Overview of the Management Practices of DHL

Introduction

DHL a leading shipping company founded in 1969. The unique feature of the shipping industry is internationalization of business at an ever growing pace. In the past 20 years, shipping companies have distorted their direction from domestic to international; they have shifted from multi domestic marketing to international marketing. The appearance of international and international market has been enthused by the speedy enlargement and mixing of countries; the configuration of local trading blocs; the formation of market economies; and advances in manufacture and communications technologies.

Today, international marketing is proving to be of ever-increasing importance to companies of all sizes, to their customers, and to national economies. Worldwide, most companies are now selling to, using materials or equipment from, or competing with products from other nations. Australian market provides profits and is all that enable some companies to make any profits at all (Fill, 1999). National and regional economic health and growth have become increasingly dependent upon sales as an engine of growth (Drejer 2002).

General Description of DHL and its Environment

DHL, Dalsey, Hillblom and Lynn, is a German based company specialized in express logistics services. Deutsche Post is the owner of the company. DHL is a typical marketing organization like DHL which has four basic functions:

  1. marketing planning,
  2. product and market management,
  3. advertising and promotion, and
  4. market and marketing research (DHL Home Page 2009).

Marketing channel members have a great impact on how DHL can or should manage these functions. Society desires the preservation of small business, yet craves the benefits of efficient mass producers and distributors. It limits competition but seeks the low prices of vigorous competitive effort. it wants the lowest prices for consumers but high wages for labor. The company has 285,000 (2006) worldwide. The company has international divisions in all continents When product is standardized it becomes established for minimum quality and features, competition shifts to a greater emphasis on cost and service.

Consumer marketing strategies are the broad approaches intend to adopt in the longer term to achieve its marketing objectives in accordance with its marketing policies. New strategy will take into account increased competition. The main services proposed by DHL are DHL Express Worldwide, DHL Express 9:00 and DHL Express 12:00. the divisions reported to the main office located in Bonn, Germany. The main competitors of DHL are UPS, FedEx, Royal Mail and TNT (DHL Home Page 2009, see Appendix 3,4,5).

Internal Environment Analysis

Strengths

The strengths of DHL are strong brand image and expert system, excellent web-site and customer support. Resource-based philosophy and innovations create new opportunities for market development and brand recognition. Customers’ loyalty can be achieved through the people who are employed by DHL (Bearden et al 54).

Opportunities

The opportunities include high potential to growth and profitability, professional management team and corporate culture, customized order system and free shipping. There is a great opportunities for the company is this field, because specialized shops, throughout the world are interested in goods produced in the environmentally friendly manner (Bearden et al 32).

Weaknesses

The main weaknesses are low market potential and uniqueness of the product. Competition is the main threat for DHL. In spite of weaknesses and threats, DHL has an attractive position based on a combination of cost management and customer services (Bearden et al 51).

Threats

Limited geographical market and increased competition are the main threats for DHL. Recent years, the Internet and new emerging technologies allow more opportunities for business and individual consumers to exchange information for free. So, it becomes of the threats for DHL to lost customers who exchange mails and other types of information (Bearden et al 76).

External Analysis

It is difficult to provide an external analysis for DHL as it operates on the global scale. In Germany, legal environment is favorable as the state introduces laws and regulations in order to support foreign subsidies and attract FDI (foreign direct investments). In order to support national economy, the governmental prevents price rises, or even to rolls them back in basic industries. Governmental involvement seems to relate price increases to the impact on inflation and increased productivity. Government has the influence to block or roll back price increases (Boone and Kurtz 98). Threat of new entrants is low because entry barriers are high and competition among companies is strong.

The problem is that volume size does not significantly change the cost base. Competitors provide ‘commodities’ with little differentiation and customer loyalty is low. In addition, high inventory costs and competence barriers prevent many companies to enter this market. Bargaining power of suppliers is high because DHL relies heavily on high quality services and on time delivery. DHL partners have a unique availability product they can exert a strong influence over prices and conditions of supply, therefore potentially putting pressures on the businesses purchasing their product. as the most important, there is a limited number of suppliers in this industry. Competitors follow the same strategies as DHL relying on product differentiation and cost leadership (Boone and Kurtz 32, see appendix 1,2,).

Social-demographic factors suggest fast population growth and decreased mortality rates. Both in physical appearance and in most aspects of their culture-notably, their language, their traditional form of administration, and their religion. It is the northern half of Europe which has the larger population, and, in spite of provisions for moving refugees to the south, this distinction is not likely to disappear entirely (Boone and Kurtz 31).

Technological factors involve the Internet access and development of telecommunication infrastructure, new methods of doing business and information availability. Such factors as continued economic growth, increased disposable income, vigorous domestic and foreign competition, accelerating technology, automation, population decentralization, expansion, and innovation will spur the appearance of this new marketing form. The application of computer technology and the use of new analytical techniques have added greatly to the efficacy of planning activities. In sum, internal and external analyses suggest that DHL operates in favourable environment which allows the company to expend its business and compete on the global scale (Crawford 98).

