UPS Case Analysis

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Industry External Analysis Considerations of Macro Environment Market Demographics: The target market is everyone in the world who needs to ship an item. Christmas time is a particularly busy time for shipping items across the world, whereas people need a company like UPS to do the delivering for them. Economic: Gasoline prices, along with rising energy prices are the major concern. Jet fuel prices are at $2.80/gallon! However, many people would rather have items shipped rather than spend money on gas to go and buy the item. Legal: International express services can be delayed by government policies and restrictions that can include anticompetitive practices of government-owned or authorized monopolies, licensing requirements, customs procedures, restrictions on access to aviation markets, restrictions on access to ground transportation systems, and restrictions on foreign investment. Socio-Culture: The economy is really bad right now, so many people don’t have extra money to make a lot of online purchases and businesses are not selling as much, therefore not needing to ship as much. Global: Worldwide packaging shipping volume is increasing as a result of global exchange, e-commerce, and changes in supply-chain management. Technological: The internet has expanded the reach of direct marketing. Industry Analysis: Dominate Characteristics: With globalization, shipping is now a major priority for businesses and many individuals, especially those that use the internet to do a lot of shopping. Driving Forces: Globalization and the internet, along with Christmas. The Competitive Forces are: The biggest competitor is Fed Ex, and they cannot compare. UPS did 2.5 times the volume through its sophisticated delivery machine. Rivalry in the Industry (Porter’s Five Forces): Real Threat of New Entrants: Fed Ex, DHL, and TNT have capabilities in certain regions on par with UPS, but new entrants are unlikely to build such a globe-spanning infrastructure, then incur the expense of trying to steal share from these established networks. Real Threat of Substitute Products or Services: High customer satisfaction earned through conscientious drivers, high reliability, and Internet-based tools has kept UPS at the top. UPS has created an economic advantage by assembling a dense integrated global shipping network that is unlikely to be matched by any but a few global players. Bargaining Power of Suppliers: The suppliers who provide the boxes and envelopes most likely sale the products in bulk, this is economies of scale and allows UPS to sale them at a cheaper price. Bargaining Power of Buyers: Businesses can buy in bulk and get a cheaper rate.

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