Introduction
UPS Corporation has a good financial position as a result of its improved supply chain and integrated advanced technical system. However, it faces fierce competition from rival courier firms, as well as volatile oil prices, which have a negative impact on its performance.
Company Overview
UPS is a courier corporation headquartered in the United States. The organization has specialized in the delivery of goods and freight to customers all around the world (UPS, 2016).
UPS Internal Environment Assessment
UPS's global supremacy, broad consumer base, supply chain, and distributional network are some of its assets. Incorporation of advanced technology has also boosted its operational efficiencies.
Strengths
Weaknesses of the UPS Corporation: The company charges high for the services that it offers to its consumers and has also faced a sharp decline in its operations in the recent past. UPS also has to deal with aggressive competition in the market.
External Environmental Analysis of UPS Corporation
Opportunities: One of the company’s greatest opportunities is the emerging market in Asia, which will help promote its expansion. Its adoption of e-commerce and advanced technology will also play a role in the enhancement of its productivity (Aaker, 2012).
Threats: The company is faced with threats such as aggressive competition in the market and the fluctuation of currencies in most of those countries in which it operates (“UPS United Parcel Service SWOT Analysis,” n.d.). Unpredictable oil prices also impact the company’s performance negatively.
Industrial Analysis
Strengths and Weaknesses of Competing Rivals: The courier industry enjoys a strong global dominance and an integration of advanced technologies. On the flip side, weaknesses such as representation of employees in unions and charging highly for its services affect the industry negatively (Haseeb, 2017).
Opportunities and Threats of the Competing Firms in the Industry: Opportunities such as ever rising off-shoring and near shoring and the ever strengthening global distributional network will play a critical role in the enhancement of the industry’s performance. It should, however, be noted that there is aggressive competition within the industry among individual firms.
Conclusion
It is evident that UPS enjoys a strong financial position in the market, and it has been solely attributed to the business strategies and models that it has embraced. Factors such as aggressive competition and the fluctuating market prices, however, negatively impact its performance and that of the industry.
Executive Summary
UPS has over the years enjoyed immense growth and currently operates in more than 200 countries across the globe. Its strong financial position has been attributed to its dominance as well as ability to meet the tastes and preferences of its consumers. Its recovery process after the 2007-2009 global financial crises has been remarkable. Some of the factors that have contributed to its improved productivity include aggressive marketing and advertisement and the incorporation of advanced technology in most of its systems. An enhanced supply chain and distributional channel has also made it easy to meet customers’ needs. Furthermore, the company has a good leadership that has been on the frontline in ensuring that employees accomplish set objectives. Its large consumer base also plays a significant role in the enhancement of revenues generated. Opportunities such as new markets in the Asian continent and acquisition of new firms will make the company meet its expansionary goal. UPS is, however, faced with weaknesses such as poor employee motivation and aggressive competition that exists in the market. At the same time, the courier industry benefits from strengths such as strong global dominance and implementation of e-commerce. On the other side, the increasing new entrants in the courier industry play a role in increasing competition levels. Unpredictable oil prices also impact the operations of the firms operating in the courier industry negatively. The rise in the oil prices in the past decade has also impacted the sector negatively by leading to an increase in the costs of production. It is a high time that the industry came up with suitable measures that will ensure that individual companies benefit regarding an increase in their market share and an enhancement in their performance.
