Brief Of Company Of United Parcel Service Commerce Essay

Brief Of fraternity Of United ploughshargon return Commerce EssayUnited Parcel serve well, Inc. also known as UPS is a messenger agreement which is the initiations coarsest piece of land deli truly help provider today. It was founded in 1907 by Jim Casey and their headquarters argon based in Georgia, United States. The organisations run activi withdraws include logistics, freight forwarding, place tracts and supply chain function. It tosss packages to to a greater extent than than 200 countries and domains worldwide.Reasons for selectingThe organisations gross escalated from US$36.6 one thousand million (2004) to US$51.5 billion (2008). Therefore, they aro single-valued function been scaling a tremendous reaping rate for several socio-economic classs. A comprehensive analytical study of UPS trading operations and its corporate strategic implications would en qualified me to have a firm moil of globalisation initiatives. With an applied oriented approach, I wo uld garner a more(prenominal) in-depth perspective of strategic concern.Main strategic issues facing the companyRegarding the desegregation of reading technology, al-Qaida and its package delivery operations. To adopt a holistic perspective in tackling information systems with implications at a National and internationalist level.To leverage on its profit-margins by aggressive determine to affects and counter escalating overheads in its infrastructure and operate personifys, UPS has had to axe 1800 employees.Companys contribution to the National EconomyUPS achieved about US$38.63 billion in revenue from the U.S. market share (75%) in 2008.UPS contributed 0.36% to the United States GDP of US$14.2 trillion in 2008.The organisation holds a 61% (US$31.28 billion) market share in the U.S. domestic delivery package service.Companys contribution to the Regional EconomyThe organisation has achieved an award on environmental excellence for the conservation of energy and dealing w ith global warming issues emphasising on corporate social responsibilities.The organisation new-madely endowed in its corporate mark by sponsoring the Beijing Olympic Games 2008 to gain a foothold in the Chinese market.Recent strategic dilemmaThe recent U.S. economic deferral has sent terminate prices increasing thereof incurring lavishly operating cost.Recent strategic choiceThe recent opening of a novel line of descent hub in move that provides the organisation with more value added capacities and great efficiencies in discovering business opport unit of measurementies.UPS partnership with DHL by consenting to its pit to outsource their businesses to them generating revenue of US$1 billion annually crosswise 10 years.Source of tuition on Companyhttp//files.shareholder.com/downloads/UPShttp//www.reuters.com/finance/stocks/companyProfilehttp//www.ups.com/ depicted object/sg/en/about/index.html(349 words)Exe snubive heavysetUnited Parcel Service, Inc is an American-bas ed organisation that is a freight and logistics provider globally across 200 countries and domains employing just about 426,000 employees. The messenger service persistence which deals with parcel deliveries is currently in the mid-maturity stratum of the Industry life cycle. Critical success factors such as service reliability, capability and technological integration into its massive infrastructure are line aspects for a package company to achieve its successful reputation. A strong amount of initial capital investing is essential for a courier organisation to operate its activities due to gets and leasing fees of aircrafts, ships and vehicles.Rivalry among existing firms is extravagantly, due to a large number of competitors posting competitive first cost pricing strategies. Stakeholders such as governanceal regulations and international legislative authorities in ming direct countries have put downd stringent laws and policies in conducting its operating move and procedures. UPS attributes its success and sustainability in developing a robust technological infrastructure and consistently abiding to corporate social responsibility practices. However, the steep cast up in volatile render prices and substantial operating cost have light-emitting diode to the organisations recent restructuring. The substantial allocation of the firms resources diverted into the Chinese and Indian market would elevate the brand equity and turnovers of UPS.Therefore, it could geographically expand and bring forward capitalise future growth out of the U.S. market dependency. Although UPS necessarily to approach its short duration challenges by monitoring its cash flow activities, it has non compromised its spending in constructing tonic hub expansions globally in China, America and England primarily. The firms great term perspective has also focuse on rectifying issues such as the improvement of delivery services to leverage on maintaining customer commit tedness initiatives. The organizations ROI was 6.04% for 2008 which demonstrates that the firm was efficient in their management effectiveness.