Managerial Functions

Planning

At DHL, marketing planning requires sales projections for such periods as one, three, five, and ten years ahead. These projections predict customer and competitor reactions; attempt to gauge acceptance for new products; and highlight economic, social, demographic, technological, psychological, and political changes, all of which are difficult tasks to perform -nor can they be performed with the degree of precision available in other more concrete situations. At DHL, information that provides a perspective for future operations is invaluable for corporate decision making. One of the major characteristics of the adoption of the marketing philosophy is that DHL’s plans and programs replace haphazard marketing methods.

By providing the means for anticipating the firm’s future requirements along an orderly, continuous, systematic, and sequential basis, marketing planning avoids crisis decisions and concentrates on integrated programs of action. For DHL, marketing planning is a rational way of translating experience, research information, and thought into marketing action. It is a pragmatic, organized procedure for analyzing situations and meeting the future.

During planning process, DHL pays a special attention to high speed and quality, customer satisfaction and possible improvements during shipping process. Based on information about ends and means to determine various causal relationships, trends, and patterns of behavior, it is concerned with the selection of alternative strategies. In essence, DHL’s purposeful research, experience, judgment, and decision making (all of which are directed toward guiding the corporate system and bringing it growth, survival, and adjustment) form the fabric of the marketing-planning process. DHL management understands planning as an integrated, intelligent, rational process for guiding business change. Marketing planning is closely related to problem solving. DHL planning approach constitutes an intentional, unified approach to the solution of various marketing problems (Drejer, 98).

Organizing

DHL sees organizing function of management as a dynamic activity. In estimating future moves of competitors and actions of customers, for example, the difficulties and intricacies of estimation are evident. The fact that anticipated actions may not occur is clear. Therefore, organizing is dynamic by necessity. Flexible and pliable plans that reflect unexpected and unanticipated reactions must be developed. Because it encompasses market and sales forecasts, DHL’s plans and programs, and, of course, budgets, marketing planning carries out the marketing concept by balancing the firm’s capability with expected opportunities.

Organizing assists in perfecting the fundamental strategies of a business enterprise through attention to market needs, forces, and opportunities. In short, organizing lends rationality to marketing decisions. In a competitive economy, organizing is an essential element for business growth and survival. Moreover, organizing itself is planned. As one of the most significant managerial functions, organizing is a prime responsibility of the DHL’s top marketing executive.

Yet, the very nature of critical day-to-day operations, the pressures of time, and the tendency to act rather than plan, frequently cause executives to neglect this function (Lirter 2009). But one of the major criteria of an executive’s effectiveness is his expenditure of time and resources on creative and contemplative marketing planning, especially of a longer-range character. The marketing executive who is too busy to plan is admitting that he is too busy to manage (Fill, 54, see Appendix 6,7).

Controlling

Controlling provides DHL with a forward-looking view of the total enterprise. It is the basis for determining the fundamental strategies to be employed and the objectives, programs, and resources required. Essentially, controlling is to a business enterprise what thinking is to an individual. It supplies the rational means for achieving maximum market-striking power and results from the resources in hand (Hardres, 92). Control is goal-directed and achieves a more efficient expenditure of marketing resources. Controlling necessitates classification of a company’s goal or objective; but recently there has been a change in the perception of planning.

The former perception adopted a perspective that can be likened to the previously described Newtonian model. Hence, DHL first specifies goals and then develops plans to carry them out, thus being able to achieve the goals. Goals thereby determine plans -plans are ways of reaching goals (Scheurle, 2009). Time relates to marketing planning because markets are inherently concerned with temporal factors. Market potential and purchase decisions presuppose a specific period of time. Marketing efficiency is measured on the basis of sales or profits over time, and marketing programs are laid out in terms of a time period — a quarter or a year.

However, the time aspect may be considered in another way. At DHL, controlling rests on the sales forecast, which is a consideration of future events. As a result, controlling is involved in the determination of expectations. Because DHL management never knows what is going to happen, the tale of controller deals with contingencies. The question, what would happen if markets or competitors’ strategies change in a specific manner, is extremely important (Fill, 23).

Leading

Recent years, DHL adopts the viewpoint that it must continuously adjust and adapt — they must plan for change. Hence, goals must be reassessed and changed in the light of changing opportunities (Scheurle, 2009). Thus, leading function of management determines goals (and vice versa), for objectives must be related to the means and inputs to their achievement. If the means are inadequate, objectives have to be scaled down. DHL gives a specula attention to sustainability: “Sustainability is how we demonstrate our responsibility for people, the planet and for future generations. It is a key part of our business strategy and essential for our long-term success” (DHL Home Page 2009).

It is the corporate commitment of resources that indicates whether objectives seem reasonable. For in reality, there is no one market potential for a company’s goals. The leading depends on the supporting marketing program Another dimension of the relationship between goals and plans stems from the fact that DHL does not have a single corporate goal; it has multiple goals. Thus, a decision that at first appears to be a compromise among conflicting goals actually creates a supergoal.

