Student

ID: 1530983

Warwick Business School
Module IB1170, Market, Marketing and society

TNT Express, a company in a highly competitive market

Student ID: 1530983
Word count: 1829

Student ID: 1530983

Executive summary
The international courier collects, sorts, transfers and delivers products that may be too heavy
to be delivered by standard mail at a global level. It enables the connections between the
buyers and the sellers especially within the e-commerce. In this growing industry, companies
have to face important competition from the others firms.

Established in 1946 in Australia, the TNT group founded TNT Express, an international
express delivery company in 2011. Headquartered in Hoofddrop, it is one main leader in the
international courier sector. However, today, the company cannot compete with the big firms
like UPS, DHL or FedEx and got bought in October 2015 by its rival FedEx.

Thus this report will concentrate on analysing what were the companys micro-environmental
and macro-environmental threats and weaknesses that pushed TNT Express to sell itself.
Moreover, It will as analyse the opportunities and the strengths the company had and could
have used before it bought.

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Table of Contents
1. Introduction...4
2. External Analysis..3
2.1. Threats...5
2.1.1. The indirect Factors: PEST Analysis....5
2.1.2. The direct Factors: PORTER Analysis.....6
2.2. Opportunities.7
2.2.1. Economical opportunities..7
2.2.2 Technological opportunities...8
3. Internal Analysis...8
3.1 Strengths....8
3.2 Weaknesses.10
4. Segmentation and
Targeting.11
4.1 Segmentation within the international courier sector.11
4.2 Segment Targeted by TNT Express11
5. Discussion and Conclusion.12
6. Reference list...13
7. Appendice.14

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Introduction
TNT Express N.V (Thomas Nation Wide Transports) is an international express delivery
company which operates in the CEP (courier, express and parcels) market. Headquartered in
Hoofddrop, Netherlands (MarketLine, 2015), TNT uses its road, air and rail services to
provide express services to businesses and consumers. Especially operating in Europe, the
Middle East, Asia Pacific and the Americas, the company ships documents, parcels and
palletised freight majorly between businesses (B2B) and between businesses and consumers
(B2C). (TNT, 2014) TNT is owned in 61 countries and operates in 175 countries
(MarketLine, 2015)

The aim of this report is to provide a careful analysis of the external and internal factors that
affects TNT Expresss performances.

Thus, the first part of the report will analyse the external factors that can be a threat or an
opportunity for the companys performances,
The second part will analyse its resources and assets,
The third part will analyse the segmentation within the international courier industry,
The final part will discuss the connexion between these factors and the companys
performances.

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2. External Analysis
Based on Porters five forces and the PESTLE this section will deal with the different factors
that are positively or negatively influent on TNT Expresss performances.

2.1 Threats
This section focuses on the most relevant threats posed by macro-environmental and microenvironmental factors.

Macro-Environment (PESTLE)
Economic
*GDP growth:
Trade flows and economic development are strongly related. In fact, these flows allow
economic development and reciprocally. Thus, the Gross Domestic Product affects the
international express delivery industry (TNT, 2014). In 2015, the growth of the global
economy is still recovering from its crisis and remains weak at 2,7% (The Economist,
2015)(see appendix).
This issue affects the global demand and thus, TNT Expresss performances.
*Currency risks
Because of its operation all around the world, TNT Express faces currency risks. In fact, the
majority of currencies outside the Eurozone, which TNT deals with, are weakened against the
euro. This disturbs the companys profitability (TNT, 2014) .
*Fuel surcharge

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Moreover, fuel surcharge is a threat for TNTs air network. In fact, for 2016, 6.50% of the
companys fuel cost in Europe is charged (apart from UK and Ireland) and 13% in the Rest of
the World (including UK and Ireland). (TNT, 2014)

Political
Aviation is one the main target for terrorism (Polloczek, 2015). Thus its growth has caused
governments and airline operators authorities to review and strengthen their security
requirements within the airline industry. This increases operating costs for firms like TNT
Express who majorly uses commercial aircrafts for its global activity. In fact, TNT Express is
forced to invest in aviation security equipment, which increases its material costs and thus its
revenues. These new regulations could also limit the quality of TNTs operations
(MarketLine, 2015). These regulations may get even bigger after the Paris attack in
November 2015

Micro-environment (Porters five forces)

Competitive rivalry
The global courier, express and parcel sector is an oligopoly. It has a few sellers for a lot of
buyers (David Besanko, 2013). TNTs major competitors are UPS, FedEx, DHL and other
companies that provide service at a global level. The actions of these individual firms affect
the overall market. This situation puts TNT into a highly competitive market forcing him to
constantly improve its network coverage, its quality of service, its shipping speed and to have
the lowest prices. Therefore, TNT couldnt face this competition because of its lack of
financial resources (MarketLine, 2015). This constant competition was such a threat for TNT,
that it got bought by its rival FedEx in December 2015.