(298 words)Industry Life passCourier Service IndustryIndustry turnoutIntroduction cropMaturityDeclineoTimeThe courier industry has contend a major role to facilitate the evolution of globalisation today. This domain has achieved tremendous growth revenues from the 1960s savings bank 2003, before entering into the earlier maturity stage of the industry life cycle. The industry is looking at expansion opportunities, for example, setting up of new air hubs in early(a) countries to leverage on its international branding. Some organisations have also departed onto diversification of its resources, for example additional services resembling wareho utilize and supply chain management solutions. With the implications of global market uncertainty thats happening passim the world, it has made an impact on slow sales growths.In addition, escal ating fuel prices and soaring operating cost like leasing fees have resulted on a decline or flat profit margin. Currently, I believe that this industry is at its mid- maturity stage of the life cycle. This industry has also experient peak sales and their revenue is maintained or goes up reasonably yearly. heroic players in this industry have experienced low cost per customer due to economies of scale, for e.g. expanding their infrastructure and delivery operations on a wider scale in order to achieve lower costs and change magnitude in output. The courier industry has existed for more than a century past and there are many competitors in the market but more or less are recently exiting from this industry.The industry targets the mass market for e.g. household consumers, corporations and government agencies whereby all these segments require package deliveries for industrial growth. Price cuts policies are used to encourage customers to switch brand to cement its consistent r evenues. There is low research and development needed because the industry has stabilised and systems and policies are already in place. Moreover, firms may result to cost reductions, e.g. axing of employees to reduce expenditure. Major firms efficacy need to consider dropping a few subsidiaries and harvest the more profitable strategies and resources in order to sustain the business. headstone Factors of SuccessKey Success Factors cant overUnited Parcel ServiceFedExDeutsche Post DHL evaluation weighted reachRating heavy ScoreRatingWeighted Score1Corporate Branding0.025.000.105.000.104.500.092Technological integrating0.105.000.504.500.454.500.453Location Accessibility0.145.000.704.500.634.000.564Service Reliability0.204.000.804.500.905.001.005 rugged operational Costs0.154.500.684.000.603.500.536Skills Expertise0.175.000.854.500.774.500.777 junior-grade Pricing Policies0.034.500.144.500.145.000.158Speed Efficiency0.194.000.765.000.955.000.95Total Scores1.004.534.544.50Trust, c ommitment, locomote and efficiency are the most important factors to consider in this industry. Thats because customers using the service must rest assured that their packages arrive to their desired destinations on time and accurately to the appropriate address. Firms must deliver a uplifted level of accountability and responsibility to their customers to uphold its reputation. That is why courier insurance policy policies offered to customers must be affordable and deliver value to discover firms offers superior assurances. Pilots, drivers and shipmen have to acquire the appropriate expertise to be relied upon for safe deliveries to parry damages and losses. Training and development programmes for operating aircrafts and vehicles are essential for unruffled transit of packages and to ensure an accident-free dispatch.Hub location must also be hands down and accessibly situated so that firms can deliver a faster and more responsive delivery at lower transportation time and costs. In this way, firms will achieve just-in-time (JIT) delivery system principle for storage costs to be kept at the lowest possible level. The advancement of information management systems integration leads to efficient operations to transact or cut across the progress of packages for customers and a more systematic process in discourse business activities. Firms must also deliver low cost operations to achieve economies of scale by expansion for e.g. bulk purchases for their raw materials like cart boxes, papers, bubble bags and envelopes to attain a lower overall unit cost reduction.In addition, firms must also strategise affordable pricing policies to provoke customers to use their services. Branding and ad is crucial for a firm to view as its market share as this leads to awareness and quality emphasis for customers to develop brand positioning perceptions of various organisations. UPS has performed well by sharp advertising its brand for e.g. sponsorship for the recent Beijing Olympics 2008 to leverage its recognition in the well-situated Chinese market. In addition, in cost of net income, UPS is the strongest in its pecuniary stability (US$3 billion in 2008) but has to better its reliability, focal ratio and customer service quality compared to its competitors.Porters Five ForcesPotential Entrants lavishly gear sign Capital OutlayLoyal Customer RelationshipsStrong Brand referenceInternational LegislationsEconomies of Scale different StakeholdersGovernmental InterventionEnvironmental Laws outwear UnionsShareholders WealthEmployee DemandsCommunity Pressure (e.g. Terrorism Threats)Rivalry among Existing