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.
In 2003 in an unprecedented move, UPS teamed up with rival FedEx to keep DHL from entering the US parcel market. DHL had purchased Airborne Express in an attempt to enter the US market. UPS and FedEx identified that DHL would distort US competition because DHL could subsidize its competitive activities with revenues gained from its postal monopoly in Germany. Unable to compete against the two US shipping giants, DHL announced in 2013, it would close its North American operations. In May 2013 DHL started outsourcing some of its operations to UPS.
The company chosen for this project is the United Parcel Service (UPS). UPS was started in 1907 by Jim Casey, under the name American Messenger Company (AMC), in Seattle, Washington. In 1913, they changed their name to Merchants Parcel Delivery (MPD) when they acquired their first Model T Ford. After making their first expansion to Oakland, California, in 1919, they once again changed their name to what it is today: United Parcel Service. In 1981, UPS bought its first aircraft and in 1982, UPS obtained a portion of the Louisville Airport for use and began operations from the Louisville International Airport’s air hub ("UPS: About UPS", 2014).
Also with U.S. operations, the type of product impact order fulfillment and shipment. Large and small item are never shipped together.
UPS is performing better than FedEx in financial performances. From 1997-1999, UPS reported average net profit margins of 6.5% while FedEx¡¦s was 2.8% and ROE of 25.2% for UPS and 10.6% for FedEx. Although UPS¡¦s net income in 1999 dropped significantly, it was result of a tax dispute, which should not affect the sustainability of the UPS financial performance. One of the factors driving this performance is the growth in the international delivery business. International operations in 1999 has accounted for 13% of the UPS¡¦s revenues and 5% of the operating profits. International package revenue grew 50% since 1994 and international...
...ng luxury, not many people want to wait two weeks to receive their product. When an item is ordered, it is needed immediately, and if it is received immediately then it not only improve the relationship to the customer. But it will also add value to the purchase which makes that customer that much more likely to buy the product again in the future, as opposed to your competitors. If you have customers in remote areas you do not have the luxury to send their shipment in a large batch of items, you must pay more to have that item shipped individually, which is costing more money.
The parcel service industry is made up of four main competitors. These competitors are UPS, FedEx, Airborne Express, and the U.S. Postal Service. Since 2000, American consumers have spent more than $50 billion to ship parcels, packages, and overnight letters. New parcel distribution patterns developed due to the way U.S. manufacturing companies are operating. The Internet has expanded the reach of direct marketing, particularly with retail transactions requiring home delivery. Globalization has also created the need for parcel carriers to expand worldwide.
Express mails are for individuals who need their item delivered overnight. It is guaranteed to arrive at the desired location on time and is less pricey through this mailing distributor. Priority mail is the method most people prefer. It will get a package or letter to its wanted whereabouts in three to four business days. Price wise this is less expensive in comparison to competitors offering the same service. In addition, they make a flat rate priority mailing option. Flat rate means, as long as, the contents fit into pre-sized boxes the cost is always one rate for that carton. If a person wishes to trace their parcel during transportation, they need one of two utilities. They are delivery and signature conformation. Both are used to track mail piece...
Through the extensive use of technology UPS is no longer only a package delivery company. The technology driven growth model has not only helped UPS strengthen its current business, but also allowed diversification into varied business arenas. UPS’ subsidiaries now provide and supporting other services such as venture capital management and aviation equipment and professional services according to the client requirements.
In August of 1971, Smith started his venture by buying controlling interest in Arkansas Aviation Sales. While operating his new firm, Smith recognized the tremendous difficulty in getting packages delivered within one- to- two days. This dilemma motivated him to do the necessary research for resolving the current inefficient distribution system. Thus, the idea for Federal Express was born: a company that revolutionized global business practices and now defines speed and reliability1.
Because Dollar General does not sell in bulk, they tailor their supply chain to focus on more frequent deliveries of goods to smaller stores. Although this creates some inefficiencies relative to their big box rivals who were able to ship larger truckloads to their stores, Dollar General benefits from a denser network of stores in many areas as they had more than twice as many US locations (11,061) as Wal-Mart (4,807) in 2013. Additionally, Dollar General owns all trailers moving to and from distribution centers, but subcontracts trucking [dollar general 10K]. This reduces their necessary capital investment, while retaining key distribution activities including control of the loading, unloading and delivery scheduling of products to both retail stores and distribution centers.
...(Boulton, 1999). Considering new developments in technology and particularly e-commerce, UPS recognized that this model would not sustain them in the twenty-first century. The customer driven pull-model entailed a non-linear process, and the new supply chain “[involved] each participant scrambling to establish direct electronic connections to the party who pays – the end customer” (Boulton, 1999). This has ultimately allowed customers to have a direct voice in the supply chain, and UPS has been better able to serve is customers since this transition. A few benefits of this model have been a much more efficient supply chain, fewer inventories, faster service, lower costs and better customer response (Boulton, 1999). UPS’s ability to identify the high value of focusing on the customer through their supply chain choices has allowed them to achieve unparalleled success.
Business depends very critically upon Fed Ex. If Fed Ex had a major disruption to their delivery system, flowers would not be delivered on time, resulting in dissatisfied customers. For example, if Fed Ex employees went on strike, there would be no alternative equivalent to Fed Ex to deliver flowers to customers. UPS, although an alternative, did not deliver perishable products in the same timely fashion as Fed Ex.
United Parcel Service (UPS) was founded in 1907 as a messenger company. It has grown into a multi-billion dollar corporation. Today UPS is a global company and one of the most admired and recognized brands in the world. UPS has become the largest delivery package company and leading provider of specialized transportation and logistics services in the world.
This rating as well as many others factors have lead to the success of the United Parcel Service. The current status of the company reflects the strength of the their competitive position. The leaders of the current which include James Kelly, Michael L. Eskew, and John A. Duffy have set an example for anyone who is interested in management as a career. Their tactical maneuvers are first rate. This company succeeded because of the drastic communication advances. The customer is ultimately satisfied with the reliability of UPS to deliver on time. This is the marketing factor that sets UPS a step above the competition All decisions were made in the respect that the company would continue to bring the customer more than they expected. In turn United Parcel Service is an extremely profitable corporation. The environment provided by UPS keeps customers, employees, and managers working hard to keep up the high standards set by todays’ customers.
In sum, internet distributors are a foe to A/S because they cheat the price. To them A/S has to respond as convinced anti-internet distributor by satisfying their customer needs instead of disembowel them.