Introduction
Federal Express is an express transportation company, founded in 1973 by Frederick W. Smith. During his college years, he recognized that the United States was becoming a service-oriented economy and needed a reliable, overnight delivery service company. In 1965, as a undergraduate at Yale University, Smith wrote a term paper about the passenger route systems used by most airfreight shippers, which he viewed as economically inadequate. He wrote of the need for shippers to have a system designed specifically for airfreight that could accommodate time-sensitive shipments such as medicines, computer parts and electronics.
Background
In August of 1971, Smith started his venture by buying controlling interest in Arkansas Aviation Sales. While operating his new firm, Smith recognized the tremendous difficulty in getting packages delivered within one- to- two days. This dilemma motivated him to do the necessary research for resolving the current inefficient distribution system. Thus, the idea for Federal Express was born: a company that revolutionized global business practices and now defines speed and reliability1.
The company incorporated in June 1971 and officially began operations on April 17, 1973, with the launch of 14 small aircraft from Memphis International Airport. Apart from his own investment, $4 million, Smith raised over $72 million in loans and equity investment within the first year. Though the company did not show a profit until July 1975, primarily due to the oil crisis, Federal Express soon became the premier carrier of high-priority goods in the marketplace and the standard setter for the industry it established.
The company entered its maturing phase in the first half of the 1980s. Federal Express was well established, and ...