Case Study DHL

Syllabus elements: 1.3, 1.4, 2.1, 2.2, 2.3, 2.4, 2.5, 2.6, 3.1, 3.2, 3.3, 3.4, 3.5, 3.6,
3.7

DHL was formed in 1969 by three friends, Adrian Dalsey, Larry Hillblom, and
Robert Lynn, in San Francisco. Originally, the company was in business to
take ships’ documentation by air from San Francisco to Honolulu (carried by
the founders themselves) so that cargoes could clear customs before the
ships arrived, thus saving days of waiting in the harbour while customs
officials processed paperwork.

By 1974, the company had 3,000 customers and 314 staff. In that year DHL
opened its first overseas office in London. At this stage, all the company
carried was important paperwork and documents, sending these with an
individual courier by air so as to be absolutely certain of delivery, rather than
entrusting them to the mail services. It was not until 1979 that the company
branched out into moving parcels as well. Nowadays, DHL is known as one of
the most reliable delivery services in the world. In 2002, the company was
bought out entirely by Deutsche Post, the German postal service, leading to
considerable rationalisation between the two businesses: the former Parcels
division of Deutsche Post is now part of DHL, for example.

The company is now organised into five divisions: DHL Express, which deals
with urgent parcels: DHL Freight, which deals with heavier loads and part-
loads (thus making efficient use of the company’s fleet of trucks and aircraft):
DHL Global Forwarding, which supplies logistical solutions for moving parcels
and freight worldwide: DHL Exel Supply Chain, which supplies consultancy
services and support in logistics, storage and sales: and DHL Global Mail,
which is in effect an alternative post office for the world.

To do all this, the company employs nearly 300,000 people worldwide, has
420 aircraft split between four separate airlines, 6,500 offices, 76,200
vehicles, and 450 hubs, warehouses and terminals. DHL ships 1.5 billion
shipments per year throughout the world to 120,000 destinations. DHL even
has its own delivery boat for Venice, and uses canal barges and bicycles to
deliver in Amsterdam.

For DHL, the internet revolution might have seemed like a threat. As more
and more documents are sent via email, and more and more transactions
take place online, the need for postal services is diminishing. The company’s
original business, that of carrying important documents by personal courier
worldwide, is in decline. However, the internet has created a massive
increase in business for firms such as DHL because of the explosion in online
buying. Delivery of purchases bought from internet retailers has proved to be
the success story of the early 21st century, with delivery companies
experiencing a bonanza. Not least of the advantages is that the delivery
company works for many online retailers. Most e-tailers, as they are known,
are struggling to make money, but it makes little difference to DHL which is
successful and which is not; they all have to have the goods delivered by
somebody.

As a global company, DHL has its share of problems. Despite being German-
owned, and headquartered in Europe (in Brussels and London) the company
is often thought of as American, and bears the brunt of American foreign
policy as do many others. In 2003, a DHL aircraft flying from Baghdad was hit
by a surface-to-air missile and had to turn back – the crew managed to land
safely, despite only being able to control the aircraft by using the engines.
DHL can, and does, deliver virtually anywhere – not being an American
company, it is not subject to Amercan embargoes and therefore delivers to
Cuba and North Korea. On the environmental front, such a large company
inevitably creates a lot of pollution, but DHL are very active in minimising their
environmental impact. The company is gradually converting its vehicles to run
on natural gas rather than petrol, for example, and seeks to offset its pollution
from aircraft by reducing its carbon footprint on the ground.

DHL has come a long way in only forty years by providing a good service
based on real customer need. Reliability, consistency, and a positive
approach have given it an unbeatable advantage over the public mail services
it replaces.

Questions

You are to assume the role of marketing assistant to DHL. Your boss has
asked you to produce a report on DHL’s business environment, in particular
concentrating on:

Ways in which DHL might monitor its internal and external environment

Possible threats the company might face in the future

Sources of information about the environment