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Threat posed by substitutes

Thanks to the internet boom, speed is todays generations defining characteristic leaving
traditional businesses at a comparative disadvantage (Erik Brynjolfsson, 2001). Today, TNTs
targeted customers (majorly small and medium enterprises) no more have to pay for its mail
services and can now send or have free access to information such as mail, bank statements
and printed matter independently and faster (MarketLine, 2015). These new performances are
dangerous substitutes for the traditional mail service in which TNT operates. Therefore, the
company can loose a lot of opportunities with the rise of the internet.

2.2 Opportunities
This section will analyse the different opportunities brought by external factors of the
business environment. This analysis follows the PEST method and only considers the most
relevant factors.

Economic
The global CEP market is increasingly growing from the past years thanks to the growth of a
new form of commerce (see appendices): The E-Commerce , which has brought a new hope
in the international courier sector (MarketLine, 2015). This commerce facilitates the trade of
products and services using online networks and mainly involves B2B and B2C businesses. In
this virtual market, TNT Express and its competitors transports the products and the services
and allow the connection between the buyers and the sellers. Thus, these companies have a
major role in this new form of trading. This boom is todays one of the main drivers for the
global CEP market growth. The market estimates expect a growth at a CAGR of 3.4%

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between 2014 and 2019 (MarketLine, 2015). This market growth is a huge opportunity for
TNT to increase its operations.

Technologic
The constant technologic advances and innovations gives a whole new set of opportunities for
the CEP market (Market Realist 2015). In fact, it is pushing many operators to improve their
capacity expansion and their delivery models to benefit from the change in consumer and
business behaviour demand (Paul Needham). TNTs IT support, depot and hub automation
are on their way to improve their services, their productivity and their competitiveness with
lower costs (TNT, 2014). Moreover, Durpa takes place in 2016, showing the industrys best
new technologies which would give TNT the opportunity to improve their delivery operations
(same day, next hour, more click and collect, drones, parcel lockers) (Bowes, 2015)
Therefore, TNT does not have good financial resources, and investing massively on new
technologies would be a risk for its survival.

3. Internal analysis of the companys resources

This part of the report will be focused on the most important strengths and weaknesses related
to the assets, facilities and resources of the company.

3.1 Strengths
Tangible resources
Robust facilities:

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With its operations in 61 different countries, TNT Express can deliver its products and
services in 200 countries independently. The company has an air hub based in Liege, Belgium
which has 54 aircrafts, all connected with 74 airports around the world. Furthermore, with its
19 road hubs and its 540 depots, TNTs European road network operate in 41 countries.
This robust delivery base enables the company to charge profitable prices which can increase
its earnings. (MarketLine, 2015)

A Diversified geographic presence:

TNT Express has wide and diversified network which runs in Europe, the Middle Est, Asia,
Australia and South Africa. Its European Air and Road Network has excellent connection
with the rest of the world (TNT, 2014). This diversified geographic presence allows the
company to be geographically independent for the majority of its operations, which reduces
its businesss risk (MarketLine, 2015)

Intangible resources
Because of its lack of financial resources, the Dutch company focuses on its immaterial assets
like its reputation and its internal and external relationships

External relationships:
The customers of a company are essential for the businesss activity. TNTs relationship with
its customers is an extremely valuable asset. One of its main priority is to focus on building a
large and personal network by giving out special care and attention to its customer. This is
why TNT calls itself The People Network. This strategy gives TNT a large number of loyal
customers (TNT, 2014).

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Internal relationship:
A good staff and leader relationship within a business is extremely important and is a great
strength for businesses like TNT who operates in highly competitive sector. Thus, the
company values its internal relationship. For instance, in recognition of their good
contribution to the company, TNT offered a trip to Norway to 83 of its UK and Ireland staff
members (Sanderson, 2015).
This type of act motivates the workers and increases their efficiency within the company and
gives a great reputation for TNTs brand.

