1 United Parcel Service
Dec 19, 2015
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Background
United Parcel Service
- Founded in Seattle 1907 (Jim Casey)
- Expansion 1920s
- Partnership with Blue Label Air
- 1993 diversified with offering logistics
- 1998 Began offering financial services
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Current Executives
C.E.O.
Michael Eskew (2002)
C.F.O.
D. Scott Davis (2001)
C.I.O
Kenneth Lacy (1997)
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Company Culture
Parking Spaces
Cutting costs (economy class flights)
Uniformity
Egalitarianism (promotion within)
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UPS Today Headquarters in Atlanta, Georgia
357,000 employees (317,000 U.S. ; 40,000 International)
Regional offices located in: Africa Australia/New Zealand Caribbean Central America Europe Middle East North America South America
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Interesting Facts
Fortune 500 ranking: 42
UPS awarded one of Fortune magazine’s Diversity Elite 50 Best Companies for African American, Asians and Hispanics.
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Key Competitors
AMR Corp Atlas Air Worldwide Federal Express U.S. Postal Service DHL International US Airways Lufthansa Nippon Express Yellow Roadway
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UPS vs. Federal Express
Use of technology
Hub strategy
Employees and culture
Service cost structures
Financial performance
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Profitability: UPS vs. Federal Express
2003 2002Revenue $33,485.000 $31,272.000Net Income $2,898.000 $3,182.000Net Profit 8.7% 10.2%Employees 357,000 360,000
UPS Fiscal Year Date: December, 2003 (Millions in U.S. Dollars)
2003 2002Revenue $16,351.0 $15,327.0Net Income $431.0 $443.0Net Profit 2.6% 2.9%Employees 134,000 n/a
(Millions in U.S. Dollars)Fed Ex Fiscal Year Date: December, 2003
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2003 Package Operations
2003 Delivery Volume: 3.4 bil packages and documents
Daily Delivery Volume: 13.6 mil packages and documents
Service area: More than 200 countries and territories
Customers: 7.9 mil daily (1.8 mil pick-up, 6.1 delivery)
Operating facilities: 1,748
Delivery fleet: 88,000 cars, vans, tractors, motorcycles
Aircraft: 582
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Competitive Rivalry Within The Industry
Federal Express
United States Postal Service
TNT Post Group
Deutsche Post World Net
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Threat Of New Entrants
A good amount of resources to start up and run a company of that nature. The investments needed in information technology are too much and this acts as barriers to entry.
UPS has invested millions of dollars in the development and use of technology and so have many of its major competitors.
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Threat Of Substitutes
New ways to communicate such as e-mail and other forms of communication are being used more frequently.
Federal Express, the United States Postal Service, and others offer a similar service and this is where substitutes can hurt UPS.
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The Bargaining Power Of Customers
Customers can’t bargain with UPS about prices, but they can go somewhere else to get their packages delivered.
This is easy to do and any customer can just switch over to a competitor because membership is not being required if you decide to use a new carrier
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The Bargaining Power Of Suppliers
Because they provide more of a service in delivering packages, there is no real direct supplier to be worried about.
Ground delivery units, aircraft transportation firms, and IT support
Air2Web, Inc. helped with wireless shipment tracking as a part of its service package. Able to link business applications to multiple wireless networks.
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Strategy & Challenges
Their strategic goals changed and were able to integrate new technology with overnight and ground services to compete with Federal Express.
Since the middle of the 1980’s USP has invested $14 billion dollars to build integrated global networks.
In 1990 they introduced their own handheld, called Delivery Information Acquisition Device (DIAD) that captures and transmits delivery data in real time. By integrating it with their services, they stayed ahead of Federal Express with that technology.
The strengths of UPS are their reputation and adaptability. They have been in the business for more than 90 years and have performed to their customers expectations.
Their weaknesses are that they are the largest business in the parcel delivery industry and have the most market share to lose. Also constant changes in technology play a role in their future due to the constant need of upgrading and developing.
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Usage continued
Parts Planning Lower inventory costs Service improvement Enhanced performance
Order to Cash Order flexibility Cost savings Simplicity of the supply chain
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Distribution Services Network
Combines IT networks
Ability to leverage established networks
Inventory staging
99% Reach