a high per worker as there are fewer workers than the actual work required.
This puts workers under psychological stress and is likely to be less productive.
• Worker morale is low due to company culture and politics that have grown in recent years.
• The performance appraisal is not in a systematic manner. People are often not appraised
for their performance. This leads to lower work morale and lack of promotion opportunities
for employees.

4.7.3 Opportunities of XPO Logistics

• Internet: there has been an increase in the number of internet users all over the world. This
means that there is an opportunity for XPO Logistics to expand their presence online; by
using the internet to interact with its customers.
• E-commerce: There has been a new trend and a growth in sales of the e-commerce industry.
This means that a lot of people are now making purchases online. XPO Logistics can earn
revenue by opening online stores and making sales through these.
• Technological developments: technology comes with numerous benefits among many
departments. Operations can be automated to reduce costs. Technology enables better data
to be collected on customers and improves on marketing efforts.
• There has been an increase in average household income along with an increase in
consumer spending following the recession. This will result in growth in XPO Logistics’
target market with new customers that can be attracted towards the business.
• Population: the population has been growing and is expected to grow at a positive rate for
the upcoming years. This is beneficial for XPO Logistics as there will be an increase in the
number of potential customers that it can target.
• Inflation: The inflation rate has been low and is expected to remain low in the next two
years. This is an opportunity for XPO Logistics as its cost of inputs would remain low for
the next two years.
• Interest rate: Lower interest rates than compared to previous years provides an opportunity
for XPO Logistics to undergo expansion projects that are financed with loans at a cheaper
interest rate.
• Green government drive: this provides an opportunity for XPO Logistics for the sale of
XPO Logistics’ products to federal and state government contractors.

54
• Transport Industry: the transport industry has been flourishing in the past few years, and
shows growth potential in the future. This has reduced the costs of transportation, which is
beneficial for XPO Logistics as it will lower its overall costs.
• Tax policy: the governments’ reduction in tax rate is beneficial for XPO Logistics as a
lower amount would be expensed out as a tax.
• The government has also announced a subsidy on the sale of environmentally friendly
goods in this sector. XPO Logistics can focus on these environmentally friendly products
and make use of this opportunity.
• Tourism: growth in tourism is beneficial for XPO Logistics as it will provide new potential
customers that it can target in order to gain market share.
• Skilled workers: increase in education and training by numerous institutes has increased
the amount of skilled labour available within the country. This means that if XPO Logistics
is able to hire skilled labour, it would have to spend less on training and development,
therefore, saving costs.

4.7.4 Threats of XPO Logistics

• Technological developments by competitors; New technological developments by a few

competitors within the industry pose a threat to XPO Logistics as customer attracted to this
new technology can be lost to competitors, decreasing XPO Logistics’ overall market share.
• Suppliers: The bargaining power of suppliers has increased over the years with the decrease
in the number of suppliers. This means that the costs of inputs could increase for XPO
Logistics.
• New entrants: there have been numerous players that have entered the market and are
gaining market share by gaining existing companies’ market share. This is a threat to XPO
Logistics as it can lose its customers to these new entrants.
• Increasing competition: there has been an increase in competition within the industry
putting downward pressure on prices. This could lead to reduced revenue for XPO Logistics
if it adjusts to the price changes, or loss of market share if it doesn’t.
• Exchange Rate: the exchange rate keeps fluctuating and this affects a company like XPO
Logistics that has sales internationally, while its suppliers are local.
• Political uncertainties in the country prove to be a barrier in business, hindering
performance at times and making the business incur unnecessary costs.

55
• The fluctuating interest rates in the country do not provide a stable financial and economic
environment.
• Consumer tastes are changing, and this puts pressure on companies to constantly change
their products to meet the needs of these customers.
• Regulations on international trade keep changing, and this requires compliance by
companies if they are to operate globally.
• Substitute products available are also increasing, which is threat collectively for the whole
industry as consumption of current products decrease.
• The rise in prices of fuel has increased in the input costs for XPO Logistics. These costs
have also increased as other industries that provide inputs for this company also have
suffered from increasing fuel prices, thereby charging more.
• Increased promotions by competitors have been a threat for XPO Logistics. On most media,
there is more clutter than ever, and customers are bombarded with multiple messages. This
reduces the effectiveness of promotional messages by XPO Logistics.
• Constant technological developments require the workforce to be trained accordingly as
the inability to keep up with these changes can lead to loss of business for XPO Logistics.

