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united parcel service case study

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Introduction Of United Parcel Service Case Study

United Parcel Service is an American multinational shipping and receiving and supply chain management company founded in 1907.  This company originally known as American Messenger Company that specialised in telegraphs, UPS. Parcel service means that service which users ordered and deliveryman to collect the item and delivered the item.  It was common instances where many individuals encountered challenges of receiving gifts from different pin code or their loved ones.   The lack of transportation services and delivery processes limited delivery method and parcels (Kellermann,  Biehle and Fischer 2020). In order to resolve this issue, this company was developed   by the co-founders. This company is usually one of the world largest  shipping companies. James E. Casey is the founder of the company because he founded the American Messenger Company in 1907 with the collaboration of Claude Ryan (Perboli and Rosano 2019).   

Introduction Of United Parcel Service Case Study

Problems and Issues in United Parcel Service’s Organization:

 While this company build a strong logistic network and excellent consumer base, logistic challenges are the major issues encountered by the company.  For example, COVID 19 affected the supply chain and logistic business as physical distancing was banned and hence, parcel movements as well as sharing required additional precautions.   In 2020, the United Parcel Service was faced with major supply chain issues, such as an online shopping surge and global vaccine deliveries. However, in order to address such supply chain issue, the company hired approximately 700 people in Dallas-Fort Worth last year and it acted as an access as key advantages for its expanding delivery network.   On the other hand, High attrition rate in work force is also major challenge of the company. This is because compare to other organizations in the industry, United Parcel Service, Inc. has a higher attrition rate and have to spend a lot more compare to its competitors on training and development of its employee (Yıldız  2021). 

Problems and Issues in United Parcel Service’s Organization:

Vision and Mission Statement of United Parcel Service

Vision: The vision of the United Parcel Service is “To provide solutions and world class customer service by ensuring our retailers are supported in the over 5,000 communities we serve” (Building America 2022).

Mission:  The mission of United Parcel Service is “Passionately support the small businesses in our neighbourhoods because their community is our community (Building America 2022).

United Parcel Service Inc. Situation Analysis:

As one of the leading firms in its industry, this company has numerous strengths that help it to thrive in the market place. For example, this company offers the time definite delivery of shipments to the business across 140 countries and territories. However, current encountered shortage of labour market for high demand, especially Covid 19 infection that resulted in distancing (Clarke Friese and Washburn 2016).   The company also encountered logistic challenges that resolved through expanding market and labour force in the company.

Behaviours of the Target Market:

Wang et al. (2014), suggested brand awareness is the major behaviour of the company. For example, since this company is offering luxury products at premium prices to a market where the high-end market is considerably small in number will require, the consumers currently   buying the products developed by this organisation. They   tend to prefer online delivery because the population more likely get access without transportation (Vega-Figueroa, López-Becerra and López-Santana 2022). Hence, consider this company for delivering their desired products.

Industry Structure and economic feature:

This company is multinational shipping and receiving and supply chain management. Hence, this company works   in global logistic industry.  This company has a high revenue from international as well as local shipping that contributed to current stability in the market. For example, the current sales of national packages usually account for 61% of revenues while revenue of international packages account for 22% (Allen et al. 2018). However, apart from such revenue, Supply chain and freight-based revenue account for 17%.

United Parcel Service Strategic:

i) Business Level Strategies:

They comprised of two segments such as larger couriers and smaller local delivery company. They together focus on surface level, air and express courier delivery services of parcels, documents and packages of different consumers (Libo-on 2021).  Hence, their business strategy is to establish their   identity through next day air service delivery.

 ii) Corporate Level Strategies:

 The corporate level strategy is to be better not bigger framework because it guides them to be innovative, consumer first solution in high growth areas such as health care, international market and small business.  They use their   asset utilisation which improve their efficiency in supply chain.  

 

Competitive Analysis and Advantage in the industry:

UPS has an astonishing history in logistic and delivery.  They have very powerful competitive advantage because apart from logistics, they also focus on freight forwarding and couriers express delivery. However, they have strong competitors such as Fedex,  DHL , DB  schenker,  TNT  express  and USPS   and hence, they require strong product and pricing strategies in order to compete with  these companies.

SWOT Analysis

Strengths ii) Weaknesses iii) Opportunities iv) Threats

 

Strength

·   They have very high strength UPS has hired approximately 5,200 technology employees

·   They have very diversified revenue due to global presence.

· They have high operational network in United States and reasonable price

·  They have excellent services as they transport within 7 days or sometimes one time delivery and they have received five reviews in customer satisfaction index (Le and Ukkusuri 2019).

 Opportunities

·  UPS has been working to introduce drone technology and hence, they have opportunities to transport through drones.

· Expanding markets and expansion abroad  

· Portfolio Diversification

 Weakness

· Heavy dependence on current United states market. Not having reliable market apart from United states may affect their growth (Building America 2022).

·   Price is highly dependent on the transportation of cost.

 Threats:

· Increase Days of Operations

· Since UPS has to transport couriers worldwide, political unrest internationally can adversely affect its operations.

