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Industry & firm Analysis Presentation

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  • 1. Industry & Firm Analysis: Air Delivery & Freight Services industry
    Sarah Schleigh
    Presentation and Paper can be viewed here:
    http://www.slideshare.net/SchleighS
  • 2. Industry Analysis – Major players
    Revenue ($ in Millions)
    Data taken from 2010 Annual Reports – see footnotes in paper for web addresses.
    6 Note: Annual revenue for DHL was provided in Euros. Amounts shown above have been converted using an annual USD-Euro exchange rate of 0.755. Original Euro values for 2010 and 2009 are 51,481€ and 46,201€ respectively. Exchange rate derived from irs.gov website – see footnotes for full web address.
    • Although the U.S. Postal Service has the highest revenue (two-year total) above, it is on the decline compared to 2008 revenue of $74.9 million.
  • Industry analysis - size
    Number of Employees (as of 2010 Annual Reports)
    Data taken from 2010 Annual Reports – see footnotes for web addresses.
    • The parcel industry is unique in that the services it provides directly contribute to the health and growth of the whole economy.
    • 3. Nearly every business entity in the country relies on the parcel industry to ship its products, supplies, and correspondence.
    • 4. The value of goods shipped via parcel carriers compared to the Gross Domestic Product was 2.1% in 1977 and rose to 10.6% by 1997.
  • General factors affecting the industry
    Domestic and Global economic health
    Globalization – has increased the need for speedy, secure international shipping
    Population shift – more locations and employees where there are more people
    Labor – a large portion of the parcel industry’s workforce is unionized; this creates increased regulatory burden and increased labor expenses
    Other regulation – Federated Aviation Administration (FAA), Department of Transportation (DOT), Transportation Security Administration (TSA), Homeland Security, Environmental Protection Agency (EPA), and international customs laws
  • 5. Impact of IT on the Parcel Industry
    Growth of e-commerce = more shipped packages; partially (but not fully) offset by reduced catalog ordering
    Delivery trucks now rely on GPS to find the quickest and most efficient paths to their destinations
    Handheld electronic devices and scanners enable parcel industry personnel to track packages, and web-based technology allows consumers to see where their package is and when it will be delivered
    Email has resulted in a reduction of regular mail and written correspondence which has had an adverse effect on the industry – most of which was born by the U.S. Postal Service which is the primary mail carrier in the U.S.
  • 6. Firm Analysis – United Parcel Service (UPS)
    Founded in 1907, by 19-year old James E. (“Jim”) Casey, who along with his business partners and teenage employees, delivered packages by foot and by bicycle.
    The company now operates in over 220 countries and territories and has become one of the most recognized companies in the world.
    The company is decentralized with a small presence in nearly every city or small town in the country
    Current CEO – D. Scott Davis (2007 – present)
    Corporate headquarters: Sandy Springs, Georgia
  • 7. UPS – Financials and Other Figures
    * Data taken from the 2010 UPS Annual Report
  • 8. UPS - Recent Accomplishments and potential future risks
    Accomplishments:
    expanded international reach, opened new facilities, increased the size of aircraft and truck fleet
    PR wins:
    one of only four companies in the world to receive the highest score on the Carbon Disclosure Index
    received the highest score in the industry on the American Consumer Satisfaction Index (ACSI)
    recently Treasury Secretary Timothy Geithner visited the UPS Worldport air hub in Louisville, KY and commended the recent expansions of the facility for providing jobs and growing the economy
    Risks:
    Increased security requirements and the threat of a security breach
    The effect of climate change or more specifically, climate change regulation that could drive up costs
    Strikes, work-stoppages, and slowdowns by unionized employees (which comprise more than half of UPS’s workforce)
    Employee health and retiree health and pension costs which are a significant expense to the company
    Changes in fuel prices or interruptions in the supply of fuel
    Any major breakdown of their IT systems could result in serious disruption of service and intense customer dissatisfaction
    The potential for an adverse outcome in any one of the pending litigations against the company.
  • 9. The Role of IS at UPS
    Since 2008, UPS has been deploying a new technology called telematics, which combines information from drivers’ handheld devices with GPS and automotive sensors that helps them better manage their ground fleet. This technology provides benefits in the following areas: vehicle maintenance, safety, service, and reductions in vehicle expense, fuel consumption and carbon emissions.
    The company’s Chief Information Officer (CIO) is David A. Barnes, who worked from the ground up after joining the firm in 1977. Barnes was the lead business manager on the development of the International Shipments Processing System (ISPS), a Smithsonian award-winning software application developed internally at UPS.
    The UPS Information Technology Governance Committee is responsible for directing the company investments and undertakings in the IT world
    UPS considers IS to be the backbone of the company. Their IT systems give them and their customers the ability to track the shipment of packages across the world. Any significant problems with their system could result in major losses, both in terms of financial loss and customer loss.