This super goal is the weighted average of all corporate subgoals rather than a single goal. Employees are motivated by high salaries and annual rewards, positive organizational relations and training programs proposed for all employees. Since marketing planning is really the process of organizing forethought, it refers to activities concerned with the achievement of marketing objectives at some future time. By sequencing and balancing activities, planning determines events not through momentary reactions to pressures for decisions, but by the logical consideration of the operations themselves (Fill, 54).

Analysis and Recommendations

The analysis of DHL shows that executives are constantly audit the planning process itself. The extent of planning responsibilities and the time devoted to planning and various job specifications should be reviewed. Moreover, planning should be audited at various management levels. The clarity of overall goals, the agreement of department goals with them, the quantity and quality of information, and relations with such areas as finance, purchasing, and production must be assessed. Plans are checked for two characteristics which, at first sight, seem diametrically opposed: stability and flexibility (Fill, 76).

For DHL, stability does not imply rigidity; it simply refers to well-designed, well-thought-out, and well-organized plans, so that programming can occur. Having perceived its market opportunity and having developed various marketing plans and selected a generalized strategy, DHL then creates its marketing program, which implements and maintains an effective plan. Marketing programming is dependent on the planning process, results from it, and is geared toward execution of major strategies and achievement of company objectives. Rooted in the resources, organization, and personnel available, DHL faces the difficult task of determining the specific ingredients that will compose the marketing mix. It coordinates the marketing effort to the end that the marketing mix maximizes its impact on the marketplace (Scheurle, 2009).

At DHL, effective monitoring of marketing activities can be achieved only if market-related information is available. Such information must pertain to future potentials. Sales forecasting, which is both based on and part of marketing intelligence, furnishes management with information about what market conditions are likely to be during some specified future period. This information helps in planning broad company goals and strategies and the programs to achieve them. The establishment of potential volume and profit targets, expected market shares, and sales quotas becomes the basis for guiding and controlling operations (Kotler 43).

To integrate goals, objectives, and operating programs with potential market opportunity, management must concretize its sales forecasts. This necessitates translating the sales forecast into specific market, customer, product, territory, and volume goals to be realized during some future period (Hollensen, 41). Thus, the sales forecast becomes the foundation for marketing programs, financial budgets, purchasing plans, personnel budgets, production schedules, plant and equipment demands, expansion programs, and other aspects of management programming. Companies having diversified bases are confronted with increasing competition and innovation. Moreover, current decisions have long-range implications, as in automated processes, product development, and research and development (Fill, 76).

Ay DHL, the initial step is to develop a project network comprising the many activities that must be performed to complete the project successfully. Activities use resources and occur over time. In product development, for example, screening, consumer reaction, and sales plans are activities. Activities begin with and end with events. Effective planning requires that the activities be listed and joined into an efficient network that shows which activities must be performed sequentially and which can be performed concurrently. For example, screening of product ideas must occur before lab testing and package design.

Marketing planning, the second of the systemic functions, is closely related to the assessment of market opportunity. The utilization of scarce marketing resources to capitalize on opportunities requires planned marketing strategies and operations. Fundamental relationships exist among marketing planning, company goals, and time dimensions. Functional and departmental, tactual and strategic, and convergent and divergent marketing planning can be distinguished.

There are pivotal operational interfaces between marketing planning and programming. DHL should take into account that planning is a direct responsibility of top management, whereas programming is often carried out by technicians. Marketing planning, moreover, is concerned with both the conceptual and operational levels, but programming mainly involves only the operational level.

Programming encompasses accountability and the direction of particular activities, standards, budgets, and time schedules. The distinction, then, is one between stages of planning. The major goal of marketing programming is programming the marketing mix. It balances marketing resources and marketing inputs in terms of the communication mix, distribution mix, and product and service mix previously described. Marketing programming is, then, a process of devising or arranging the correct order in which various mixes should be initiated and completed, based on flexible application, evaluation, and revision. It bears on the sequence of marketing operations in which the outcome of preceding operations govern future ones.

Works Cited

Bearden, W. O., Ingram, Th. N., LaForge, L.W. Marketing, Prentice Hall, 2004.

Boone, L.E., Kurtz, D.L. Management, McGraw-Hill, New York, 2002.

Crawford C. Merle. New Products Management. Irwin-McGraw Hill. 7th Edition, 2006.

Drejer, A. Strategic Management and Core Competencies: Theory and Application. Australian Scholarly Publishing, 2005.

DHL Home Page. 2009. Web.

Fill, C. Marketing Communication: Contexts, Contents, and Strategies 2 edn.

Upper Saddle River, Australian Scholarly Publishing, 1999.

Hardres, D. A call Center Worker. Personal Interview. 2009.

Hollensen, S. Global Marketing: A Decision-Oriented Approach. Financial Times/ Prentice Hall; 4 edition, 2008.

Kotler, Ph., Armstrong, G. Principles of Marketing. Prentice Hall; 11th edition, 2006.

Lirter, A. A Customer. Personal Interview. 2009.

Scheurle, W. HR Manager. Personal Interview. 2009.

Appendix

Job Trends
Job Trends.
Shipping Performance.
Shipping Performance.
Structure of services.
Structure of services.
Transshipping.
Transshipping.
Organizational structure.
Organizational structure.

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