MANAGING CHANGE AT UNITED PARCEL SERVICE (UPS)

Presented By Akshaya Mali

ABOUT THE COMPANY

The United Parcel Service (UPS) delivers more than 15 million packages a day to about 6.1 million customers in 200 countries around the world, making it the worlds largest package delivery company. UPS is headquartered in Atlanta, Georgia and operates primarily in the United States with about 428,000 employees. UPS slogan What can Brown do for you emphasizes the companys ability to provide services to almost any one in the world, at any address. Before the $42 billion company grew into a worldwide name, it was started as a small messenger company in 1907 by two aspiring teenagers, Jim Casey and Claude Ryan in Seattle, Washington with just $100. Top competitors of UPS include Federal Express (FedEx), DHL International and the United States Postal Service.

Industry External Analysis

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 $2.85/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 dont 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.

Analysis of Competitive Forces Michael Porter Method

Rivalry

The Transportation Air freight and Trucking Industry is a highly competitive environment.
The companies involved specialize in the time definite delivery of packages and documents throughout the world. UPS is able to compete by differentiating its product while maintaining cost effectiveness. UPS strength is in its ability to integrate its distribution and information systems to provide unique transportation solutions at competitive prices. UPS has established itself as a leader in this field, which has allowed the company to expand its expertise into the supply chain area, offering consulting, freight forward and logistics to major companies in over 120 countries. UPS has one of the most extensive integrated global ground and air networks that allow them to have an effective global reach and

Threat of new Entrants

Due to the increasing high entry barriers that exist in the Transportation, Air and Trucking Industry, the threat of new entrants and substitute products is extremely unlikely.

The industry is in the beginning of a mature stage, companies are, for the most, competing to take rivals market share. In order to enter the market and compete on the global scale of a company, such as UPS, one would need extensive starting capital to finance the cost of transportation vehicles.
In addition, established companies in the industry have a loyal customer base with extensive brand recognition and established distribution channels.

Bargaining Power of Suppliers

The bargaining power of suppliers is limited in the case of the major players in the Air and truck transportation industry. All of the top companies in the field rely on their own transportation vehicles and information systems. On the other hand, the cost of fuel is a major expense to these companies.

Bargaining Power of Suppliers

The bargaining power of buyers is increased due to the amount of competitors within the industry. Customers are able to choose to ship their goods with a number of different carriers. A major part of companies, such as UPS, consumer base is derived from businesses, with an increasing focus on e-commerce. Companies within this industry have to compete extensively on time delivery guarantee, as well as, cost effectiveness in order to gain market share.

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.

SWOT Analysis
Strengths:

High entry barriers UPS is the largest package delivery company in the world. UPS competitive advantage lies in its use of integrated assets to transport U.S. urgent and ground shipments through the same network. Clients appreciate the convenience of using the same driver to handle both express and ground packages. By doing this, UPS yield on express packages is 20% more than Fed Ex.

Weaknesses:

Company is still highly reliant on the U.S. market. High energy costs are reducing profits.

Opportunities:

Firm announced two new strategic moves: the ratification of a new five-year contract with its Teamsters employees, including a plan to withdraw from a large under funded multiemployer pension, and a change in policy toward debt. The UPS driver team is unionized, but risk of service disruption was minimized when management and labor came to an agreement on a new contract in 2007. UPS needs to minimize union labor.

Threats:

Unionization Growth of Fed Ex, DHL, TNT or other major competitors.

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