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The Strategic Planning Process At United Parcel Commerce Essay

Paper Type: Free Essay Subject: Commerce
Wordcount: 1746 words Published: 1st Jan 2015

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UPSs primary business is the delivery time identification of packages and documents worldwide. In recent years, UPS has extended their service portfolio to include less than truck transportation (mainly in the U.S.) and supply chain services. UPS reports its operations divided into three parts: U.S. Domestic Package operations, International Package operations, and Supply Chain & transportation activities.

Based on the Case study, the purpose of this report is to answer the following questions:

Identify the strategic problems and opportunities that exist at United Parcel Service and discuss a coherent set of actions that will address these.

What are the potential problems involved in implementing these actions

Critically assess the approach to the Strategic Planning process at United Parcel

Identify the strategic problems and opportunities that exist at United Parcel Service and discuss a coherent set of actions that will address these.

SWOT is an acronym of the internal strengths and weaknesses of a company and the opportunities and threats to the environment in which the company is facing. SWOT analysis is a widely used technique through which managers create a quick overview of the company’s strategy. This technique is based on the assumption that an effective strategy derives from a sound “fit” between a company’s internal resources (strengths and weaknesses) and its external situation (the opportunity and threat). An appropriate maximum strength and opportunities of the business and minimize the weaknesses and threats of it.

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This simple assumption has a strong impact on the design of a successful strategy, “United Parcel Service UPS offers transportation services, primarily in domestic and international mail and package delivery Packet through its subsidiaries, it also provides transportation, logistics and specialized financial services company is one of the largest companies provide packages in the world, in terms of revenue and volume. UPS is one of the leading providers of less than trucking service. size large operations of the company allows it to cater to a large customer base in the international market. However, the increase in fuel prices can have a direct impact on corporate profits by causing an increase in the cost of operation of the UPS.


• Sustainability: UPS is the environmental leader in the U.S. package delivery industry. UPS to reduce its carbon emissions through integrated network, modern air fleet, alternative fuel sources, and extensive use of the tracks. 

• Network: UPS has a network of established and continue to invest in network expansion, especially in China. 

• Superior Financial Strength: UPS is known for maintaining high operating margins than its competitors. It is highly profitable, the average ROE of 28% in six years. 

• Value of dividends Strength: has consistently increased dividends every year except 2009, in which it is held constant. Since 2000, the ratio of annual dividends have increased by an average of 2.53%. 

• Brand equity: UPS is synonymous with the delivery of parcels. Brown tones of the delivery truck and logo is iconic for the distribution industry.


Awareness of traffic ground instead of overnight

Heavy union presence

Lag Brand: While the brown trucks of UPS recognized, who cannot have a complete picture of the full capacity of the UPS.

Trade unions: the labor force of the UPS is unionized and thus affect the labor cost of the UPS. The threat to strike UPS can cause pressure to increase wages.

Debt: UPS has a higher ratio of financial debt compared to its competitors


Expansion of online shopping

The emergence of the international middle class

Business to business growth: increase B-to-B growth will help to expand operating profit due to economy of scale.

Asian markets: By increasing the expectations of customer’s higher quality products, UPS scalability in a fragmented Asian market. They first entered the market by working with key business players in the market with a focus on export / import. After that, they will pursue acquisitions and more of a domestic drama.

Logistics Business Solutions: UPS promote its network by providing logistics solutions for the retail and manufacturing companies. Business has been growing double-digit expansion before the crisis and in

2009 revenues decreased 20%. However, this has recently reversed by We Love Logistics “campaign.

Global healthcare distribution network: the new facilities are being added to the U.S., Asia, Europe, and Canada to adapt to the rapid growth in the medical field.

Productivity growth: While DHL, market prices down, leaving the U.S. parcel market more than two years ago, we believe that pricing power is partly delayed after shipment contracts often is 1-3 years. So UPS can be increased margins by controlling prices.

U.S. mail volume decline: Over the past 10 years, USPS has steadily lost market share to UPS and FedEx. Continue their decline may benefit modest volume for UPS


• Rising fuel prices: UPS fuel surcharge in the domestic and international package and LTL services as their primary means of reducing the risk of adverse changes in fuel prices. They also periodically on the option contracts on energy commodities to manage price risk with forecasted transactions related to refined fuels such as jet fuel.

• challenging weather conditions:

• Bad weather can damage the quality and efficiency in delivery impact. In addition, bad weather can affect retail sales and other groups UPS partner that could hurt sales. While the UPS cannot control the weather, they have improved their tracking platform for customers by providing more information and provide an updated time for customers in case of any delay doubt.

• Currency Headwinds: headwind currency in their international business can affect inflation costs. However, UPS has delivered the strong cost that we believe make them competitive with others in the industry. With over a century of experience, we believe that UPS has specialized in foreign currency hedging activities using the derivate financial instruments such as forward currency contracts and currency options.

What are the potential problems involved in implementing these actions

Porter’s five forces

Porter’s Five Forces will be used to determine industry competition as well as the strategic impact on Apple.

New Entrants- Low

• UPS has established brand equity

• Long-term contracts with corporate customers

• Capital intensive industries related to aircraft, vehicles, software, and storage

Replace – Medium

• Some customers have needs not time sensitive logistics can trade down using the slower delivery options and less expensive, such as USPS

• Companies can create their own housing in the supply chain and logistics solutions rather than outsourcing work with a company like UPS

• Threats to business mail delivery as a result of a movement to electronic documents

Power supply – Low

UPS does not rely on specific suppliers for their business activities outside the major capital costs

Buyer Power – Medium

Smaller customers are less likely to negotiate the price for fixed price

Larger companies using the full range of logistics solutions have pricing power due to their ability to negotiate long-term contracts

Competitive rivalry -Private postal companies

• Federal Express

Most government agencies support


• Deutsche Post

Until 1994, UPS has mainly focused on continuously improving their operations that they have to compromise on quality and customer service. Many analysts noted that UPS did not pay attention to the needs of the customer and customer satisfaction.

In 1994, due to increasing competition, UPS recognized the need to have many customers meet and embark on a major transformation initiatives of the company. This case gives a detailed overview of the various human resource initiatives UPS

• Nearest competitor, FedEx, similar services in the freight and logistics business

• UPS focused on overseas growth and expansion of business supply chain

• be able to compare prices in the industry

Critically assess the approach to the Strategic Planning process at United Parcel

They have invested in the core business of worldwide distribution and logistics. The company is building capacity in the integration of goods, funds, and information. They use technology to create new services. They began to attract talented people. Study customer behavior and predict their needs. Practice innovation leads to growth. Build an environment that allows them to treat each customer as if he was the only one.

We believe that UPS has high potential in the fragmented Asian emerging markets such as China, Malaysia obvious its recent expansion in 2010 and bought seven new aircraft in 2011. Air Freight transportation is developed here.

UPS has high interest activities and will earn higher profits when the economy recovers and

Have the right to set higher prices in 2012 and 2013.

UPS developing supply chain and transportation division, using customized logistics solutions. While they have been used for many retail and high-tech companies, they are branching out into the market global distribution of health care, we believe there is high growth potential for distributed this song. In January, UPS announced the expansion of health care facilities in Kentucky, Singapore, the Netherlands, and Canada.

UPS operates in a competitive environment with their direct competitors just FedEx.

Developments in the past have shown that they are able to set the price on the exchange rate as well as pass along higher costs in the business, such as energy prices rise.

The company’s financial strength has allowed them to generate stable cash flow through all business segments of business

EPS is expected to reach the highest of all time


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