Research Paper on "Thinking Outside the Box UPS"

Research Paper 13 pages (3731 words) Sources: 15

[EXCERPT] . . . .

thr Box (UPS)

Thinking outside the box -- United Parcel Service

The economic agents of the modern day society have to develop and implement more and more complex strategies in order to best respond to the emergent requirements of a growingly dynamic market place. Throughout the past recent decades, the global regions have opened their boundaries and this has created opportunities for economic agents to expand their operations and to sell their products to wider consumer markets. Nevertheless, it has also meant that they would be presented with incremental levels of competition, as the same local consumers would come to be served by more providers.

The contemporaneous business community is more challenging than ever. The customers are more and more pretentious, the pressures of the stakeholders -- customers, employees, business partners, governmental and non-governmental organizations, the public and so on -- exponentially increase. The role of the staff member has suffered functional and legal modifications.

In such a context, firms have to create strengths outside their core operations. In other words, the simple delivery of the company's product and/or service is no longer sufficient to ensure organizational competitiveness. Economic agents are as such faced with the necessity to develop other core competencies and integrate them in specific business models which best serve their own needs and which are tailored to the specifics of a situation, such as the company size, the features of the industry or the type of customers served.

In other words, it is necessary that economic agents develop customized business models and core competencies. The current endeavor strives to assess the business strategies for competitiveness as they have been developed and implemented by one of the leaning courier firms, UPS. Information on the company would initially be introduced, to be followed by an analysis of the organization, by the company and industry key success factors, the organization's driving forces and its international strategic alliances.

2. General information about the company

United Parcel Service Inc. was established in 1907 in Seattle, Washington as a local messenger company. Throughout the years, the company has metamorphosed into a leader of the international courier industry. As they themselves agree, the strategy followed was that of promoting UPS as the supporter of global trade:

"Founded in 1907 as a messenger company in the United States, UPS has grown into a multi-billion-dollar corporation by clearly focusing on the goal of enabling commerce around the globe. Today, UPS is a global company with one of the most recognized and admired brands in the world. We have become the world's largest package delivery company and a leading global provider of specialized transportation and logistics services. Every day, we manage the flow of goods, funds, and information in more than 200 countries and territories worldwide" (Website of UPS, 2011).

UPS has been recently impacted by the internationalized economic crisis and the immediate result has been represented by a decrease in its revenues from $51,486 million in 2008 to $45,297 million in 2009. The year was also marked by decreasing operational expenses from $46,104 million in the previous year to $41,496, as well as a decrease in the net income from $3,578 million in 2008 to $2,152 million in 2009. Throughout the year, the company employed an estimated 408,000 individuals, out of which 300,000 in the United States and the rest throughout the world (UPS 2009 Annual Report). The firm has nevertheless used the negative economic climate to conduct processes of internal strengthening and improvement through acquisitions, infrastructure development and new product creations.

Aside from the role it plays in supporting international trade and its global presence as a strong international delivery organization, UPS is also committed to being a socially responsible member of the communities in which it operates. In 2009 for instance, UPS:

"Continued our sustainability initiatives through community support, responding to global disaster relief needs, and efforts to reduce our impact on the environment" (UPS 2009 Annual Report).

3. Analysis of UPS

The analysis of United Parcel Services Incorporates is best conducted through the lenses of the SWOT analysis, through the presentation of the company's internal strengths and weaknesses, as well as through the observation of the external opportunities and threats, as they are revealed within the environment.

3.1. Internal strengths

a)

United Parcel Services has been present within the courier industry for over one century, during which time it has evolved from a small size local messenger into a global leader of the courier industry. Its long existence and long time expertise in the field generates high levels of customer trust, as well as loyalty.

b)

A second organizational strength is constituted by the company's brand strength. Throughout the years, UPS has focused on the development and implementation of a strong corporate brand, which has inspired customer trust.

c)

UPS has an undying commitment to innovation and research and development. It continually researches the market and the industry in order to identify and serve new needs as well as in order to identify and seize new opportunities. It strives to create new products which better serve the needs of their customers and they use technologic efficiencies in their efforts. These efforts have led to a context in which the company has identified new requirements and has adapted to them. The results were those of higher quality products, as well as a diversified product offer which better addresses the needs of the quickly changing business community.

"For almost 100 years the UPS brand has been synonymous with reliable package delivery. And our expertise has made us the world leader. But as our customers' businesses evolved to be increasingly interconnected and complex, UPS focused on targeting a bigger opportunity: to establish a deep portfolio of transportation and supply chain services that can be efficiently and seamlessly combined into service bundles based on the needs of individual customers. Today, our services range from global package delivery, service parts logistics, international air freight and customs brokerage to managing customers' entire inventory and distribution systems" (Tybout and Calkins, 2005).

d)

Another strength on which UPS can rely is constituted by the global presence in the meaning that the company operates in over 220 countries and global regions. The daily average number of customers is of 7.9 million, with an average of 22.4 million tracking requests (Website of UPS).

3.2. Internal weaknesses

a)

Despite its core competencies and strengths, UPS remains unable to overcome the competition posed by FedEx, even if the quality of their services and the volume of their sales exceed those of FedEx:

"In spite of the advantages of the status, which helped define the culture and UPS brand for decades, the ability to sell its services was being hindered by the fact that publicly held rival Federal Express (FedEx) was clearly the preeminent brand in the category. This in spite of the fact that UPS's sales volume was over double the size of its rival and many of its services matched our outshone FedEx" (Morley, 2009).

b)

Another weakness is constituted by the brand, which was initially presented as an organizational strength. The limitation is however represented by the fact that the UPS brand is commonly associated with delivery services. In today's context nevertheless, the firm is striving to become an active player by offering services complementary to delivery, but the brand makes the public continually perceive the firm as a strictly courier business.

c)

Up until the financial crisis emerged, one would have listed UPS's resources as an organizational strength. Today however, as a result of decreasing customer orders, the company registers decreasing revenues. This in turn indicates reduced powers for sustained developments and innovations.

3.3. External opportunities

a)

The internationalized financial crisis has forced economic agents to reduce their operational expenditures. Delegations were as such decreased and were replaced with more efficient solutions, such as teleconferences, telecommunications and courier services. The evidence of this trend could be revealed in the future company documents in which a change in the structure of UPS's customer base could be observed.

b)

In the incrementally dynamic business society, economic agents seek solutions to increase their operational efficiencies. In this context, UPS's integrated solution presents corporate customers with opportunities to increase the efficiency of their logistics and supply chain operations. In other words, the need for efficiency and a one stop company to sustain logistics could represent an opportunity for UPS's future development.

"The goal is to enhance our customers' supply chain so that they can focus their attention on other things that will make them more successful, rather than spending time stitching together the services they need from multiple logistics providers" (Tybout and Calkins, 2005).

c)

A third opportunity is presented by the increasing living standards in emerging countries, in which the purchasing powers and the customer demands increase. UPS could as such expand into these regions and subsequently increase its global presence and its revenue sustainability.

3.4. External threats

a)

The internationalized economic crisis has reduced the purchasing powers of both companies as well… READ MORE

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