The report analyzes the market presence of United Parcel Service (UPS) and the nature of the operational and competitive dynamics prevalent in the market. It also examines various elements in the internal and external environments of the company. Then identifies critical factors that the business must consider to enhance its operational capabilities and survival in the long-run. The report highlights that the business operates in diverse political, economic, and social contexts because of its global nature. It demonstrates the need for differentiated strategies to ensure it is not exposed to the risks in some of the markets. In addition, the business has its strengths in areas such as a strong brand name, global presence, and expertise due to its many years of industry operation. The report proposes the need for a business to segment its market, and offer services in the emergency sector, which consolidates its market presence through an increase in market share and improved bottom-line performance.
Table of Contents
The management of United Parcel Service (UPS) needs to develop an understanding of the various markets where they operate by identifying the attributes and drawbacks of these markets concerning the resources and capabilities of the business. Such an understanding is vital in promoting the expansion of the company into new consumer segments. Which, successively, facilitates the competitiveness of the business amongst its rivals and also improves its share in the global market (Burke, 2013). One of the main strengths of the company is its large distribution networks in the global market that ensure it benefits from economies of scale. Also, the ability of a business to invest in current technologies has been instrumental in enhancing the levels of efficiency in its service provision (Guoan & Xue, 2019). However, the business faces increased competitive threat from its rivals, who are mostly global entities and have a considerable presence in the worldwide market, that constrains the ability of the business to expand its market share. It becomes vital for the business to consider expanding its services to new customer segments. This report proposes the provision of emergency night courier services where businesses and households seeking such services can contact the business (Hooley, Broderick, & Moller, 2015). The focus on such a segment is essential in promoting the ability of the business to expand its share of the market and improve its bottom lines.
One of the tools for conducting an analysis of the market for a business is Five C’s Analysis (Burke, 2013). The tool evaluates various dimensions like the customers, context, company, and collaborators, and eventually, competitors to the business as analyzed below.
Analysis of the Customers
Most of the customers for UPS include individuals, businesses, and households that usually send parcels and other packages from one place to another (Burke, 2013). The primary functional need that the customers prefer is safety and efficiency of the service to ensure the designated packages arrive at their terminus in time and proper conditions (Smith & Nagle, 2015). These capabilities of efficacy and safety make the customers highly satisfied with the service. The company primarily segments its customers based on their demographics, such as language and income levels. It, at times, uses geographic segmentation where customers are segmented based on where they are in in the different continents.
Analysis of the Context
Through the use of the PESTLE analysis, it is easier to identify the context in which the company operates. Notably, the United States is the main target market for the company. In this country, there is political certainty due to the entrenchment of democratic principles and the rule of law that offers a stable operating environment (Smith & Nagle, 2015). It is paramount to note that the company also serves other countries in regions, such as the Middle East and Africa. In these nations, vices such as corruption, bureaucracy, and weak enforcement of tax, labor, and patent laws are imperfect. Therefore exposing the operations of the business to unfair competition and illegal practices (Hooley, Broderick & Moller, 2015).
On economic factors, the business operates in diverse environments. In its primary market in the USA, there is financial stability. Nonetheless, the venture is exposed to aspects like high inflation rates, volatile exchange rates, and low levels of economic growth in developing countries such as in Africa. Such outcomes derail the growth and expansion of the company, which exposes the business to risks (Rahman & Areni, 2014). On social factors, most of the populations served by the company have attended school and can understand the nature of service and interact with the company and its marketing and other service messages. Further, most of the customers served by the company are oriented to both low and high context cultures based on their geographical origins (Rahman & Areni, 2014).
On technological factors, the company exploits the current technologies to offer capabilities like the ability of customers to track their parcels to ensure they are aware of the possible delivery dates. By using technological capabilities, the levels of efficiency are enhanced by the company in improving service quality that makes customers satisfied. They also rank the company highly in comparison to the competition (Guoan & Xue, 2019). On environmental factors, the company ensures its services are sustainable by adhering to the required standards in areas such as ecological conservation to reduce air and water pollution. Through packages, the company utilizes reusable and recyclable bags to minimize the pollution of the environment. On statutory factors, the company adheres to the various laws and policies in areas such as labor laws, copyrights, and patents and also health and safety laws (Smith & Nagle, 2015).
Analysis of the Company
The main competitive advantage of the company is its vast extensive global distribution network (Smith & Nagle, 2015). The network guarantees benefits in the form of economies of scale. The company leverages on the use of technology to enhance the levels of efficiency in its supply chain network. Furthermore, it deploys strategies such as modeling, and data emanating from its planning systems. Those two can be used to guide drivers on the most economical and efficient routes to limit any delays. Besides, the company also exploits its extensive knowledge of the market owing to its long history of over a century experience in the distribution business.