4.8 BCG Matrix of XPO Logistics

The BCG Matrix for XPO Logistics Inc will help XPO Logistics Inc in implementing the
business level strategies for its business units. The analysis will first identify where the strategic
business units of XPO Logistics Inc fall within the BCG Matrix for XPO Logistics Inc.

4.8.1 Stars

• The financial services strategic business unit is a star in the BCG matrix of XPO Logistics
Inc. It operates in a market that shows potential in the future. XPO Logistics Inc earns a
significant amount of its income from this SBU. XPO Logistics Inc should vertically
integrate by acquiring other firms in the supply chain. This will help it in earning more
profits as this Strategic business unit has potential.
• The Number 1 brand Strategic business unit is a star in the BCG matrix of XPO Logistics
Inc, and this is also the product that generates the greatest sales amongst its product
portfolio. The potential within this market is also high as consumers are demanding this
and similar types of products.

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 XPO Logistics Inc should undergo a product development strategy for this SBU, where it
develops innovative features on this product through research and development. This will
help XPO Logistics Inc by attracting more customers and increases its sales.

• The Number 2 brand Strategic business unit is a star in the BCG matrix of XPO Logistics
Inc as XPO Logistics Inc has a 20% market share in this category. It also the market leader
in this category. The overall category is expected to grow at 5% in the next 5 years, which
shows that the market growth rate is expected to remain high.

XPO Logistics Inc should use its current products to penetrate the market. This could be
done by improving its distributions that will help in reaching out to untapped areas. This
will help increase the sales of XPO Logistics Inc.

4.8.2 Cash Cows

• The supplier management service strategic business unit is a cash cow in the BCG matrix
of XPO Logistics Inc. This has been in operation for over decades and has earned XPO
Logistics Inc a significant amount in revenue. The market share for XPO Logistics Inc is
high, but the overall market is declining as companies manage their supplier themselves
rather than outsourcing it. The recommended strategy for XPO Logistics Inc is to stop
further investment in this business and keep operating this strategic business unit as long
as its profitable.
• The Number 3 brand strategic business unit is a cash cow in the BCG matrix of XPO
Logistics Inc. This is an innovative product that has a market share of 25% in its category.
XPO Logistics Inc is also the market leader in this category. The overall category has been
declining slowly in the past few years. XPO Logistics Inc has the power to influence the
market as well in this category.

It should, therefore, invest in research and development so that the brand could be
innovated. This will help the category grow and will turn this cash cow into a star. The
overall benefit would be an increase in sales of XPO Logistics Inc.

• The international food strategic business unit is a cash cow in the BCG matrix for XPO
Logistics Inc. This business unit has a high market share of 30% within its category, but
people are now inclined less towards international food.

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 This change in trends has led to a decline in the growth rate of the market. The
recommended strategy for XPO Logistics Inc is to invest enough to keep this strategic
business unit under operations. If it no longer remains profitable and turns into a dog, then
XPO Logistics Inc should divest this strategic business unit.

4.8.3 Question Marks

• The local foods strategic business unit is a question mark in the BCG matrix for XPO
Logistics Inc. The recent trends within the market show that consumers are focusing more
towards local foods. Therefore, this market is showing a high market growth rate. However,
XPO Logistics Inc has a low market share in this segment.

The recommended strategy for XPO Logistics Inc is to invest in research and development
to come up with innovative features. This product development strategy will ensure that
this strategic business unit turns into a cash cow and brings profits for the company in the
future.

• The Number 4 brand strategic business unit is a question mark in the BCG matrix for XPO
Logistics Inc. This strategic business unit is a part of a market that is rapidly growing.
However, this strategic business unit has been incurring losses in the past few years.

It has also failed in the attempts made at innovation by research and development teams.
The recommended strategy for XPO Logistics Inc is to divest and prevent any future losses
from occurring.

• The confectionery strategic business unit is a question mark in the BCG matrix for XPO
Logistics Inc. The confectionery market is an attractive market that is growing over the
years. However, XPO Logistics Inc has a low market share in this attractive market. The
low sales are as a result of low reach and poor distribution of XPO Logistics Inc in this
segment.

The recommended strategy for XPO Logistics Inc is to undergo market penetration, where
it pushes to make its product present on more outlets. This will ensure increased sales for
XPO Logistics Inc and convert this strategic business unit into a cash cow.

