External environment analysis of United parcel Services

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Nov 24, 2024

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EXTERNAL ENVIRONMENT ANALYSIS OF UNITED PARCEL SERVICES (UPS) 1 External environment analysis of United parcel Services (UPS) Name of the student: Name of the professor: Institution: Course: Date:

EXTERNAL ENVIRONMENT ANALYSIS OF UNITED PARCEL SERVICES (UPS) 2 Overview: A well-known name in the fields of package transportation, supply chain management, and logistics services is United Parcel Service, Inc. (UPS). Having started off as a small messenger service in 1907, UPS has grown into a global powerhouse that provides a wide variety of services. UPS is recognized for its reliable package delivery services across the globe and has a large fleet of cars and planes (James, 2022). Additionally, it broadens its area of expertise to include complete supply chain solutions, international freight services, and customs brokerage to help firms through the intricacies of global commerce. With operations in more than 220 nations and territories, UPS is essential to supporting international trade. The business's persistent dedication to technical advancement, sustainability, and its highly committed employees have cemented its position as a dominant force in the market and allow it to continually provide effective and trustworthy services to both people and companies. UPS Competitors FedEx and DHL are UPS's fiercest competitors in the cutthroat world of logistics and package delivery (Gavrilescu, 2021). One of the top rivals, FedEx, employs over 384,000 people and has a staggering $97.1 billion in annual sales. FedEx is organized into divisions including Federal Express Corp, FedEx Ground Packaging System, Inc, FedEx Freight Corp, and FedEx Corporate Services, Inc. that operate in comparable areas and have similar business models (Gavrilescu, 2021). The broad reach and size of this competitor's operations pose a serious obstacle for UPS. Another strong UPS rival is the German-based courier provider DHL. DHL is a global logistics company with over 400,000 employees and $13.2 billion in annual sales. Some of its divisions include DHL Express, DHL Jetline, DHL Secureline, and DHL Same Day. Despite the

EXTERNAL ENVIRONMENT ANALYSIS OF UNITED PARCEL SERVICES (UPS) 3 disparity in income, DHL is a strong competitor in the market because to its widespread presence and wide range of service options (Gavrilescu, 2021). The rivalry among these significant firms continues to reshape the logistics and package delivery industries, spurring innovation and client- centered solutions. Competitive Advantage A comprehensive network is run by UPS, which provides a range of services including ground, air, domestic, international, residential, and business shipping. A vertically integrated approach is used to attain this adaptability (Gavrilescu, 2021). UPS, which is renowned for its cutting-edge courier technology, improves the effectiveness of delivery, supply chain, and freight management. They streamline shipping by integrating services with company software. Employee loyalty is fostered by a strong corporate culture. Operating in more than 220 nations and territories, UPS is a very market-diverse company. Porter's Five Forces A well-known paradigm for evaluating the competitive dynamics and allure of an industry is Porter's Five Forces (Collins, 2017). This approach thoroughly covers the following five elements that influence a company's strategic landscape: Competition in the industry, potential of new entrants into the industry, power of suppliers, power of customers and threat of substitute products. Competition in the Industry The logistics market for shipping and courier services is very competitive. While UPS continues to dominate the market in terms of both staff base and revenue, FedEx has significantly increased its market share (Collins, 2017). FedEx may not be as effective as UPS, but as delivery prices increase, this is likely to change. In the same way that Uber and Lyft

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EXTERNAL ENVIRONMENT ANALYSIS OF UNITED PARCEL SERVICES (UPS) 4 disrupted the old taxi service, new technological advancements also represent a danger since it's possible that a new business model may threaten to capture a significant portion of the market. Potential of new entrants into the industry The industry of shipping and logistics has an extremely high entrance hurdle. It is exceedingly rare that a new company can achieve any type of sizable market share due to expensive launch and ongoing capital expenses, competing against brand loyalty, and acquiring access to distribution channels. Power of suppliers It takes a startling amount of equipment to properly deliver shipping on a global basis. Due to their extensive experience, UPS has established several alliances and negotiated the most affordable contract pricing for these products (James, 2022). Purchasing, maintaining, and fuelling the different forms of vehicles utilized to deliver all items come at additional expense. Power of customers Alternative courier services are available to customers (FedEx, DHL, etc.). Because there is so much competition, switching couriers has a cheap cost (Collins, 2017). Since most consumers are devoted to a single brand, client loss should be minimal if there aren't any significant changes to the quality or pricing of the services offered. Threat of substitute products Although UPS has rivals, they are very dependable in their ability to deliver a wide range of packages to a diverse consumer base. There truly isn't a substitute for the service supplied until a technology emerges that can get around the established economic paradigm. Areas of Opportunity

EXTERNAL ENVIRONMENT ANALYSIS OF UNITED PARCEL SERVICES (UPS) 5 The epidemic-related forced lockdowns have considerably sped up the emergence of e- commerce by driving many consumers to resort to internet retailers. Knowing that the increase in online sales is not just a passing trend, UPS successfully adjusted to it. In a number of digital projects and partnerships with online businesses, UPS is prepared to spend much more, similar to their successful cooperation with Amazon. Numerous small-to-medium sized firms have emerged as a result of the increase of entrepreneurial initiatives, but many of them are underequipped to handle their sophisticated shipping and logistics needs as effectively as bigger organizations (Gavrilescu, 2021). In this situation, UPS might be crucial in meeting their unique demands. Additionally, the epidemic has caused radical changes in the healthcare industry. Underscoring UPS's capacity to contribute to the changing healthcare scene, the rising acceptance of remote healthcare services has raised the need for courier services to assist the conveyance of medical data, prescriptions, and test findings.

EXTERNAL ENVIRONMENT ANALYSIS OF UNITED PARCEL SERVICES (UPS) 6 References Collins, C. (2017). UPS: Five forces. Retrieved August 13, 2023, from prezi.com website: https://prezi.com/qq07mevaupb9/ups-five-forces/ Gavrilescu, A. (2021). UPS competitors analysis : Top 5 competitors. Retrieved August 13, 2023, from Business Chronicler website: https://businesschronicler.com/competitors/ups- competitors-analysis/ James, J. (2022). DHL vs. FedEx vs. UPS: Shipping carriers compared in 2022. Retrieved August 13, 2023, from Lateshipment.com Blog website: https://www.lateshipment.com/blog/overview-of-fedex-ups-and-dhl/

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