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Dhl Worldwide Express Case Study

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As a multinational logistics corporation, DHL has a diversified pricing strategy, which based on the branches and subsidiaries in each market. Normally, the director of each nations’ SBUs decide their price, for example, according to the price data published by DHL 2014, their price for EU is €3.95 for the first kilo, while the price for international rise to €4.50, in compare with its competitors such as FedEx, UPS, DHL’s price level is about 20%~40% higher. However, they are all based on a standard covers the nature of service rendered, weight and destinations. Beyond the ordinary services, customers could also choose to add insurances to cargos.

There are some pricing challenges confront DHL:
- Increasingly cost pressures
The country manager has power in independent pricing in different districts, thus price is higher than those of his competitors for about 20-40%. What’s more, Sales leader have a greater flexibility of pricing negotiation while managers only give a general guidance. Managers little participation also leads to higher possibility of cost problem.
Global network operating is one of the basic features of Global Express business. Therefore its profit centers is not the individual profit centers in their respective districts or national institutions. It should not take the decentralization of the price system, which will make the cost of operation higher.

- Increasingly competitive pressure
Global Express industry is a typical oligopolistic market structure. DHL as a leader of this industry continues to use decentralized price system, which will enhance price competition among the industry. Also it’s not benefit for the overall interest of the stable development of the whole industry and the company, respectively.
For the global express company, it also faces significant competitions with local express company, such as the SF-express in…...

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