Analyzing International Business Challenges For UPS And DHL Logistics Companies

Challenges faced by DHL

Question:

Discuss about the International Business Logistics Companies UPS and DHL in Australia.

International business is governed by many factors, of which some even challenges the multifaceted specialities of multinational companies. Different companies have different international business strategies; however, the destinations of all those companies are the same. Moreover, they move to the globalized areas to have enhanced business operations and annual revenues. However, in course of this, they even face many challenges, which even challenge their sustenance (Ajami et al. 2014). The main purpose of the assignment is to analyze the real business problem in two of the biggest companies of Australia such as UPS and DHL. The assignment tries to check their international business operations and the challenge, which they receiving on their way to the success.

DHL is one of the leading logistic companies in the world is struggling with the logistic problem in some countries such as Australia. Three reasons have been identified behind the challenges, which are opposing the growth of the country in some of the most emerging nations across the globe. Following are some of the reasons behind the issues in the logistic operations:

Standardization – It is the first problem in the global business of logistic operation, which is because of the fact that different countries have different set of regulations governing the logistic operations. The emerging countries have generally no such awareness towards the importance of logistic operations. In addition to this, the ever-changing rules and regulations in such countries related to the supply chains operations often make it problematic for the companies to have a smooth flow. The rules and regulations in some of the emerging countries are not standardized and this is affecting the business of DHL in big terms. Nevertheless, the emerging countries are a god asset for the company if the country offers a standardized rules and regulations (Casson 2013).

Change – The global countries can often their foreign trade policies dramatically. This is because of the fact that these countries are often more inclined towards the local companies. They tend to uplift the business of local companies, which is like opposing the growth of foreign companies. Thus, the changing perceptions of foreign countries towards their local companies have also become a challenge to the global operations of the DHL logistics (Cavusgil et al. 2014).

Lead Times Costs – Different countries have different set of policies for the import business, which is another strain for the logistic operations of DHL as the timely deliverance of product is very much required for the sustenance of reputation. In some countries such as Chile, once goods are arrived it relatively reaches quickly from port to the distribution centre. However, in countries such as Brazil and Peru, the imported goods take relatively higher times because the imported goods are first sent to the fiscal warehouses for the clearance of the products. It is then sent to the distribution centre. It is time consuming and little expensive (Clarke 2012).

Standardization

The Incoterms used in the DHL Company is for defining the distributing criteria and the assignment of risks between the internationally involved trading parties. It standardizes the shipping of products and receiving the merchandise. It is also used to allocate international commercial transactions. It also helps establish a relationship of agreement on between the exporting and the importing parties (Dunning 2012).

DHL is very well known for its global presence in the logistics operations, which is governed by several available resources such as international express, ocean, air, and road transportation. It has categorized its network in two sectors such as global and local. Hong Kong, Cincinnati and Leipzig are connected through global network whereas Bangkok, Thailand and Singapore as the local network. DHL Thailand is the gateway of both the important, export services, and transit shipments for the Indo-China countries. Approximately around 5,300 employees are working for the company across the globe. The company manages its operations through some business expertise and divisions such as DHL Express, DHL Excel Supply Chain and DHL Global Forwarding (Forsgren and Johanson 2014).

UPS is the world’s largest company for package delivery and the one of the leading global provider of logistics services. However, the company is facing several problems in maintaining its reputations on the e commerce websites. During the bad weather times, the shoppers are not able to go on the shopping malls and this is such times, which enhances the pressure on the UPS Company. Notably, at that point in time, UPS Company does also suffer of bad weather condition, which hampers its network. This is because of the fact that com any is not able to meet with the rising demand on the online booking of products and their shipments. The network is poor and is not responsive under bad weather conditions (Hill, Cronk and Wickramasekera 2013).

Incoterms – the Incoterms used in the company have its objectives to differentiate the functionalities and risks between two parties. It also covers delivery points, obligations for the sellers and the buyers and transport mode. The different kinds of Incoterms used in the company are E Terms, F Terms, C Terms and D Terms (Meyer and Peng 2016).

It is known as the “Big Brown”, the company is the world’s largest delivery company for the packaged goods. The import and export business are done by means of several transportation modes such as road, air, ocean and rail transportation. The company owns the 9the largest airline in the North America, which simply tells the highly incremented global reach of the company. The global operations are expanding steadily; however, in the US, it is taken a huge growth. Nevertheless, the company is not having comparative high growth in Australia where it is lagging in terms of e commerce advancement. Its door-to-door operations are efficient enough to connect to the major number of residents. The highly incremented business of the company is in the United Sates where the company is generating approximately around 83% of its entire revenues generations. The ground shipping market is covering the 60% of its entire operation in the US and 35% in the air shipping. The company is also using advanced technology to reach to maximum number of customers and make elevated order supplies on a regular basis. This is because of the fact that the company is very much into the e commerce websites as most customers use this websites when they are not able to move into the shopping places. This happens because of several reasons such as bad weather condition. However, the company is struggling with its poor e commerce website (Penrose 2013).

