The FedEx Corporation is a logistic service company that is based in the US and whose headquarters are located in Memphis, Tennessee. The company was originally known as FDX. FedEx belongs to the category of the Courier industry and has over 280,000 employees. FedEx is involved in shipping express services, truckload freight carrier services, air freight services and logistics and technological solutions.
FeDex subsidiaries include: FedEx Office, FedEx Express, FedEx Supply Chain, FedEx Trade Networks and FedEx Freight. Currently the main project involves the purchasing of new computers so that we can deliver faster services to our ever increasing customers and the second project which we consider as the long term goal is to establish more branches in different locations all over the country.
The current project acquisition of more computers means that the company has to invest a sufficient amount of money so that we can acquire the best computers that will perform better than the ones that are currently in use. The long term investment, which is the purchasing of more trucks so as to speed up parcel delivery in different region, requires sufficient funding and a reliable lender is required. The net present value of the organization is positive as the business has experienced profits in the recent times. (Birla, 2005)The main source of funding for the acquisition of the trucks will be from the government.
The Federal Reserve System also known as the Fed is the main banking system in the US and is actively involved in the financing of institutions and courier companies like FeDex that are in need of starting up projects. FedEx being a major campaign contributor in the US has strong ties with White House and the members of the Congress and because of this the company could easily acquire funds for from the federal system. The financial assistance given by the Federal system will be at a specified interest rate and at a specified duration of time.
To qualify for the funding the organization has to come up with a detailed proposal indicating the investment that they wish to engage in and the amount of money that they expect to use. The FeDex project to expand its branches can be effectively funded by the Federal System. The Federal system will monitor how the money is being put into use and how the establishment of newer branches is proceeding. This ensures FeDex uses the money lent to them for the purpose intended. (OECD, 2006)The purchasing of computers for its branches is seen as a short term project. To attain the funds for this investment, FeDex can dig into its deposits.
Money/Profits acquired from the operation of the FeDex can be ploughed back in the institution by the purchasing of up-to-date computers. The company will first determine the basic deposits that it should have in order to effectively operate and serve its customers and the surplus can be used to achieve the short term goal. FeDex however should determine the duration expected to take before the funds borrowed are realized and put back in the companies’ deposit. A long duration may be risky because of unforeseen financial constraints that may occur in the future. FeDex should therefore aim at paying back the money at the shortest time possible (OECD, 2006)
The government financing will greatly enhance the development of the FedEx Company so that it can effectively serve its customers. Also, with the ever changing technologies it is imperative that FeDex updates its computers, the software and the entire system as a whole so that the can also efficiently serve their clients.
Birla, M. (2005) FedEx delivers: how the world's leading shipping company keeps innovating and outperforming the competition. John Wiley and Sons
OECD, (2006) Government R&D Funding and Company Behavior: Measuring Behavior. OECD