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4.8.4 Dogs

• The plastic bags strategic business unit is a dog in the BCG matrix of XPO Logistics Inc. This

strategic business unit has been in the loss for the last 5 years. It also operates in a market that
is declining due to greater environmental concerns. The recommended strategy for XPO
Logistics Inc is to divest this strategic business unit and minimise its losses.
• The Number 5 brand strategic business unit is a dog in the BCG matrix for XPO Logistics
Inc. This is operating in a market segment that is declining in the past 5 years. The company
also has negative profits for this strategic business unit.

However, it is expected that the market will grow in the future with environmental changes
that are occurring. The recommended strategy for XPO Logistics Inc is to invest in the
business enough to convert into a cash cow. This will ensure profits for XPO Logistics Inc if
the market starts growing again in the future.

• The synthetic fibre products strategic business unit is a dog in the BCG matrix of XPO
Logistics Inc. The market for such products has been declining, and as a result of this decline,
XPO Logistics Inc has been facing a loss in the past 3 years.

The market share for it is also less than 5%. The recommended strategy for XPO Logistics Inc
is to divest this strategic business unit to minimise any further losses.

• The artificially flavoured products strategic business unit is a dog in the BCG matrix for XPO

Logistics Inc. These products were launched recently, with the prediction that this segment
would grow.

However, with increasing health consciousness, people are now refraining from consumption
of artificial flavours. The market is shrinking, and XPO Logistics Inc has no significant
market share. The recommended strategy for XPO Logistics Inc is to call back this product.

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5.1 Porter's Five Forces

Porter's Five Forces is a model of business analysis that helps to explain why different
industries are capable of maintaining various levels of profitability. The model was published
in the 1980 book by Michael E. Porter, "Competitive Strategy: Techniques for Analysing
Industries and Competitors.

"The Five Forces model is widely used to analyse a company's business structure as well as its
corporate strategy. The five forces are frequently used to measure an industry or market's
competition intensity, attractiveness, and profitability.

Porter's five forces are:

1. Competition in the industry

2. Potential of new entrants into the industry

3. Power of suppliers

4. Power of customers

5. Threat of substitute products

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Competition in the Industry

The first of the five powers apply to the number of rivals and their ability to undercut a business.
The greater the number of competitors, the lower the power of a business, along with the
number of equivalent products and services they offer. If they are able to offer a better deal or
lower prices, suppliers and buyers seek out a company's competition.

Conversely, a business has greater power to charge higher prices when competitive rivalry is
low and set the terms of deals to achieve higher sales and profits. Potential of New Entrants
into an Industry The power of a company is also affected by the power of fresh entrants into
its market. The less time and money it cost a competitor to enter the market of a company and
be an efficient competitor, the more the position of an established company could be
significantly weakened.

For existing companies within that industry, an industry with strong barriers to entry is ideal
because the company would be able to charge higher prices and negotiate better terms.

Power of Suppliers

The next factor in the model of the five forces addresses how easily suppliers can drive up input
costs. It is influenced by the number of a good or service's key input suppliers, how unique
these inputs are and how much it would cost a business to switch to another supplier.

The fewer suppliers to an industry, the greater the dependence of a business on a supplier. As
a result, the supplier has more power and can drive up the cost of input and push for other trade
benefits. On the other hand, a company can keep its input costs lower and improve its profits
when there are many suppliers or low switching costs between rival suppliers.

Power of Customers

One of the five forces is the ability of clients to drive prices lower or their level of power. It is
influenced by how many buyers or clients a business has, how important each client is and how
much it would cost a business to find new clients or markets for its production.

A smaller and stronger base of customers means that each customer has more power to bargain
for lower prices and better deals. In order to increase profitability, a business that has many,
smaller independent clients will have an easier time charging higher prices.

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Threat of Substitutes

Substitutes are the focus of the last of the five forces. Substitute goods or services that can be
used instead of the products or services of a company pose a threat. Companies producing
goods or services that do not have close replacements will have more power to raise prices and
lock in favourable terms.

Customers will have the option to forgo the purchase of a company's product if close
replacements are available, and the power of a company can be weakened.

5.1 Porters five force model of Logistics Sector

5.1.1 Threat of new entry (Strong Force)

Threat of new entrants reflects how new market players impose threats to the existing market
players. If the industry will be profitable and barriers to enter the industry will be low, it will
attract more players and hence, the threat of new entrants. will be high.