Table of Contents
UPS Corporation Outline 2
Executive Summary 4
Table of Contents 5
Introduction 6
Company Overview 6
UPS Internal Environment Assessment 8
Strengths 9
Weaknesses 11
External Environmental Analysis of UPS Corporation 12
Opportunities 12
Threats 14
Industrial Analysis 15
Strength and Weaknesses of the Competing Rivals 15
Opportunities and Threats of the Competing Firms in the Industry 16
Conclusion 17
References
UPS Corporation
The organizational success rate is dependent on the business strategies and models that companies embrace. Advancement in the levels of technology in the past decade has played a key role in the enhancement of operational efficiencies of various firms across the globe. The courier industry, for instance, has experienced diversification in its production process, and it has led to improved performance. Globalization has also been instrumental in the expansion of companies into foreign companies, and at the same, contributing to the enhancement of their consumer base. It should, however, be noted that threats such as aggressive competition and tight market regulations may make it hard for a firm to meet its set objectives and goals. Companies that operate in the courier industry include UPS Company, FedEx Corporation, DHL Corporation, and Japan Post. The sector enjoys a strong global dominance and network and this has played an integral role in the enhancement of the individual companies. This paper focuses on the strength and weaknesses of the United Parcels Services Corporation as well the five porter forces of the industry that entails its strength and weaknesses as well as opportunities and threats. Background information on the UPS Corporation is highlighted in the paper. A SWOT analysis of the company will be provided with the aim of presenting both internal and external factors that affect its operations.
Company Overview
The United Parcels Services Company has in the past ten decades enjoyed immense growth, and it has primarily been linked to the high-quality services that it offers to the consumers and diversification in its productivity. Having been founded in 1907, the firm has also had a good leadership structure that ensures that it maintains sustainability in the market. As a part of its expansionary process, the organization has also been involved in the acquisitions and mergers, and its decision to go international in 1976 marked an instrumental move. The acquisition of the Mail Box Entertainment Corporation in 2001 improved its performance in the industry (UPS, 2016). In the early 1990s, the company incorporated technology, and it bolstered its operations and enhanced the revenues generated. UPS benefited by taking advantage of the online platform in increasing its customer base and production volume with the introduction of Internet technology in the early 2000s.
UPS has specialized in the delivery of packages and documents in various regions around the world. Some of its products include express courier services, logistic, procurement, and freight forwarding services. The company boasts of a superb supply chain and distributional channels that have been critical in ensuring that the firm customers’ needs are appropriately met. The United Parcels Services Company has its operations categorized into three segments including US Domestic Package, supply chain, and freight and international packages (UPS, 2016). The operations are designed in such a way that they are aligned with the firm’s vision and goals. Transportation is done using delivery vans, tractor-trailers, cargo airlines, and trains.
The company’s organizational structure has also played an instrumental in the sustainability that it has over the years enjoyed in the market. David Abney is the current Chief Executive Officer of the firm, and it is because of his transformational leadership that the organization has in the past three years increased its stability and productivity. The board of directors has also been pivotal in coming up with business models that have given UPS a competitive edge over the rival firms. As at the end of 2016, the organization had a total of 434,000 employees across the globe (UPS, 2016). With the unique employee motivation strategy integrated into the firm, the workers’ productivity has always been on a high (UPS, 2016). The departmental managers have incorporated various measures that ensure that there is a good working environment, thus promoting the ability of the workers to focus on the company’s goals.
United Parcels Services Company’s headquarters are located in Seattle, Washington, US. Through its Corporate Social Responsibility, the firm has been on the frontline in ensuring that it promotes environmental conservation, and at the same time, rolls out youth empowerment programs in those countries where it has operational base. Its involvement in CSR has played a critical role in enhancing the kind of relationship that it enjoys with the customers and the surrounding communities (UPS, 2016). In the US, the company faces stiff competition from rival firms such as United States Postal Service and FedEx. Global competitors include Royal Mail Corporation, Japan Post, and Deutsche Post. In the quest of dealing with the aggressive competition from its rivals, the UPS has enhanced its operations through the incorporation of advanced technology.
UPS Internal Environment Assessment
The assessment of the internal environment for the UPS primarily focuses on its strength and weaknesses. Its dominance in the market has over the years improved significantly, and it has been attributed to its effective leadership and the strategies that it embraces. Diversification in its products has also played an instrumental role in ensuring that it taps the untapped markets, while at the same time, enhancing revenue generation (Adcock, 2000). On the flip side, various weaknesses including aggressive market competition and the reduced reliance on letters as the main mode of communication have negatively impacted UPS’ productivity and sustainability. In this section, the focus is directed on the company’s internal environment, more so its strengths and weaknesses, and their impact on the performance.
