External and Internal Factors of Management

Essay by babydoll77stlCollege, UndergraduateA+, April 2009

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With our economy in a downward spiral, it is not just “Joe the plumber” taking a hit. Some of the larger companies like Fed Ex who have been around for more than 30 years are feeling the squeeze themselves.

Despite an increase in spending, Fed Ex is planning to make some serious internal cost cuts for the 2009 and 2010 year. Organizing this task to stay out of the red for 2009 is Chief Executive Frederick W. Smith. In a recent interview, Smith said, "With the decline in shipping trends during our second quarter and the expectation that economic conditions will remain very difficult through calendar 2009, we are taking additional actions necessary to help offset weak demand, protect our business and minimize the loss of jobs." (“FedEx cuts cost despite growth in earnings,” 2009) In order to help prepare for the 2009 year FedEx will be eliminating a great deal of its compensation payouts by instituting a hiring freeze.

FedEx also plans to cut back on its labor hours and its line-haul expense leaving many people without jobs. The hourly workers are not the only ones seeing these cutbacks, several FedEx Freight offices will be reducing their personnel and salaries by 7.5 to 10%. All 401k matching plans have been suspended for at least one year starting the beginning of February. In hopes of keeping the moral up within the company and not trying to focus on the jobs lost, “Chief Executive Frederick W. Smith will take a 20% cut in base salary to show that he too is feeling this drought.

By making these cuts, FedEx is trying to somewhat control the effects that the economy is having on the industry. “FedEx expects these cuts to save the company $200 million through 2009 and $600 million by...