United Parcel Service Company’s Strategic Management

Vision, Mission, Objectives, and Strategies

The vision of UPS is to synchronize the world of commerce by developing business solutions that create value and competitive advantages for customers. As a delivery company, it can help people and companies all over the world transfer material goods quickly and efficiently and strives to be the best available option. UPS’s missions include growing its business by offering value, maintaining financial strength, inspiring people, and leading by example. Through these pursuits, it can maintain its position as an industry leader and ensure that all of its stakeholders remain satisfied.

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UPS’s objectives include maintaining its current service quality and achieving sustainable growth in the long term. The latter goal requires recognition and popularity among consumers, to which end the company tries to improve its public image. As such, it adopts a transparent approach, maintains a code of ethics, and contributes to causes such as non-discrimination. Internally, the company opens new dedicated healthcare facilities and tries to expand further, increasing its presence in Europe and other areas. The new establishments serve to aid in the transportation of medical products, which the company sees as profitable.

As UPS is a delivery company first and foremost, a vision that is closely related to the interest of its foremost consumers would be better suited to its purposes. Since most of the company’s customers are individuals, a focus on quick and easy deliveries regardless of the location may be warranted. The company’s mission appears to be well-designed, but it could include a more immediate objective. As a delivery company, UPS’s ultimate goal is to be able to offer deliveries to anybody and in any location. As such, it may add an additional mission to the effect of increasing the breadth and depth of its worldwide coverage.

Strengths, Weaknesses, Opportunities, and Threats

Strengths

  • Size: UPS is the world’s largest logistics company based on revenue and package volume. Its scale and budget allow it to undertake and finance various projects without financial strain;
  • Robust Infrastructure: UPS has a well-established network that can process hundreds of thousand packages every hour. As such, it is prepared to receive the increased traffic that may be brought in by a successful venture;
  • Delivery Capabilities: UPS commands a fleet over 100,000 vehicles and 530 aircraft that operate throughout the world. As such, it can handle massive volumes of shipments when necessary;
  • Sustainability: UPS undertakes consistent active efforts to ensure that it is in good standing with consumers and governments. It operates transparently and employs environmentally-friendly measures;
  • Profitability: UPS’s revenue is growing at a stable rate, allowing it to satisfy shareholder expectations and fund further expansion. Its recent acquisitions such as TNT Europe serve as examples.

Weaknesses

  • Pricing: UPS’s pricing tends to be determined based on American and European norms, which is likely the reason why an overwhelming majority of its profits comes from these two regions;
  • Lack of International Presence: Despite the company’s claim that it is present in 220 countries worldwide, it sees little traffic from most of them. The reason is likely that most of these states have small numbers of offices with low capacity;
  • Reliance on Individual Customers: Most of UPS’s revenue comes from individuals who send packages. Large-scale shipping contracts would help the company expand its presence and gain significant profits;
  • The Focus on America: Domestic U.S. shipping creates more than half of UPS’s earnings. Through its lesser focus on other countries, the corporation may deliver a lower standard of service;
  • Lack of Coverage in Asia: Asia is a significant market, as it is home to several billion people. However, UPS has a weak presence in the region as well as South America and Australia.

Opportunities

  • Competitor Weaknesses: Some of the company’s competitors, such as USPS, are operating at a loss. UPS generally creates more revenue per employee than its rivals, USPS and FedEx;
  • Acquisition Deals: The purchase of TNT Express shows that there are opportunities for relatively quick expansion worldwide. UPS can use them to grow faster, but so can its competitors;
  • The Emergence of Large Developing Markets: The rapid growth of countries such as China and India creates new markets with high potential;
  • Special Product Categories: UPS is currently planning to focus on medical product shipping. The transportation of delicate items has the potential to create considerable profits;
  • The Emergence of Supply Chain Solutions: The new areas of expansion adopted by UPS can help it diversify its business and attract new business from existing and first-time customers.