3.2 Weaknesses
A lack of financial resources
The company recorded a revenue decrease of 3.6% during FY2014 compared to FY2013.
Moreover, the company witnessed an operating loss of $114.3 millions in FY2014 as
compared to FY2013 where it made operating profit of $12 millions (MarketLine,
2015)Therefore, TNT has lost a significant number of investors (TNT, 2014). This shows that
the company has a lack of financial resources which negatively affects its profitability. This
weakness is the main reason why TNT got itself sold to FedEx in 2015.

A high dependence on its infrastructures

A big part of the firms infrastructures like its air express hub in Belgium is limited and does
not have any back-up facilities in cases of an interruption of the firms activity. TNT Express
can be exposed to numbers of risks regarding its operations like, power failures, civil unrest
or airplanes crashes, and without any back up facilities, TNT Expresss business can easily
fall.

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4. Segmentation and targeting

4.1 Segments targeted by TNT Express
Globally speaking, TNT operates in 3 different segments:
The international Europe segment
This segment which recorded revenues of $3,645.4 million is the companys main segment.
With its European air and road network, TNT is one of Europes CEP market leaders.

-The international AMEA (Asia, Middle East and Africa) segment

This segment recorded revenues of 1,204.1 million in FY2014, which has decreased of 14.6%
for the last year. This segment operates in close relations with the International Europe
segment.
-The unallocated segment
This segment which recorded revenues of $643.2 million in FY2014 deals with TNTs other
networks, central networks, IT, Global business services and the TNT head office

TNTs operations are majorly between business (B2B) and especially SMEs although it still
offers services for business-to-consumer (B2C) (TNT, 2014).

4.2 Segments within the international courier sector

The international courier sector is one geographical segment of the CEP market. Whereas
international courier companies deal with different business categories:
B2B (business-to-business) for transactions between businesses.
B2C (business-to-consumer) are for companies selling their services or/and its products to
consumers.
C2C (consumers-to-consumers) are for transaction between consumers. (Arline, 2015)

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5. Discussion and conclusion

As a conclusion, it is important to notice that the business environment and especially the
micro-environment has a huge impact on TNT Express performances. In fact, despite all the
technologic and economic opportunities the company could have taken, TNT couldnt face
the constant strong competition of the global CEP market. It tried to grow based on its
reputation and relationship with its costumers but didnt have enough financial resources to
compete with companies like UPS or FedEx. FedEx bought TNT in October 2015 TNT to use
its robust facilities in Europe. Finally, it is legitimate to argue that TNT was not able to face
the threats of the business environment and that innovating massively on innovations would
have been too delicate.

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6. Reference List
Arline, K. (2015, Feb 26). What Is E-Commerce? Available at businessnewsdaily:
http://www.businessnewsdaily.com/4872-what-is-e-commerce.html

Bowes, P. (2015, December 14). Looking forward to 2016. Available at postandparcel.info:
http://postandparcel.info/70047/in-depth/looking-forward-to-2016/

David Besanko, D. D. (2013). Economics of Strategy. New York: John Wiley & Sons Inc.

Erik Brynjolfsson, G. L. (2001). Strategies for e-business Success. New York: Erik Brynjolfsson.

MarketLine. (2015, October 30). TNT Express N.V. Available at MarketLine:
http://store.marketline.com/Product/tnt_express_nv?productid=E14F10AD-12CA-4819-
946E-E1D4DB26E523

Polloczek, D. (2015, December 12). After the Paris Attack Finding the Right Balance
between Safety and Security. Available at Eurocockpit:
https://www.eurocockpit.be/stories/20151214/after-the-paris-attack-finding-the-right-
balance-between-safety-and-security

Sanderson, N. (2015, Janvier 20). rapidparcel.info. Available at TNTs methods of motivation:
https://www.rapidparcel.com/blog/news/tnts-methods-of-motivation/

The Economist. (2015, Jun 13). World GDP. Available at The Economist:
http://www.economist.com/news/economic-and-financial-indicators/21654018-world-gdp

TNT. (2014, Febuary 18). Annual Report. Available at tnt.com:
https://www.tnt.com/express/en_gb/site/home/the-company/the-people-network.html

TNT. (2014). International fuel surcharge. Available at tnt.com:
http://www.tnt.com/express/en_gb/site/home/how-to-ship-parcel/invoices-fuel-
surcharges/International_Fuel_Surcharges.html

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7. Appendix
Figure 1: The global GDP growth

Figure 2: The B2C Ecommerce growth

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