Business Development: United Parcel Service Case Study

This case study report examines United Parcel Service (UPS), a global leader in delivery and logistics. The report begins with an executive summary, providing an overview of the industry and UPS's position. It then delves into UPS's mission, vision, and operational strategies, including cost-cutting measures and strategy formulation. The study includes a SWOT analysis, detailing internal and external strategic factors. Furthermore, the report analyzes UPS's marketing strategies, including the BCG matrix and value chain analysis. Finally, the case study concludes with a discussion of UPS's future strategic plans. The report highlights UPS's history, its adaptation to e-commerce, and its competitive advantages in the market, along with the challenges it faces from competitors like FedEx and Amazon. The case study showcases how UPS has maintained its position as a leader in the industry through strategic planning, technological innovation, and a focus on customer satisfaction.

Case Study Report
UPS (UNITED PARCEL SERVICE)

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Executive summary
The Global Courier and Delivery Services industry has modest revenue volatility through
2021. They offer distribution services to businesses, manufacturers, and households via air,
ground, and express courier delivery. The revenue is affected by the price of crude oil,
consumer confidence, and online retail. United Parcel Service (UPS), FedEx, and DHL group
are covered by IBIS World. United Parcel Service, Inc. provides delivery, transportation,
logistics, and other services. Their operations are divided into two types; domestic package
shipping in the United States, and international packages shipment outside. Time-definite
delivery of mail, papers, small packages, and palletized freight is provided by the US
Domestic Package sector. Day and time-definite shipping services to Europe, Asia Pacific,
Canada, Latin America, the Indian subcontinent, the Middle East, and Africa can be found
under the International Package area of the website. Time-bound express can be found in this
section. Air and ocean freight forwarding, customs brokerage, distribution and post-sale,
postal and advisory services are offered in 200 countries. It's amazing how well-oiled the
company's package distribution system is. However, the company plans to grow its business
internationally in the near future. Internet marketing expansion and acquisitions of
multinational companies in the same industry are both discussed in this study. In 1907, in a
Seattle basement, Claude Ryan and Jim Casey established the American Messenger
Company. It completed one-off orders and shipped out purchases made in the store. Today,
UPS is available in more than 200 countries and territories, expanding from its humble
beginnings as a small courier service. The company's key functional areas are covered in this
report, as well as the company's overall business strategy. The purpose of this article is to
examine UPS's goals, as well as the company's internal and external influencing factors. An
action plan for implementing the strategy is provided, as well as an analysis of the future
external and internal environment and potential challenges.
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Contents
Introduction................................................................................................................................3
Mission and Vision....................................................................................................................4
UPS Operational Strategies........................................................................................................4
Cost-cutting strategy..............................................................................................................5
Strategy formulation...............................................................................................................5
Strategy Implementation........................................................................................................6
SWOT analyses of UPS.........................................................................................................6
Internal strategic factors.........................................................................................................7
External strategic factors........................................................................................................7
UPS-Marketing Strategies..........................................................................................................8
BCG matrix in UPS’s marketing strategy..............................................................................8
Value chain analyses..............................................................................................................8
Future strategic plan of UPS......................................................................................................9
Conclusion..................................................................................................................................9
References................................................................................................................................10
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Introduction
The United Parcel Service known as (UPS) is a renowned delivery company which has lasted
through the years. The company started out as a $100 dream, but now it is a global industry
with a well-known brand all over the world. Packages are delivered to businesses and
customers in over 200 countries by this company, which has been around since 1923. In
1994, UPS established an internal organisation to assist with the development of e-commerce.
UPS restructured and retooled to better serve its new primary business. To take advantage of
new prospects, it also created new businesses. In terms of revenue, UPS is the world's largest
courier service. According to the company's 2020 projections, it is predicted to earn over
US$85 billion per year, which is higher than DHL and FedEx. American Messenger
Company was founded in Seattle, Washington, on August 28, 1907 by James Casey and
Claude Ryan. To get the business off the ground, they borrowed $100. In 1975, UPS
relocated its corporate headquarters from New York to Greenwich, Conn. As a result, it
began providing service to the 48 states that border each other. Before any other firm, UPS
was the only one that was capable of delivering packages to each and every residence in the
48 contiguous states. They were able to do this because they decided to expand their
company (Morlok, 2008). UPS made its first foray into international trade in 1975 when it
opened an office in Toronto, Canada. In 2021, they had a total revenue of $97.3 billion.