4.5 Here are some factors that reduce the threat of new entrants for Logistics
Sector:

• Entry in the industry requires substantial capital and resource investment. This force
also loses the strength if product differentiation is high and customers place high
importance to the unique experience.
• Logistics Sector will face the low threat of new entrants if existing regulatory
framework imposes certain challenges to the new firms interested to enter in the market.
In this case, new players will be required to fulfil strict, time-consuming regulatory
requirements, which may discourage some players from entering the market.
• The threat will be low if psychological switching cost for consumers is high and
existing brands have established a loyal customer base.
• New entrants will be discouraged if access to the distribution channels is restricted.

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 5.1.2 Threat of substitution (Weak Force)

The availability of substitute products or services makes the competitive environment

challenging for Logistics Sector and other existing players. High substitute threat shows that
customers can use alternative products/services from other industries to meet their needs.
Various factors determine the intensity of this threat for Logistics Sector.

The Threat of Substitute Products or services increases when;

• A cheaper substitute product/service is available from another industry

• The psychological switching costs of moving from industry to substitute products are
low.
• Substitute product offers the same or even superior quality and performance as offered
by Flipkart com’s product.

5.1.3 Bargaining power of suppliers (Weak Force)

Bargaining power of suppliers in the Porter 5 force model reflects the pressure exerted by
suppliers on business organisations by adopting different tactics like reducing the product
availability, reducing the quality or increasing the prices. When suppliers have strong
bargaining power, it costs the buyers- (business organisations). Moreover, high supplier
bargaining power can increase the competition in the industry and lower the profit and growth
potential for Logistics Sector Similarly, weak supplier power can make the industry more
attractive due to high profitability and growth potential.

Bargaining power of suppliers will be high for Logistics Sector if:

• Suppliers have concentrated into a specific region, and their concentration is higher than their
buyers.
• This force is particularly strong when the cost to switch from one supplier to other is high for
buyers (for example, due to contractual relationships).
• When suppliers are few and demand for their offered product is high, it strengthens the
suppliers’ position against Logistics Sector
• Suppliers’ forward integration weakens the Logistics Sector position as they also become the
competitors in that area.

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• If Logistics Sector is not well educated, does not have adequate market knowledge and lacks
the price sensitivity, it automatically strengthens the suppliers' position against the
organisation.
• Other factors that increase the suppliers’ bargaining power include-high product
differentiation offered by suppliers, Logistics Sector making only a small proportion of
suppliers’ overall sales and unavailability of the substitute products.

5.1.4 Bargaining power of buyers (Weak Force)

Bargaining power of buyers indicates the pressure that customers exert on the business
organisations to get high quality products at affordable prices with excellent customer service.
This force directly influences the Logistics Sector ability to accomplish the business objectives.
Strong bargaining power lowers profitability and makes the industry more competitive.
Whereas, when buyer power is weak, it makes the industry less competitive and increase the
profitability and growth opportunities for Logistics Sector.

There are some factors that increase the bargaining power of buyers:

• A more concentrated customer base increases their bargaining power against Logistics Sector

• Buyer power will also be high if there are few in number whereas a number of sellers
(business organisations) are too many.
• Low switching costs (economic and psychological) also increase the buyers’ bargaining
power.
• In case of corporate customers, their ability to do backward integration strengthen their
position in the market. Backward integration shows the buyers' ability to produce the products
themselves instead of purchasing them from Logistics Sector.
• Consumers’ price sensitivity, high market knowledge and purchasing standardised products
in large volumes also increase the buyers' bargaining power.

5.1.4 Competitive Rivalries (Strong Force)

The Rivalry among existing firms shows the number of competitors that give tough competition
to the Logistics Sector High rivalry shows Logistics Sector can face strong pressure from the
rival firms, which can limit each other’s growth potential. Profitability in such industries is low
as firms adopt aggressive targeting and pricing strategies against each other.

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The Rivalry among existing firms will be low for Logistics Sector if;

• There are only a limited number of players in the market

• The industry is growing at a fast rate
• There is a clear market leader
• The products are highly differentiated, and each market player targets different sub-
segments
• The economic/psychological switching costs for consumers are high.
• The exit barriers are low, which means firms can easily leave the industry without
incurring huge losses.

Similarly, there are some factors that increase the Rivalry among existing firms for Logistics
Sector for example, the company will face intense Rivalry among existing firms if market
players are strategically diverse and target the same market.