Threats

  • Changing Consumer Behaviors: People appear to be displaying a preference for lower prices over faster deliveries, reducing the average profit per package for UPS;
  • Export Orientation: Many companies are beginning to choose international sales as their preferred mode of operations. They are more interested in bulk shipping via sea than the fast deliveries offered by UPS;
  • Lack of Business-to-Business Volume: The shift to the online model means companies need to ship goods from the manufacturer to a retailer less often. As a result, UPS misses out on orders and the associated profits;
  • Active Competition Worldwide: Despite USPS’s weak performance, companies such as FedEx and DHL offer a significant amount of competition for UPS;
  • Difficulty in Engaging Emerging Markets: UPS’s rivals are trying to establish themselves in Asia and other new markets, primarily through acquisitions that complicate the efforts of the others.

Critical Success Factors

A variety of metrics can be employed to compare the performance of UPS to that of its rivals, and five will be selected for this assignment. The first is total revenue, as it offers an estimate of the relative size of the companies. The second choice is the profit per employee, which shows how efficient each competitor’s operations are. The volume of shipments is the third metric, as it helps determine which company is the most popular with customers worldwide. Growth (in percent) is the fourth, showing whether the company has performed well recently. The fifth, and final, metric, is the size of each company’s infrastructure, which will show whether they are ready for increased traffic. Combined, these factors should offer a sufficient picture of the circumstances of the UPS and its competitors that will permit comparison and the identification of lacking areas.

Feasible Strategic Alternatives

UPS is currently expanding its operations and focusing on medical goods, which require special care during transportation. However, there also exist other categories of products that need special conditions and offer profits in return. Food and sensitive electronic devices can serve as examples. The former has to be refrigerated and delivered quickly but is always in high demand, especially if the delivery price is not too high. UPS may be able to secure considerable profits by focusing on such specific product categories and offering high-quality services that do not have many alternatives.

Another direction UPS can take is an expansion of its business so that it can handle more significant amounts of freight and transporting large goods. Such orders are usually placed by big companies, which would bring considerable revenue through long-term deals. However, this approach would require that UPS adjust for the elimination of its policy that restricts package weight to 150 pounds and below. New infrastructure would become necessary, and the transport fleet would require adjustments for fresh needs. Nevertheless, by charging corresponding prices for large-scale shipments, UPS can turn a considerable profit.

A third option that is available to the company is to increase the depth of its coverage and the offered services in countries outside of the United States. By increasing the degree of its coverage, the company can secure new business opportunities and extract more profit from various territories, potentially reaching the same degree of popularity as what it enjoys in the United States. This decision is the recommended one due to its relatively low cost, as investments would only be necessary to improve the speed of the project.

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Strategy Implementation

The recommended strategy would involve increasing the degree of coverage in individual countries, which may be done through multiple methods. Acquisitions are an effective method, as shown by UPS’s and its competitors’ interest in the activity. Many countries have established package delivery services, and the purchase of the company would bring its existing business connections into the fold. As such, UPS would gain a foothold and be able to conduct more extensive operations from it, expanding the business of the acquired firm. However, this approach is expensive, as it requires immediate and considerable investment.

The other approach is to attempt to increase the presence of UPS’s brand through offering competitive services and intensive marketing. This method is slower than acquisitions, as the company would have to increase consumer awareness significantly to begin rivaling existing businesses. However, the process can be partially circumvented through deals with entities such as online stores, creating business and increasing awareness through branding. The overall lower cost of this approach is its primary advantage, as only an initial investment into the establishment of offices is required. The branch should continue to sustain itself and grow from that point, though further capital would speed the process up.

Due to the number of people and countries in the world, an expansion of UPS’s business in a significant fraction of nations is going to be an expensive endeavor. As such, the EPS-EBIT analysis shows that debt financing is not a viable option compared to stock, as UPS is likely to require considerable time to pay off the loan, accruing significant interest. Ultimately, the company should use the slower approach unless a particularly attractive acquisition presents itself, using the stock as a capital source.

Review and Evaluation Procedures

The recommended strategy is currently in the theoretical stage, though it draws on the history of UPS and its growth in the United States. It should undergo review and evaluation in a variety of scenarios before the decision to implement or abandon it is made. The approach should be tested in a hypothetical situation, with specific requirements in terms of expected profit and the time necessary as the determinants of its viability. If it satisfies such expectations, variance and different scenarios should be taken into account, including aggressive acquisitions by UPS’s rivals. The regional differences in geography and population wealth in different locations should also be taken into account for the setting of prices and expectations of growth. If weaknesses or issues surface during either of the two stages, adjustments that address them will be necessary if they are possible.

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