FirmsLarge Number of CompetitorsPricing CompetitionService Differentiation towering grumble BarriersMergers AcquisitionsSubstitutesE- chain mail Fax ServicesCustomer SatisfactionComplex unreliable TechnologiesImportant DocumentsSecure FacilitySuppliers publicizecrafts (e.g. Boeing Airbus)Leasing Contractual FeesLogistic Vehicles Cargo Ships Manufacturers open fire Prices IncrementsAirport AuthoritiesBuyersConsumer PreferencesBackward Integration (e.g. Vehicles)Service Reliability On-time DeliveriesLow Switching CostDiscounts IncentivesRivalry among Existing Firms ( luxuriously)Theres a high challenger among firms to compete in low pricing for players as the industry is very saturated. Firms globally offer similar courier services, but have to acquaint and offer differentiation to provide an array of services for variety at low costs. Theres a high heady costs because firms need to purchase vehicles, aircrafts, ships and infrastructure to facilitate its delivery operations. Therefore, theres high exit barrier as players who enter the business demand to purchase or lease fixed assets and employ run awayers in order to conduct their activities.Threat of New Entrants (Low)Theres high barrier on entry to new entrants as competitors are aggressively protected of their market share. Furthermore, besides a high in itial investment required, established major players have already developed multiple scattering channels. In addition, customers have already committed to their preferred firms for repetitive services due to branding and reliability. Stringent trade barriers, heightened tariffs and governmental regulations to obtaining courier licensing are difficult. Overcoming these factors takes a long time.Bargaining Power of Buyers (High)The bargaining world power of buyers is high because competitors provide undifferentiated services and large commercial firms may use courier providers to transport a massive volume of deliveries. Customers are go wrong for choices as they could conveniently compare various prices firms offer. Buyers may also call for to practice backward integration, for e.g. producing their own supply chain activities and delivery vehicles. In addition, firms offer discounts for high volume freight forwarding and which focuses on high customer retention.Threat of Substitut es (Low)It is not possible to find a ersatz for freight services to deliver packages as this is the only source. However, in terms of mail deliveries, substitution such as emailing and fax pose a threat as alternatives. While these technologies weaken revenues, they wont overwrite it entirely, as customers prefer manual deliveries for a safer medium. In addition, the complexity and substantial costs for its extensive network communication systems will not be able to replace the human element of guaranteed deliveries.Bargaining Power of Suppliers (High)The bargaining power of vehicles, ships and aircraft manufacturers is high because courier providers require large fleet of vehicles and periodic maintenance. Manufacturers appease has power to exercise their preferred choice of buyers from various industries or subside to raise their fees and prices for vehicles. Furthermore, the supplier for aircrafts affects the operating costs for the companies in terms of fuel consumption. Seco ndly, supplier dependency on vehicles (e.g. Ford) is vital as the organisation needs an extensive medium for an effective mode of logistics scattering.Relative Power of Other Stakeholders (High)Environmental laws and regulations are enforced in the U.S. under the environmental protection agency (EPA) act whereby the absolute compliance of legislations regarding air pollution and depopulate materials must be minimised to protect its green environment. Secondly, employees who join unions add compress to the industry whereby organisations may be prone to strikes and work stoppages because of a large workforce. In addition, shareholders have added pressure for the company to reduce its operating costs by forcing to lay off employees just to maintain its share prices. intrinsic Factor Analysis Summary (IFAS)Internal FactorsWeightRatingWeighted ScoreCommentsStrengthsS1 honorable Branding0.104.800.48 food market DominanceS2 Broad Service Variety0.054.500.23Diversified ResourcesS3 app lied science Expertise0.104.700.47E-commerce CompetenciesS4 Financial reaping0.154.200.63High Profit Margins SuccessS5 Merger Acquisition0.084.000.32Reduce CompetitorsWeaknessesW1 Low Employee Output0.053.000.15Low Productivity Revenue Per EmployeeW2 Domestic grocery Dependency0.123.500.42High Reliance on U.S. MarketW3 High OperatingCosts0.153.200.48 change magnitude in Fuel Prices Labour CostsW4 Poor Delivery Service0.102.000.20Slow Delivery Missing ParcelsW5 High Reliance on Information Systems0.102.500.25Massive Database Information Processing VulnerabilityTotal Scores1.003.63StrengthsIn 2008, the firm was listed in the top prong for the worlds most admired companies by the character Institute. In terms of service variety, the firm offers customised denouements (e.g. UPS CampusShip) to enable employees across early(a) countries to ship documents and parcels from any computer with internet access. UPS was the first company to free delivery transactions online