· Intense Competition with FedEx, DHL, Amazon, YRC, Old Dominion (Building America 2022).

 

 

PESTLE Analysis:

 Political factors  

 The government stability also attracts the investors, their global presence is a refreshing opportunities.  The desirable tax policy also supports business growth of company.

 Economic factors

  A moderate inflation rate is needed in the economy for companies like united parcel services.  The lower inflation rate will lead to a high increase in the disposable income and hence, increase competitiveness (Erer and Erer 2019).   Unemployment trends will lead to lower disposable income in the economy.

 Social factors

 An increasing portion of the population is adopting health and wellness trends. Hence, United Parcel Service has introduced health aspects in its marketing and also add features of health in their products (Vega-Figueroa, López-Becerra and López-Santana 2022).

  Technical factors

 The technical innovation is high for this company but unable to consider social media marketing. The improved technological infrastructure may attract population.

Environmental factors

There is an increased focus on environmental sustainability and recycling. Hence, company has launched recycled products to improve sustainability  (Vega-Figueroa, López-Becerra and López-Santana 2022).

 Legal factors

United Parcel Service, has always been comfortable with diversity in its workforce and hence, improved employment safety as well as anti-discrimination law (Moreno et al. 2022)

 

Target Market Analysis of United Parcel Service

Demographic Characteristics of Market:

 The target population is younger individuals as A higher portion of the younger population tend to focus on this market. A moderate to high middle class is also important for United Parcel Service as its current consumers, and advocates.

Demographic Characteristics of Market:

 This company is currently focusing on younger population as younger population considered online method as mean of buying things.

Psychological Characteristics of the Market:

The social media influence of the brand awareness is the major driver of market. The younger population mostly consider media individuals as their role model in the social media increase inclination towards buying behaviour (Libo-on 2021).   Hence, this company will focus on such social media-based marketing and currently introduced ecofriendly products as well as all online means to attract consumers (Dobrodolac et al. 2012).


Strategies Appealing to Market:

Strategies Appealing to Markets are following:

Marketing Mix of United Parcel Service

Product Strategy (Product Mix):

 The company provides a range of strategies such as:

Pricing Strategy:

Bulk pricing is considered to be cheap in this case. For example, A typical 2-pound Express small parcel will cost approximately $25 for three-day delivery (Sutrisno, Andajani and Widjaja 2019). However, with bulk delivery, they have high quantity.

Promotional/ Advertising Plan:

The company use promotions through advertisements on its websites and use social media. Since younger population is target population, the company mostly focused   on social media especially Facebook and Instagram. TV commercials, print ads, online advertisements are also common methods for promotions.

United Parcel Service Competitive Analysis

i)  4Ps’ comparisons with competitors
ii) Product:  Similar strategies are used except, very fast delivery and package tracking.

 iii) Price: The price has base rate which has season surcharge, security fee and other handling charges.

iv) Place:Unlike others, this company has distribution coverage in over 220 countries with more than 900 different fields.
v) Promotion:Use social media strategies along with print ads. They use brand ambassadors to attract population, especially younger population.

Strengths’ comparisons with competitors:

UPS is a technology enabled company and almost all the processes are governed by various tools and other solutions.

Weaknesses’ comparison with competitors:

Diversification becomes a need of every business for further growth. UPS is considered a giant in the courier transportation industry. However, at this juncture, UPS is not involved in any other business other than transporting couriers (Yıldız  2021).Hence, compared to other companies, this can be a potential distress for the company.

Organization’s Competitive Advantage:

This operates with more than 220 countries have and build a smart logistic networking   based on excellent target market as well as consumer service.   They have competitive   advantage for delivering through air or any transportation within 2 days (Yıldız  2021).  

Key success factors:

 The key success factors are following:

Financial Analysis

The company has long standing history of being sole courier of the United States. However, even though company is agile, they have poor financial strategy. For example, this company experienced in long-term debt in different segments such as discretionary accelerated payments to pension plans, share repurchases, and capital asset expansion.  For example, current data suggested that operations related revenue decreased (accounting for 77.2%) from 2016-2017.  On the other hand, cash from investing activities funded the accelerated ($7,794) million to Pension and Postretirement Benefit Contribution. However currently the company financial target of revenue up to billions and adjusted the operating margin along with return of capital adobe 30%. This company is expecting to improve expenditures to be around $5.0 billion with different expansion in business.

Conclusion

On a concluding note, it can be said that United Parcel Service is an American multinational shipping and receiving and supply chain that is driven by the vision. This company has a high revenue from international as well as local shipping that contributed to current stability in the market. They have very powerful competitive advantage because apart from logistics, they also focus on freight forwarding and couriers express delivery. The company use promotions through advertisements on its websites and use social media. However, they have strong competitors such as Fedex, DHL, DB schenker, TNT express and USPS. Since UPS has to transport couriers worldwide, political unrest internationally can adversely affect its operations. However currently the company financial target of revenue up to billions and adjusted the operating margin along with return of capital adobe 30%. This company is expecting to improve expenditures to be around $5.0 billion with different expansion in business. The company can develop comprehensive   business and financial plan to improve their revenue and market expansion.

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