Strengths
The company has a large consumer base. Currently, UPS operates in more than 200 countries around the world and has an estimated total of 410,000 employees who are highly qualified. Its dominance in the global market has given it an upper hand over competitors such as Royal Mail and Deutsche Post. With the large market share, UPS believes that it will retain its sustainability in the future. The skilled force that the company boasts of is instrumental in ensuring that operations are smooth and that it meets set goals and objectives.
UPS has in the recent past incorporated technology in most of its operations, and it has contributed to an increase in its returns. The e-commerce capabilities have made it easier for consumers to order services via the online platform and have them delivered on time. Additionally, the company has increased its reliance on Internet marketing and advertisement that has played a considerable role improving its revenue generation. The sales department in collaboration with the HR ensures that they conduct regular training of the employees on the use of technology in marketing products.
The UPS has strengthened supply chain and distributional channel. Its vast and excellent network around the world enhances the firm’s ability to produce large product volume, and at the same time, deliver to the consumers. As a part of the company’s supply chain, the commodities that are channeled to various destinations are incorporated with trackers to enhance safety. Additionally, the company is reliable, when it comes to its distributional channels (Haseeb, 2017). The large fleet size composed of cargo airlines, trains, tractor-trailers, and vans has made it simplified the ability of the firm to discharge its services to the various consumers around the world. Moreover, the strong distributional network around the globe has played a significant role in improving its financial performance
UPS has diversified its productivity, and with the broad portfolio of services, it has witnessed an increase in revenue generation across the past decade. The company offers various services to the clients; in so doing, it ensures that it meets their tastes and preferences. With its strong brand, diversification in its production has enhanced its ability to attract various consumers, and as a result, it has led to a significant increase in the revenues that it generates. Some of the services offered by the company include supply chain freight, cargo and parcel delivery, and domestic package operations.
The firm has in the past five years maintained a strong financial position. Its increased revenue stream, for instance, comes from the large volume of services that it delivers to consumers, and it has in return led to an improvement in the firm’s net profits. UPS has the largest package deliveries around the world; hence, it is a reason behind its improved financial performance. Another factor that has contributed to its strengthened financial position has been its broadened consumer base and demand for its services (Adcock, 2000). It has been projected that with the operational efficiencies witnessed in the firm, it will continue enjoying a strong financial position in the market.
Customers of the company, based on the feedback that they provide, are satisfied with UPS’ services. It is because of such factors that the company has continued expanding its market segments. An increase in the firm’s consumer base has, in return, contributed to a growth in the demand for its services, thus an enhancement in the revenues generated. Additionally, the high customer loyalty enjoyed by the company has continually improved its public reputation, thus attracting investors aboard.
Weaknesses
The UPS’ charges for the services that it offers to the consumers are very high. Customers, occasionally, are forced to pay high prices for the commodities delivered to them by the company. Apparently, the unfavorable charges by the firm tend to discourage customers from relying on the firm and instead look for companies such as FedEx whose services are pocket-friendly. It is a high time that UPS’ management came up with strategies such as price differentiation to help in dealing with the weakness that may end up leading to client lose, should it persist into the future. Good customer service may also be essential in bolstering its market position.
Another weakness that UPS has to deal with is the aggressive market competition in the courier industry. The sector has various companies that share almost similar goals and objectives. Apparently, it implies that the rival firms’ presence limits the expansion options that UPS has in the market (“UPS United Parcel Service SWOT Analysis,” n.d.). The company may implement various strategies in the market, but it may fail to meet its visions due to the ever-increasing market competition. The firm needs to embrace suitable measures that will ensure that it retains its sustainability while improving revenue generation.