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 CHAPTER 5

LEARNING, FUTURE PROSPECTS & CONCLUSION

Future as I see it

• Pandemic has adversely affected the logistics sector, particularly the asset-heavy
warehousing and transportation service providers.
• With the frequent lockdowns and business interruption, companies were forced to have
a relook at their inventory and distribution strategy.
• With the near collapse of traditional distribution channels, businesses had to launch
direct to customer initiatives.
• Globally, the pandemic has resulted in rising costs, shipping delays, fluctuating
inventory and business disruption.
• Logistics providers had to quickly scale up their e-commerce and direct delivery to
consumer capabilities.

Post Pandemic:

• Moves to lowest cost, and just-in-time logistics models

• Large regional warehouses
• Reviewing the distribution model
• Overall supply chain efficiency.
• Big investment in digitisation.

5.1 Flipkart future prospects and conclusion

Flipkart having global presence is able to manage profits and sustain currently. But in the
future, as customer expectations are evolving and as we all know the same approach does not
satisfy all the needs that are really relevant in the case of flipkart, it is difficult to continue
operating the business anymore.

This slow rate of growth and the brand value is an obvious sign of its decline. Flipkart must
also continue to adapt its strategies according to the relevant consumer demands and customer

66
desires. We all recognise that core competencies and strategic approaches do not continually
change as the world in which they work shifts.

Change is prevalent and change management operations should be carried out with customer
value in mind, customer loyalty in mind as they are interrelated. As a company, it is difficult
to propel itself unless flipkart adapts to rising different consumer demands and shifts by
increasing customer value.

5.2 DHL future prospects and conclusion

Thanks to its low prices and high customer satisfaction, DHL continues to grow its operations
successfully. Its ability to offer good service should appeal to most customers in North America
and around the world at an affordable price. DHL is a leading Logistics Company. Although
the USA is its primary market, it has also maintained an impressive presence in Germany. The
Iraq, Afghanistan and Myanmar are also other markets where DHL is located.

While sales and profits have risen rapidly in recent years, the road ahead is full of difficulties.
There are regulatory pressures and rising operating costs, in addition to the high level of
competition. In ads, DHL has never spent. However, for better promotions and to expand its
market share and customer base, it has to use digital platforms.

In order to provide better customer support, it can also use technologies like AI. By growing
into developing markets and expanding its line of products, the company can also achieve faster
growth. Although market competition remains fierce, we believe management is taking the
correct steps to lead the business into the future. All told, we believe the strengths and
possibilities of DHL outweigh its vulnerabilities and risks.

5.3 XPO future prospects and conclusion

XPO is an example of organizational success through effective branding, quality service

delivery, and use of technology to streamline business operations. However, as the business
environment changed, the company embraced different business models that encouraged
diversification into other sectors.

Diversification and embracement of technology has enabled the company to dominate the
logistics sectors for a long time. Through innovation, XPO is able to adapt to market changes

67
and maintain its high quality of customer service. Creating strong, trustworthy, and reliable
relationships is important for any business.

Market research enhances the development of effective marketing strategies that target
different segments and specific customer needs. Finally, effective management plays an
important role in the company’s success.

5.4 Learning Experience

A student who is doing a professional course should undergo an internship or training. In the
respective field they chose, internship or training would give them a chance to learn more
expertise and gain more field experience.

The research was carried out on three companies in the same market, DHL, FLIPKART, XPO.
It has provided me with useful industry insights.

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 5.5 Conclusion

Logistics Sector has become large-scale, centered, centralized and advanced. There are many
advances in technology that have benefited the Logistics Sector. I was supposed to take three
companies from the same sector and do a detailed study upon its activities, functions and
services provided in a detailed manner. The companies that were selected by me in Logistics
Sector for the study are DHL, FLIPKART, XPO.

Due to the pandemic situation, we were not able to get an industrial hands-on experience and
gain more practical knowledge about the industry, therefore we were advised to followed
eskbased study about a particular sector and to prepare a report on the basis of data that we
have gathered from various secondary data sources like journals, newspapers, websites and
various books and publications.

Because of the data which is sourced from secondary sources we have faced some difficulties
and also there was time constraints. The current status of the growth of Logistics Sector and
the future potential for brand building varies widely across countries.

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 BIBLIOGRAPHY

Websites

The report was prepared by taking references from the following websites:

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https://www.essay48.com/

https://investor.costco.com/financial-information/annual-reports

https://www.tescoplc.com/investors/reports-results-and-presentations/annual-report-2020/

https://stock.walmart.com/investors/financial-information/annual-reports-
andproxies/default.asp