Approximately 534,500 people from 220 countries were serving in the military around the
world. (UPS, 2022).
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Figure 1 UPS air
Mission and Vision
In this section, the company outlines its vision, mission, core principles, and ethical
standards. UPS's mission statement asks for harmonising the global business processes of its
customers. Global logistics services expansion, financial stability and growth, and the
encouragement of employees and business partners are all part of the company's mission.
Accounting and R&D projects are used by UPS to maintain its position as a responsible and
long-term business partner. For its transparency and maximum information disclosure, the
company's accounting reports were lauded by the Global Reporting Initiative (GRI). Among
the company's many environmental initiatives include efforts to reduce fuel use and CO2
emissions, as well as charitable giving and tree planting at various locations. (UPS, 2022).
UPS Operational Strategies
The logistics company UPS has never been one to take things for granted in terms of strategy.
Monthly meetings are formed by specific teams to forecast the future and analyse activities
have long been a part of UPS's approach to low-cost management and distinction through
high-quality customer service. The combination of these approaches emphasises quality and
reliability as a corporate strategy. If a company knows where it stands on the value-creation
frontier, its goals can be more clearly defined. UPS uses 245 planes and 115,000 trucks to
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transport freight and ground. FedEx has a fleet of 650 planes and 50,000 ground vehicles that
specialise in next-day air service deliveries. Residential mail and small package delivery are
the focus of USPS, which uses commercial planes to transport these items. There are 211,000
cars in the fleet of the United States Postal Service. Fedex has a market share of 25%,
whereas UPS has a market share of 57%. (Garvin, 2006).
Cost-cutting strategy
UPS keeps relevant by focusing on three areas. The company provides domestic,
international, supply chain, and freight services. UPS goes to extremities to save expenses
and increase efficiency. UPS trucks don't turn left. A route planner has saved them 20.4
million kilometres. This simple solution reduced their carbon footprint by 20,000 tonnes. Ben
Stoffel told CNN Money in 2010 that right-handed turns are safer and quicker. An ex-UPS
employee informed my management 310 class that drivers were expected to enter and depart
vehicles properly. By having a unique foot to step into the vehicle with, UPS gained a low-
cost advantage. UPS's strategy and decision-making emphasise efficiency and reliability.
They do so by focusing on price options, differentiation, detecting market need, and having a
specialised cost structure. UPS's purposeful and committed efforts are valuable. UPS's market
competition boosts its value. The competitors of UPS are FedEx and DHL. (Shontel, 2010).
Strategy formulation
Consider UPS's competitive advantages when developing a management strategy. First and
foremost, it includes. The corporation has a long history of social, economic, and
environmental problems. Expansion into other countries is a significant external opportunity
for the organisation. When U.S. retailers export high-tech products to countries with
expanding middle classes, this is extremely important. The company's development into the
popular digital world provides additional benefits and viewpoints. With the acquisition of
national firms with similar operations, UPS hopes to expand its customer base beyond the
United States and make better use of the digital environment. By focusing on strengthening a
company's competitive advantage, the growth strategy achieved the most results. This
approach aims to make the most of a company's available marketing resources. Building and
strengthening the business is the goal. When a company's strategic alternatives for market
capture and production expansion are underutilised and business development potential
exists, concentrated growth is advocated (Brennan, 2017).
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Strategy Implementation
Concentrated growth strategies include market positioning, market development, and product
development. First and foremost, a plan for market penetration should reflect the present
situation and future goals of the company. It assumes that the corporation employs a specific
set of techniques to increase output and sales in the market. Attracting new customers,
boosting the company's market share through acquisitions of competitors, focusing marketing
efforts on profitable base market segments, and improving its image all fall under this
category. An increase in acquisitions can be achieved through strengthening business
partnerships through consulting services. The creation of an open corporate business
acquisition programme may encourage UPS to participate with package service companies
(United Parcel Service of America, Inc, 2008).
SWOT analyses of UPS
Strength
For businesses in 140 countries and territories, UPS offers time-definite delivery in 40
additional countries. Tracking 295 million deliveries each day is one of UPS's most advanced
online services. Smart: For delivery to be successful, data must be collected and disseminated
with ease. UPS invested $20 billion on Atlanta's SMART logistics network complex, which
combines all of its systems and equipment. Customer satisfaction and retention can only be
achieved if a company consistently provides high-quality customer service. (UPS, 2019).
