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About Aramex Company culture and marketing positioning
Aramex is an international logistics and transportation service company specializing in a wide range of services including logistics, express, domestic distribution, and freight forwarding. It was founded in 1982 by Ghandour who became its CEO. The firm began as an international operator offering oversea delivery to American courier companies in the Middle East. This paper looks at the US companies Aramex has partnered with over the history, identifies the culture that drives it, its services, and how it has managed to develop a global network. First mover advantage and developing global network alliance are the two drivers of Aramex competition.
Aramex is an international logistics and transportation service company specializing in a wide range of services including logistics, express, domestic distribution, and freight forwarding. The company was established in 1982 by Fadi Ghandour in partnership with his father’s friend William (Bill) Kingson. Ghandour had just attained a degree in political science from the University of George Washington. As a student in the university he marveled at reliability and efficiency of U.S express business and wondered what it would feel to start a similar business in the Middle East. He met Kingson at Paris Air Show and they talked about this opportunity in the Middle East. This conversation led to a partnership to establish an express business in the MENA (Middle East and North Africa) region. They established the firm to offer delivery services for companies dealing with exports deliveries in North America like FedEx (Federal Express), Purolotor, Emery, Burlington Northern, and Airborne Express. Its main competitor at the time was DHL in this region. In 1990 it partnered with Airborne Express to establish an independent alliance for international express companies known as OEC (Overseas Express carriers). This organization formed an international delivery network for the member firms to give them an advantage over large firms. In 1997, the company became the first Middle Eastern company to list in the NASDAQ. However, it delisted from the stock exchange in 2002 to return to private ownership. In 2003, Airborne Express was acquired by DHL and it existed from its alliance with Aramex.
At the time Ghandour contemplated venturing into express business this industry was still at it infancy globally. Air freight industry started in US around 1970s.Airlines began to ship cargos in empty spaces underneath passengers. However, because international trade was not well developed then demand was low. As a result, airlines shifted to larger and more appealing items and abandonedsmaller packages businesses to firms known as freight forwarders(Augustine, 2009)..
In the U.S the freight forwarders included Emery, Airborne, and Purolator. These companies consolidated smaller packages into large loads attractive to the commercial airlines. Later, FedEx entry into the industry transformed this as it came with its own aircraft carrier as well as logistic infrastructure. This caused ripples in the industry and other firms went on to purchase their own aircraft to generate similar profitability like FedEx (Augustine, 2009).
Over these years United States express business dominated the world. DHL was the only company operating internationally in the whole world. It was established in 1969 in California at San Francisco. The Bank of America was the company’s first customer as it needed an international express carrier to carry its credit letter and other records globally reliably and rapidly. In the 70s the company operated in Europe, Far East, Africa and Latin America. It was one of the express companies with local offices in Middle East. By 1983, the company operated in over 125 with 500 offices(Augustine, 2009).
After graduating from university, Ghandour decided to conduct a feasibility study to start an express carrier in the Middle East. In his analysis he noted that global carriers would bypass DHL if they had an option for delivering their items across the world. Bypartnering with Kingson they established Aramex. Ghandour spent a lot of time in the initial years travelling around the world to find entrepreneurs to develop his network. He networked with individual who accepted to deliver Aramex packages locally. They include small travel operators, and emerging domestic courier companies. Ghandour initially used commercial flights to ferry packages across the world. He also noted that though most of the courier firm used to send packages to Middle East, majority had no interest in venturing into global market. His company established processing operation in major drop points like New York City airport of John F. Kennedy and Heathrow in London. In these locations the company started to load small packages to be taken to Dubai, Amman, and Bahrain for sorting and delivery to various parts of Middle East. In time the company was able to lure U.S express operators like Emery, Burlington Northern, and Airborne to partner with it and deliver these firms’ packages to Middle East. The company was able to use the known brands to attract more business (Augustine, 2009).
The company successfully developed its brand with the small courier companies. In 1987, it attracted the U.S. largest courier company FedEx. This became the firm’s turning point as the partnership alone generated 30 percent of the total revenue for Aramex. In the late 80s express industry experienced a series of acquisitions of various courier companies that the firm served, but it continued to serve them despite the changes in ownership. However, the firm later developed its relationship with Airborne and they formed OEC alliance. This alliance enabled the two firms to compete with large firms like DHLand UPS with global presence. By 1991 this network had 90 percent connection to various countries of the world enabling Aramex to access different markets. This network enabled the firm to build trust among businesses in the Middle East for services ranging from freight forwarding to express, and distributed goods to any location a client needed.
Although this alliance formed an important source of business growth for Aramex, it still depended on other courier express company like FedEx.As a result, when FedEx decided in 1966 to drop the firm and start its own ground operation in the Middle Eastit created a great threat to Aramex’s revenue. Accordingly, the firm started to source for finances to develop its own systems in Middle East. The company first sourced these funds by selling 9 percent of its share to Airborne. However, these investment were inadequate to enable the company develop its technological capabilities to a competitive level in the region. The Arab world was also reluctant to invest in the firm. They did not have confidence in the firm because it did not own buildings or lands. Kingson advised Ghandour that they should list the firm in NASDAQ, an American based stock exchange. In addition to the cash acquired for this listing, it enabled the firm to build its reputation as a global player.The firm’s IPO (initial public offering) traded on January 1997 and was the first company based in Middle East to sell shares in a United States Stock Exchange (Augustine, 2009). The listing left an impression among other players such as strategic partners, banks, and client. They all started to view the firm in a different perspective.
According to Ghandour (2011) partnering with Airborne had a great impact on the firm reputation. .............
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