The UPS currently faces a sharp decline in its operations, and it has been caused by the reduction in the performance of the parcel delivery segment. Advancement in the levels of technology has made clients change their mode of communication from letters to the use of social media platform, thus making it hard for the firm to maintain its previous performance. Declining operational efficiencies in some of the organization’s segments have also led weak returns in the company’s earnings and with the high market competition; some financial analysts argue that it may fail to meet its set objectives.
Another weakness faced by UPS is the low employee productivity in most of its operations. Workplace motivation is instrumental in ensuring that a company enjoys an increase in its performance. It is the role of an organization’s management to guarantee that it puts in place measures that can help bolster the performance of its workers (Haseeb, 2017). UPS employees have in the recent past been on record claiming that they do a lot of tasks yet are paid peanuts unlike workers in companies such as FedEx. The company also has a weak reward, benefit, and recognition system, and it leaves most staff members disgruntled and with low job satisfaction; thus, it is the reason behind their low productivity.
External Environmental Analysis of UPS Corporation
The external environment is composed of opportunities and threats that an organization has to face. One of the opportunities for the UPS is the emerging markets in countries such as China and Japan, and it will be instrumental in contributing towards its financial performance. The firm, is, however, faced with threats such as aggressive competition from the rival firms that make it hard for it to enjoy a large market share. In this section, the focus is directed to opportunities and threats of UPS.
Opportunities
The emerging Chinese market is a great opportunity for the UPS Corporation. The company will benefit immensely regarding an increase in its productivity, and it will, in return, contribute to the strengthening of its financial position. Currently, the firm operates in more than 200 countries around the world; as such, with new markets cropping up, it will enjoy a significant improvement in its share value.
The company is in the process of expanding its supply chain and freight operations. It also plans to increase its fleet size and ensure that technology is an instrumental aspect of its everyday delivery functions. In so doing, it is evident that the company’s efficiency in the delivery of commodities and services to consumers in different destinations will improve significantly; thus, there will be an increase in its revenue generation (“UPS United Parcel Service SWOT Analysis,” n.d.). The strengthened supply chain will also contribute to a rise in the firm’s production volume and its ability to meet consumer’s demand.
It is a high time that UPS expanded its e-commerce platform as a part of its expansionary process. Most sectors around the world are witnessing technological revolution, and it calls for the company also to be aligned with the trend. With increasing number of firms operating in the courier industry, UPS needs to implement measures that will give it a competitive edge over the competitors (Haseeb, 2017). One of these strategies is online shopping and the distribution of its products and services. The use of the e-commerce platform will be vital in helping the firm improve its market segments.
Deregulation in the trucking industry will be essential in the strengthening of the company’s operations. UPS will find it easy to expand to foreign countries without having to comply with strict regulations and policies. Apparently, upon the implementation of deregulation of the trucking industry, the firm will also enjoy an enhancement in its market share, despite the limits in the sector.
Strategic acquisition is another vital opportunity for the company. UPS is in the process of pursuing acquisitions in fields such as the healthcare and the supply chain sector. The firm is underway to acquire Marken, and it will make it the largest clinical trials integrated across the globe. Additionally, the company will enjoy an enhancement in the core competencies in strategic business, and at the same time, an increase in its performance.
Threats
One of the biggest threats faced by the UPS is the formidable competition that exists in the market. There are various competitors, and they include FedEx, Royal Mail, United States Postal Services, and Canada Post. The firms just like the UPS are established in the markets that they operate, and it means that they eat into the consumer bases of one another. Aggressive competition in the market limits UPS ability to benefit regarding a significant increase in its profitability level. Moreover, it impacts the organization’s product delivery volume, since consumers have choices to make on the companies that they prefer (“UPS United Parcel Service SWOT Analysis,” n.d.). It should also be noted that with the presence of rival firms, it is hard for the company to retain its skilled and talented workforce, because most of them prefer being employed in areas where they receive high pay and with high job satisfaction levels. The entrants of the new firms in the courier industry that have low costs of production have also increased competition that UPS face.