Weakness
Despite operating in other countries, UPS is very much dependent on the US market. If the
US market slows, UPS will feel the negative impact. Equipment and delivery system
upgrades have been put on hold for decades by management. However, modernising the
system would cost $20 billion, the equivalent of five years' worth of UPS income. Using old
infrastructure in the 21st century would be difficult. The delivery business is burdened by
transportation costs. When employing third-party carriers, UPS has to pay for it. The global
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competition, political unrest, different laws in countries and global pandemics are also
potential threat for UPS (Dudley, et al., 2005).
Opportunity
Drone deliveries are being tested and expanded by UPS. The transportation of lab samples
was the focus of UPS's drone testing at the Wake Med hospital sites. E-commerce is a rapidly
expanding industry, with new companies joining at an increasing rate. Improved e-Commerce
operations and services may be a good fit for UPS here. UPS has three divisions. Use its
global network to compete in B2C ecommerce retail, helping small businesses, and
diversifying into B2B. Most of UPS's customers are online retailers like Amazon, but UPS is
seeing an increase in the number of consumers who use its delivery services. (Brennan,
2017).
Threat
FedEx, DHL, Amazon, YRC, Old Dominion, and others threaten UPS's market share and
revenues. Amazon dependence: Amazon contributed 11.6% of UPS's 2019 revenue. Any
change in Amazon's partnership with UPS could affect UPS's revenue. Looming several
countries are in recession because of the pandemic's havoc. UPS lowered its 2020 earnings
prediction after its first-quarter profit fell 13%. UPS earnings are expected to drop 7% in
2020 due to the global pandemic. UPS could lose more if another wave hits (Pressman,
2019).
Internal strategic factors
Internal business considerations affect the company internally, whereas external business
aspects affect it externally. Cost-cutting is a business factor. UPS maintains good customer
relations by delivering packages cheaply. To efficiently distribute products to consumers, the
company uses scan able bar-coded labels. Time and cost efficiency and management also
demand an e-strategy. Drivers can get their daily routes using DIAD. The system's routes
reduce delivery time. "340 Methods" help drivers optimise every duty. So, loading and
shipping packages is faster and cheaper.
External strategic factors
Competition from similar market players is an outside factor that makes it necessary to have
an e-strategy. FedEx and Airborne Express have been giving UPS a run for its money. To
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beat this competition, it has had to improve its technology by using bar codes that can be
scanned. This has helped keep an edge over the competition by making it easier to track and
speed up package delivery. Changes in technology are the other outside factor. Over time,
technology changes and gets better. When something is out of date, one may not be able to
rely on it. UPS has been able to keep up with technological demands and changes by coming
up with new ideas. For example, it started a website where people can find out about
delivery, place orders, track packages, and print labels. Launching the Post-Sales Order
Management System (OMS) has also helped manage international service orders and
inventory. This new technology has helped UPS keep its services high-quality and keep costs
down.
UPS-Marketing Strategies
Customers, their shifting needs, and new opportunities in the current and future markets can
all be better understood through segmentation. In this way, logistics solutions for a wide
range of industries and retail customers can be provided more quickly. Whether an individual
or a business, one will need UPS courier services. Demographic segmentation is therefore the
best option. In addition to organisations and individuals, UPS serves a wide spectrum of
customers. As a result, they have separate target markets for the many places in which their
services can be put to use. In the perspective of potential customers, logistics service
providers are constructed using UPS's value-based positioning strategy (Bahsin, 2018).
BCG matrix in UPS’s marketing strategy
Strategic business units include package reporting, customs brokering, supply chain and
freight reporting, distribution services, UPS mail innovation freight forwarding, UPS freight
and capital (SBUs). Due to the paucity of information available, it is unable to plot UPS's
numerous businesses and divide them into four quadrants. The BCG matrix categorises UPS
as a Star, which allows us to compare its performance to that of the industry. As a result, it
has a large market share and a high growth rate. (Bahsin, 2018).