Change

The international business operations of both the company such as UPS and DHL would be analyzed with the help of useful business resources such as business analysis of both the companies, as this would give clear indications towards the respective highlighted problems of both the company in the literature review section (Sitkin and Bowen 2013).

The above picture is giving clear indications that the UPS Company has not been able to capitalize during the peak demands. The picture very well tells the story of declining graph during the peak season. During the peak season, the company is even struggling to maintain a positive impact as the Q4 of 2013 and Q1 & 2 of 2014 states the problem. The company is in the dreadful condition during the peak season simply because they have incapable network system. The e commerce website of the company is not responsive during the peak season such as during the bad weather conditions. During the bad weather conditions, customer is more inclined towards the online mode of shopping; however, the UPDS Company is not capable enough to track the requirements due to the disruption on the e commerce websites. This is result in poor tracking and incapability to respond to the rising urgency. Nevertheless, UPS is one of the leading logistic companies; it becomes very imperative for such company to show their utmost business performance during the time when it is most required. The e commerce website is a notable laid down for the company (Verbeke 2013).

Refer to figure 2 in the appendices

The above picture of the global success of the DHL does very well indicate towards its problems in Australia. The company is having a comparative lesser business growth in Australia. It is far better in some other parts of world such as North America and Western Europe. The company is lagging behind to those centres in terms of customer penetration and the sales growth. The penetration issues, which the logistics operation of the company is facing in some countries, have also hampered its operations to a notable amount in Australia. The different kinds of legal rules and guidelines have notably affected the growth of the company in Australia. Moreover, the dominion of the company in Australia is not like in some other parts such as North America (Wild, Wild and Han 2014).

Both the companies such as UPS and DHL have their separate places in the logistics industries. Both are suffering with their own kinds of problems. However, both have achieved different spaces in the industry. DHL is one of the leading companies in the logistics industry whereas UPS is the leading company in packing of goods. It is also one of the leading companies in the logistics industry across the globe. DHL is struggling to capitalize in some potential market such as Australia because of their lose integration policies with the legal rules and regulations of the respective countries. This is because of the fact that the company has not been able to pronounce the same success as that in North America. It is not a loss in the country; however, the set trademark is yet to achieve in Australia.

On a same note, the UPS Company is struggling with its e commerce website’s capabilities. The e commerce website of the company is not capable enough to produce and respond to the urgency during the peak seasons. During the bad weather conditions, there are often huge sales requirement on the online; however, the incapable e commerce website is not able to track and respond to those requirements. This is because of the fact that the company is suffering of limited growth in terms of e commerce business. The e commerce is at boom and the market is hiring with the each passage of day. However, the UPS Company has not been able to capitalize on the provided chances. The Company needs some serious repairs for its e commerce websites (Penrose 2013).

1. The one point of recommendation for the DHL Company in Australia would be to integrate a different business approach, which is best compatible with the local government rules and regulations on the logistics business. It may include but are not limited to the revising of trade tariffs, which is a bar for the foreign companies. The company should look for some otherwise options to counter the effect of change trade tariffs. Nevertheless, an enhanced business would compensate the incremented incurs on the trade tariffs.
2. The one point of recommendation for the UPS Company would be to enhance its e commerce capabilities. It can do this by following the footsteps of some technically advanced multinational companies such as Walmart. The capability to respond to the urgency during to the peak timings would be an asset for the company. Moreover, this would enable them fetching more orders and hence the business would be elevated.

Conclusions

Both the companies have their own space in the logistics industry; however, DHL seems to be finding more favours over UPS in Australia. This is because of some facts that the DHL is quick in service and takes direct route whereas UPS are comparatively slower in delivery. The tracking system of DHL is more efficient than the UPS in Australia. The tracking system of UPS is suffering more because of its incapable e commerce website. Both the companies are two most leading names in the logistics industry; however, DHL has more favours from the Australian customers. However, UPS in Australia is very reasonable in pricing than that of DLF but it hardly has any impact on customers, as they prefer more to the service.

References

Ajami, R., Cool, K., Goddard, J.G. and Khambata, D.M., 2014. International business: Theory and practice. Routledge.

Casson, M. ed., 2013. The Growth of International Business (RLE International Business). Routledge.

Cavusgil, S.T., Knight, G., Riesenberger, J.R., Rammal, H.G. and Rose, E.L., 2014. International business. Pearson Australia.

Clarke, I.M., 2012. The Spatial Organisation of Multinational Corporations (RLE International Business) (Vol. 9). Routledge.

Dunning, J.H., 2012. International Production and the Multinational Enterprise (RLE International Business). Routledge.

Forsgren, M. and Johanson, J., 2014. Managing networks in international business. Routledge.

Hill, C.W., Cronk, T. and Wickramasekera, R., 2013. Global business today. McGraw-Hill Education (Australia).

Meyer, K. and Peng, M., 2016. International business. Cengage Learning.

Penrose, E., 2013. The Large International Firm (RLE International Business). Routledge.

Sitkin, A. and Bowen, N., 2013. International business: challenges and choices. Oxford University Press.

Verbeke, A., 2013. International business strategy. Cambridge University Press.

Wild, J., Wild, K.L. and Han, J.C., 2014. International business. Pearson Education Limited.