Analysis of the Collaborators
Some of the main collaborators for the company include the technology-providing companies, governments, and security companies-that ensure the service is provided in a free environment where the company exploits its logistical capabilities without hitches (Rosier, 2011). Further, the vertical integration of the company where it owns assets like the distribution tracks, and airplanes operating them is critical in guaranteeing successful service delivery to the designated customer segments.
Analysis of the Competitors
Some of the main competitors for the company include FedEx, DHL, Purolator, DB Schenker, TNT, and YRC Worldwide (Rosier, 2011). These entities are present in most of the global markets where UPS operates and have a significant presence in the courier and logistics services industry. Even though UPS has a larger market share in distribution and logistics in comparison to its competitors, they pose a significant threat due to their high-efficiency levels and ability to differentiate their service offerings.
The tool is vital in revealing the nature of the balance of power in the competitive environment where the company operates (Porter, 2008).
The threat of new entrants (low): The threat posed by new entrants into the industry is little because of the enormous capital outlays required for a new entrant to make any significant presence in the market. Most of the operators in the logistics and courier industry are established global entities, and due to the benefits of economies of scale, vast networks, more accessibility to the distribution and value chains, a new entrant faces an arduous task of gaining any meaningful presence in the industry (Juga, 2016). Similarly, the current operators have invested heavily in areas such as innovation and research that accords them a considerable advantage over any new entrant into the sector.
Supplier power (low): Most of the supplies required by the operators in the courier and logistics industry are not unique. Most of the supplies include distribution tracks, technologies, and security services for the cargo. The costs of switching from one supplier to another are also low. Further, most of the suppliers prefer retaining the businesses due to the significant economic benefits as most of their orders are in bulk due to the extensive nature of their operations (Guoan & Xue, 2019).
Buyer Power (low): The number of customers that are served by the industry operators is high, and the possibility of these customers dictating terms to the company is little (Hooley, Broderick, & Moller, 2015). In the same line, most of the customers are located in different global regions. Because of their preference for quality service, they have little say over aspects like the prices charged for the service.
The threat of substitutes (low): The threat posed by substitutes is little due to the ability of most of the operators in the industry understanding the core needs of their customers and offering differentiated services to different customer segments guaranteeing consistency and effectiveness. Such differentiation increases the switching costs of the customers, thereby decimating any possibility of the customers utilizing other forms of logistics and courier services (Porter, 2008).
Competitive rivalry (high): The competitors in the courier and logistics services industry are large and well endowed. Most of them are global entities with vast distribution networks that make them benefit from economies of scale. The entities, as well, have access to financial resources that they can utilize to improve the quality of their service offerings that further exacerbates the competitive threat they pose to one another (Keller & Lehmann, 2016).
· The enormous global presence that benefits the business from economies of scale.
· A strong brand name that is known globally.
· Ability to exploit advanced supply chain technologies to guarantee efficiency and quality of service.
· Significant market share in the global courier and logistics industry.
· Poor management of traffic, especially in the tracking of parcels by customers.
· Lack of flexibility, such as the failure to exploit online platforms (Juga, 2016).
· Increased preference by customers to do online shopping and utilize online platforms for distribution.
· Ability to enhance global growth through mergers and acquisitions (Juga, 2016).
· Intense competition from rivals like FedEx
· Fluctuations in the exchange rate in some jurisdictions that impact negatively on bottom lines.
The company must segment the market based on the levels of emergency of the cargo (Rahman & Areni, 2014). Enabling such capabilities will make the business venture into overnight express courier and logistics services for different forms of cargo thereby guaranteeing additional market share. Most of the businesses have become global and are operating in different time zones. For them to enhance efficiency, such businesses are prioritizing interconnecting their operations globally and the availability of a night courier and logistics express service. It ensures UPS exploits its significant global market presence to increase its market share as more customers, especially businesses operating in critical sectors like finance, healthcare, and insurance, would opt to utilize the service (Burke, 2013). The availability of the urgent freight service would improve the positioning of the company as its presence in every global region would make it attractive to most of the businesses operating, or providing critical services where the time element is vital.
The targeted market for the emergency service includes businesses that operate in critical sectors of the global economy, for instance, finance companies, and households, which have urgent issues that must be done within specific timelines (Broniarczyk & Alba, 2014). The target market is viable as the availability of the service would make the company levy premium charges that are comparable to those of other players in the sector like FedEx. Also, UPS would be able to exploit its large distribution networks in various regions, such as the Middle East, Africa, and Asia. In those continents, most of its competitors are not significantly present (Rahman & Areni, 2014). Also, most of the players in the targeted markets provide critical services where the time element is vital. Because of the global nature of most businesses, emergency service would be exploited by most global businesses (Broniarczyk & Alba, 2014).
The ability of the business to use its strengths is vital in ensuring it manages the competitive threat posed by the competition. Most of the rivals of UPS are established entities with similar capabilities, even though they do not have large distribution networks and resource capabilities like UPS. It means the business must focus on investing in efficient technologies such as the tracking of parcels, and modeling to ensure it utilizes the most economical service delivery options to cut costs and improve its bottom-line performance.
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