Another threat that UPS faces in its quest to deliver products and services to the consumers is the fluctuation in currencies. The company operates in more than 215 countries across the globe and the event of the weakening of local currencies against the US dollar; it implies that it will be slapped with massive losses. A good example is the Brexit that led to the depreciation in the UK pound and Euro against the dollar. Some of the countries where the firm operates are marred by political and economic instability, and it means that their foreign exchange rates keep on fluctuating. Thus, there will be negative effect on UPS retained earnings.
In the past three years, there has been a constant increase in the oil prices, and it has impacted the company negatively. With the rise in the prices of oil, so does the expense that the firm faces increase immensely (“UPS United Parcel Service SWOT Analysis,” n.d.). Soaring of the costs of production makes it hard for the UPS to meet its set goals. With the firm planning to increase its fleet size, it will be slapped with high costs as a result of the unpredictable oil prices.
With the economic slowdown in America and failure to capitalize on the Asian market, the company has been outwitted by firms such as FedEx. The US market has experienced slowdown in the past three years, despite the growth in the country’s GDP. Subsequently, it has made it hard for companies operating in the courier industry to increase their financial performance. The recession is also experienced in various other parts of the globe where the firm has its operations (Aaker, 2012). UPS’s hesitance in capitalizing the Asian market has also impaired its production. In China, for instance, unlike FedEx, the company lacks air service, and it makes it less versatile logistically.The courier industry has a strong global dominance, and it is the reason behind its sustainable financial performance.
The brand name of most of the companies operating in the industry is strong, and it helps in attracting consumers to the firms and improving their reputation (Farhoomand, Ng, & Conley, 2003).
Integration of advanced technological systems in supply chain, distributional channels, and various other divisions of the industry, thus enhancing their operational efficiencies.
The adoption of e-commerce in the industry has played a significant role in the improvement of the sector’s performance.
Majority of the employees are represented in the unions, and some argue that their grievances are never addressed.
With the high charges in the services offered by various companies in the industry, it makes it hard for them to retain customers.
The industry is mostly dependent on delivery boys at various touch points, and it, in most cases, affects delivery efficiency.
Opportunities and Threats of the Competing Firms in the Industry
The ever rising off-shoring and near shoring will increase the demand of various companies in the market.
The sector is witnessing strengthening in the e-commerce and supply chain revolution, and it will continue contributing to an increase in the individual company’s productivity (“UPS United Parcel Service SWOT Analysis,” n.d.).
There is a strong distributional network in the industry and great opportunities to expand which has played a critical role in its growth.
Aggressive competition in the industry due to established firms and new entrants.
The industry operates across the globe and is faced with foreign currency fluctuations that affect its productivity negatively.
Conclusion
UPS is a company that currently enjoys a strong financial position. From the above argument, it is evident that it is because of its unique strategies that it has maintained sustainability in the market. On the flip side, threats such as aggressive competition and fluctuation in the foreign currencies impact the company negatively. Recession and political instability in various countries around the world have also dented efforts by the industry to enjoy massive expansion.
References
Aaker, D. (2012). Developing business strategies, 6th ed. New York, NY: John Wiley & Sons.
Adcock, D. (2000). Marketing strategies for competitive advantage. Chichester, UK: Wiley.
Farhoomand, A.F., Ng, P.S.P., & Conley, W.L. (2003). Building a successful e-business: The FedEx story. Communications of the ACM – Digital Rights Management, 46(4), 84-89.
Haseeb, K. (2017). SWOT analysis of UPS. Marketing Dawn. Retrieved on November 21, 2017 from http://marketingdawn.com/swot-analysis-of-ups/
UPS. (2016). Invest. Grow. Deliver. 2016 UPS annual report. Retrieved on November 21, 2017 from http://nasdaqomx.mobular.net/nasdaqomx/7/3521/5025/document_0/UPS_2016_Annual_Report-processed.pdf
UPS United Parcel Service SWOT Analysis. (n.d.). Retrieved on November 21, 2017 from http://www.mbaskool.com/brandguide/transport-and-logistics/2688-ups-united-parcel-service.html