and provide technological tracking services. In 2008, UPS had an operating and net profit margin of 10.4% and 5.8% respectively, higher(prenominal) than its rivals. Lastly, UPS has made 52 acquisitions to date, and the most recent includes the acquiring of Korea Express (KEC) which accords UPS full authority of its partners operations.WeaknessesIn 2008, UPS revenue per personnel stood nearly at US$120,859.1 which was much lower than its rival FedEx at US$130,872.4. UPS is also highly dependent on the U.S. market for revenue and is temptable to volatility of the economic and governmental unstable situations domestically. Thirdly, the rapid increase of fuel prices, (average fuel surcharge in 2008 on U.S air deliveries was 25.17% compared to 12.17% in 2007) has increased its operating costs forcing UPS to cut jobs at the aforementioned(prenominal) time heightening their package rates. UPS also needs to improve on its delivery service as it fairs below average compared to its rivals. In additi on, the high reliance on its database information systems processing has made the firm susceptible to data omissions.External Factor Analysis Summary (EFAS)External FactorsWeightRatingWeightedScoreCommentsOpportunitiesO1 Geographical Expansions0.154.200.63Booming Chinese MarketO2 Joint Ventures0.124.300.52Oil Gas MarketO3 Online Retailing0.084.000.32E-commerce TrendsO4 Growth in Globalisation0.104.500.45Import Export SectorsO5 Strategic Alliances0.123.500.42Booming Indian MarketThreatsT1 Governmental Regulations0.063.900.23Government InterventionT2 Labour Union Pressure0.054.000.20Strikes determine StoppageT3 Foreign Currency Fluctuations0.053.800.19International MarketsT4 explosive Oil Prices0.152.300.35 change magnitude Transport CostT5 Terrorism Natural Disasters0.121.900.23 trading operations are cut offTotal Scores1.003.54OpportunitiesUPS formed a joint venture in Dubai to tap into growth opportunities in the oil and gas industry. The firm therefore acquired Unsped Paket Servisi San ve Ticaret A.S., in 2009. UPS has also penetrated the Chinese market by opening new air hubs in Shenzhen and Shanghai to focus on the air quicken cargo sectors which is expected to grow at an average of 11.2% per year till 2020. UPS has been a main facilitator for online shopping, for e.g. Nike, Amazon.com and E-bay. The emphasis of international trade in todays world economy has impacted UPS to be a leading global courier provider. UPS has also formed strategic alliance with AFL Pte Ltd, India to leverage on the Indian market.ThreatsThe unions would affect UPS to provide undisrupted service to its customers if the firm does not satisfy demands of their employees. The transportation, aviation, security measures and environmental authorities have enforced stringent governmental laws and regulations for UPS to consent in the course of their operations to ensure systematic work moral philosophy are practiced. In addition, currency exchange rates which fluctuate seasonal ly will implicate the organisations revenue. Furthermore, due to the oil embargo in 2008, it has led to the increase for oil prices. Finally, due to terrorism and natural disasters, its daily pip operations would be greatly affected.Strategic Factor Analysis Summary (SFAS)DurationINTERMESDHILOAOStrategic FactorsWeightRatingWeightedScoreRTNCommentsTEGS1 Reputable Branding0.124.800.58XMarket DominanceS4 Financial Growth0.104.200.42XXEscalated RevenuesW2 Domestic Market Dependency0.073.500.25XXHigh Reliance on U.S. MarketW3 High Operating Costs0.103.200.32XXHigh Fuel Prices Labour CostsO1 Geographical Expansions0.164.200.67XXBooming Chinese MarketO2 Joint Ventures0.154.300.65XXOil Gas MarketT4 Volatile Oil Prices0.122.300.28XXHigh Transport CostsT5 Terrorism Natural Disasters0.181.900.34XOperations are DisruptedTotal Scores1.003.51Short TermUPS has to ensure that they can maintain financial stability and has done this by achieving an increase of 3.6% in revenue for 2008. UPS has to address issues on achieving yearly financial growth because it affects their annual reports and share prices. Secondly, UPS needs to address high oil prices and has cut dig costs by employing more part time sign workers to manage volume capacities on an ad hoc basis. In addition, UPS recently purchased hydraulic hybrid vehicles which emphasises on fuel reduction expenses. They have also lay off its night sorting operations in Columbia, shutting down small facilities and froze management salaries.Intermediate TermUPS and its union-Independent Pilots Association (IPA) have came up with a mutual agreement on cost reduction measures totaling up to approximately $131 million over the next 3 years. Secondly, UPS was awarded a 3 year partnership contract with the U.S. Postal Service by agreeing to transport mail nationally in U.S. cities. UPS would have to undertake an environmental scanning compendium in order to embark on geographical expansions and joint ventures. Furthermore, UPS needs to address the issue on human resource planning, demand prognostic that are useful in sales planning, production planning, capacity planning, budgeting and analysing various operating plans.Long TermUPS has to address its branding strategy to form their reputation for public awareness. Therefore, it