Dhl Case Analysis

Case Analysis – DHL

Managerial Communications

1. The critical issues in this case concerns massive layoffs, monetary losses for DHL, local economies being hurt and macro-economic issues.  The most critical issues are the losses that DHL was incurring and the layoffs that were necessary to stop the bleeding.  “DHL was losing $6 million a day in the United States, or over $1 billion for the year in 2008 (Walker, 2015, p. 185).”  These are astronomical numbers even for companies with revenues in the billions.  DHL had to make a decision, and unfortunately it required closing down its domestic operations which led to over 13,000 people being laid off.  In a difficult economy at the time these people were hard pressed to find another job.  This had a major effect on the local economies where the closed hubs were located.
2. The stakeholders involved are the shareholders of DHL, the employees, local businesses, and customers of DHL.  The most affected stakeholders, I believe, are the shareholders and the employees.  Shareholders stood to lose their investment if DHL continued down the path they were headed.  Employees obviously lost their jobs; some of which had been employed at DHL for decades.  It was difficult for these displaced workers to find jobs due to the crippled economy of the time; especially in areas such as Wilmington, Ohio who relied on their hub as a source of jobs for their residents.  This unfortunate circumstance has a ripple effect through the local economy as businesses are affected because local residents don’t have an income to spend.  According to Senator Sherrod Brown, “…Wilmington and the surrounding area could lose three or four indirect jobs per every direct job lost (Walker, 2015, p. 185).”      
3. The sequence of events and time span that DHL utilized to announce the domestic-only shutdown and the subsequent shutdown were appropriate in my opinion.  For every day that they postponed the actual shutdown the company stood to lose $6 million.  They knew that they didn’t have a viable domestic-only business and had to shut it down to protect the rest of their business interests that were actually generating profits.  However, there is a case to be made that DHL should have made the announcement earlier.  Top level executive had to be aware of the monetary bleeding that was occurring in the U.S. market and they could have given their employees more of a notice.  I don’t believe that they should have waited longer to shutdown operations after the announcement.  From a business perspective it is not good policy to continue operating at a huge loss for an extended period of time.
4. There was no way, aside from drastically raising prices for customers, which DHL could have postponed or avoided a shutdown of domestic-only services.  They could not compete with domestic based companies, such as UPS and FedEx, who have a stronghold of market share within the U.S.  Their business model was flawed from the beginning to cope with the U.S. market.  Whether a business should leave the market during poor economic times or not is difficult to answer.  On one hand the company has to operate at a profit, and if it means leaving an unprofitable market then they should.  On the other hand if a company can weather the storm of a difficult economy they will usually come out stronger when the economy rebounds.  In addition, leaving a market during difficult economic times will put more of a strain on that economy if a large company, such as DHL, decides to leave and are forced to lay off thousands of workers.

References

Walker, R. (2015). Strategic management communication for leaders (3rd ed.). Stamford, CT: Cengage Learning.