Value chain analyses
UPS usually handles freight forwarding, logistics, mail packages, and services for the supply
chain. UPS's main tasks are operations, logistics, outbound logistics, services, sales and
marketing, and outbound logistics. It's clear that UPS's services are top-notch. More than a
few organisations and clients around the world have been happy with UPS's good services
and delivery. It is clear that the main activity has to do with clients' schedules, routes, and
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different transportation needs in order to make sure that packages are handled and sent to
their destination safely. The UPS organisation makes sure that clients are not only happy, but
that they know how much they are appreciated for using UPS. Based on research, UPS
provides a service that adds value to its clients in a number of ways. For example, the
company has made sure that customers in the United States, Canada, and North America get
their services quickly and well. The company makes sure that customers get their services
when they need them. After that, the company would email and call clients to see if they
needed any more help or had any other needs (Pressman, 2019).
Future strategic plan of UPS
The world now knows exactly what UPS is up to when it comes to delivery. FedEx, UPS, and
other big delivery companies have been focusing more on e-commerce deliveries in the past.
Since It's important to note, though, that Amazon isn't the only e-commerce company out
there. UPS envisions a future in which its fleet of delivery vehicles would be both driverless
and electric in the e-commerce delivery market. UPS has a plan to buy driverless and electric
delivery trucks. Over the next six months, UPS and Alphabet subsidiary Waymo will test
self-driving minivans in the Phoenix area. For a total investment of $1.4 billion, Amazon will
build a super hub in Harrisburg, Pennsylvania, to increase its ability to filter and dispatch e-
commerce shipments to the Northeast. In addition, the company intends to increase its
performance by implementing innovative, industry-leading technology that benefits both
customers and the organisation as a whole. In addition, UPS wants to expand into new
markets based on the types of customers it serves. UPS's ORION software, for example, is an
example of cutting-edge technology. It reduces production costs and environmental effect by
increasing delivery efficiency (ecommerecenext, 2022).
Conclusion
UPS has shifted multiple times in response to the market climate and the passage of time.
UPS also restructures their organisation from a functional to a centralised, hierarchical
structure. They determined how to give the service to the client while maximising the use of
their resources. They devised a strategic plan as well as a scenario plan in order to attain the
company's objective and were prepared to adapt to unforeseen change. Despite its humble
beginnings, UPS has now reached the height of achievement. The mission statement
established by the company's founders may have guided the organisation in the right
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direction, but the values upheld by the company and the strategies implemented by the
current leaders are crucial aspects that determine the company's long-term success (Rubin,
2013).
References
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Available at: https://www.marketing91.com/marketing-strategy-ups-ups-marketing-strategy/
[Accessed 10 7 2022].
Bomkamp, 2011. Yahoo finance. [Online]
Available at: https://www.yahoo.com/?err=404&err_url=https%3a%2f
%2ffinance.yahoo.com%2fnews%2fUPS-raises-outlook-while-apf-885984253.html%3fx
%3d0
[Accessed 10 7 2022].
Brennan, M., 2017. CNBC. [Online]
Available at: https://www.cnbc.com/2017/01/31/the-surprising-way-an-online-shopping-
surge-crushed-ups-earnings.html
[Accessed 10 7 2022].
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Dudley, B. W., Holt, S., Larsen, T. & and Stockton, C., 2005. An Analysis of the
Effectiveness of E-Commerce at United. SAIS.
ecommerecenext, 2022. ecommercenext. [Online]
Available at: https://www.ecommercenext.org/ups-says-its-fleet-in-future-for-e-commerce-
deliveries-would-be-driverless-and-electric/
[Accessed 10 7 2022].
Garvin, D. A. L., 2006. Strategic planning at united parcel service.
Morlok, E. K., 2008. THE PARCEL SERVICE INDUSTRY IN THE U.S.: ITS SIZE AND
ROLE IN COMMERCE, s.l.: s.n.
Pressman, A., 2019. FORTUNE. [Online]
Available at: https://fortune.com/longform/ups-ecommerce-strategy-drones-paying-off/
[Accessed 10 7 2022].
Rubin, J. a. C. B., 2013. UPS and Corporate sustainability.
Shontel, A., 2010. the business insider. [Online]
Available at: https://www.businessinsider.com/ups-efficiency-secret-our-trucks-never-turn-
left-2011-3
[Accessed 10 7 2022].
United Parcel Service of America, Inc (2008) Edward Hess.
UPS, 2019. globalnewswire. [Online]
Available at: https://www.globenewswire.com/news-release/2019/10/21/1932846/0/en/UPS-
Strategy-Transforms-E-Commerce-Through-Alliances-And-Agreements.html
[Accessed 10 7 2022].
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[Accessed 12 7 2022].
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