has done this by changing its 4th logotype in 2003 to a more robust and distinctive image. UPS has also been piteous out of the U.S. market by geographically expanding in China, India and the Middle East. The recent failed Nigerian terrorism plane attack has led to the U.S. authorities to impose heightened stringent checks and changing security procedures. In addition, the recent Haiti earthquake has led to disruptions in services and operations. UPS needs to address these factors which implicate the financial health of the organisation.TOWS MatrixInternal Factors(IFAS)External Factors(EFAS)WT StrategiesForward integrate a develop college in-houseReduce more overnight flight operations across countries flatulency bulk discountsST StrategiesSeismic monitoring efficiencies to track down potential earthquakes impoverish from unpredictable fuel marketFinancial stability and branding to rubbish rivalsThreats (T)T1 Governmental RegulationsT2 Labour Union PressureT3 Foreign Currency FluctuationsT4 Volatile Oil PricesT5 Terrorism and Natural DisastersOpportunities (O)O1 Geographic ExpansionsO2 Joint VenturesO3 Online RetailingO4 Growth in GlobalisationO5 Strategic AlliancesSO StrategiesDiversify by tie ups with 3M Faber-CastellTelco postal concessions (e.g. Singtel)Strategic alliance with the Chinese market to kick upstairs regional brandingWO StrategiesGeographically expand UPS by focusing on its resources capabilitiesLeveraging on E-commerce growthJoint venture with Oracle breadbasketWeaknesses (W)W1 Low Employee OutputW2 Domestic Market DependencyW3 High Operating CostsW4 Poor Delivery ServiceW5 High Reliance on Information SystemsStrengths (S)S1 Reput able BrandingS2 Broad Service VarietyS3 Technology ExpertiseS4 Financial GrowthS5 Merger AcquisitionSO StrategiesUPS could ray its resources and get together with reputable stationary companies like 3M and Faber-Castell to manufacture stationary that would actualise the UPS brand. The firm could also move into a joint venture to offer postal concessions to Singtel and attain guaranteed high volume businesses in a long-termed contract. In addition, UPS could penetrate deeper into the Chinese market, by a strategic alliance with Air China Cargo Co., Limited to share valuable resources and boost its regional standing. Finally, they should advertise aggressively by sponsoring more global events to gain a higher level of presence recognition especially from the Asian market.ST StrategiesUPS could work closely with the seismic monitoring governmental department agency (USGS) for alert signals and warnings for earthquakes. The firm could also divest more from the fuel segment and use solar energy panels instilled into vehicles during the day to reduce fuel prices. In addition, they could invest extensively in research and development to enhance fuel efficiency alternatives for its current fleet of vehicles. Finally, the firm could utlise its reputable branding to propose to EPA in implementing harsher fines to new competitors that does not comply environmental legislations.WO StrategiesUPS could add more and deeper distribution channels into several regions to cement its efficient operations. It could also utilise its telematics expertise on other countries, to leverage on its core competencies. In addition, collaborate with Amazon.com and E-bay to acquire delivery orders on a long-termed basis. Oracle and UPS could have a joint venture to provide database management systems solutions towards its supple chain management operations. At the same time, UPS could be designated as the sole distributor for Oracles packaging and hardware components delivery interdepend ently.WT StrategiesUPS could invest by forward integrating a training arm subsidiary to offer aeronautical, logistics, supply chain and self-propelled courses to groom outstanding performing employees by bonding them and fully sponsoring their educational fees to encourage them to stay in the organisation for a long-termed basis. This would avoid labour issues, improve customer service and reduce hiring costs. UPS could also reduce importantly its overnight flights in different countries to reduce expenditure. Lastly, the firm could source for a wider range of suppliers internationally to achieve greater fuel bulk discounts. sound judgement of Performance of CompanyEfficiencyChinas export business has commercially bountiful by 10% in the export business. Shanghais air cargo hub operates at a 24/7 customs inspection capacity to deliver services from China connecting into international markets like U.S. and Europe faster. UPS also collaborated with the Shanghai customs to implement a risk management system to spare lower level of redundant packaging checks and an efficient clearance to recipients. DHL outsourcing would be an advantage for UPS as this move reduces competitors. Furthermore, UPS has an extensive excess flight capacity to accommodate more package volume to achieve a higher capacity utilisation level.EffectivenessWith the growth of e-commerce and export initiatives from the booming Chinese market, UPSs new air hub expansion in Shanghai would facilitate the Yangtze River Delta res publica international trade revenue driver as it contributes approximately 40% of total countrys business