1. STRATEGIC PLANNING AT UNITED
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2. ABOUT THE COMPANY
• The United Parcel Service (UPS) delivers more than 15 million
packages a day to about 6.1 million customers in 200 countries
around the world, making it the world’s largest package delivery
• UPS is headquartered in Atlanta, Georgia and operates primarily
in the United States with about 428,000 employees.
• UPS’ slogan “What can Brown do for you” emphasizes the
company’s ability to provide services to almost any one in the
world, at any address.
3. ABOUT THE COMPANY
• Before the $42 billion company grew into a worldwide name, it
was started as a small messenger company in 1907 by two aspiring
teenagers, Jim Casey and Claude Ryan in Seattle, Washington
with just $100.
• Top competitors of UPS include Federal Express (FedEx), DHL
International and the United States Postal Service.
Strong brand images
THREAT OF NEW High capital expenditures
ENTRANTS Economies of scale
Trade tariffs and
Fuel costs Highly consolidated
Low switching costs
but customers too
small to have any
There are no real
substitutes for air SUBSTITUTES LOW
5. INDUSTRY PROSPECTS AND OVERALL
• The alliance between air freight companies and ITES
companies will bring exponential growth to the Air
• This industry should remain attractive, with concentration
on competition for market share, service differentiation,
and brand image.
• Current Advertising has been aimed at being better than
the competitor for different reasons.
6. SWOT ANALYSIS
Global brand Perception of ground delivery
Strong distribution network instead of overnight
Heavy union presence
Expansion of online shopping Increasing fuel costs
Emergence of international Competitive landscape (DHL,
middle class FedEx)
Potentially slowing global
7. FUNCTIONAL ANALYSIS (Marketing)
OBJECTIVE: Provide a complete logistics infrastructure to businesses of
• UPS is targeting a global market of producers and consumers, while
making a move to become the supply chain integrator of choice in
• They offer products and services that are state of the art in logistics,
which include the use of bar codes and RFID, high speed package
routing systems, and consulting services.
• UPS charges package prices that are in alignment with the industry
and is willing to raise prices alongside FedEx. It has been able to
charge fuel surcharges successfully.
8. FUNCTIONAL ANALYSIS (Marketing)
• A sales force is maintained to reach business customers and
producers crucial to UPS’ mission in expanding its role in logistics
to become the supply chain integrator of choice.
• There are 150,000 different places to access UPS, worldwide.
Customers can reach them by phone, web, retail outlets, customer
service centers, distribution centers and any of the drivers will
pick up packages. This level of reach to customers is necessary if
UPS expects to gain market share from FedEx.
9. FUNCTIONAL ANALYSIS (Operations Tech)
OBJECTIVE: Highly integrated operations support product offerings to
offer low cost delivery operations.
• UPS is seeking to integrate into freight with larger haul trucks
and it is adding capacity in Asia and Europe with acquisitions of
Sinotrans, a Chinese joint venture and Stolica, a Polish parcel and
• UPS is the 11th largest airline world, with nearly 600 planes, 15
airport hubs worldwide and 900 airports served. Connecting these
airports hubs to customers are 1,750 distribution facilities that sort
packages into 90,000 trucks for deliveries to the home, office, and
72,000 retail outlets. All this requires the integration of air,
ground, logistics and trade financing that UPS maintains is a key
10. FUNCTIONAL ANALYSIS (Human resource)
OBJECTIVE: A high sense of culture and esprit, stock participation
plan, and promotion opportunities contributes to a low turnover
rate of employees.
• The company is managed from a highly centralized Management
Committee organized along for the most part in to functions as
opposed to business units. There are business unit presidents in
the Management Committee but only to the extent that the
business unit is organized at a global or firm wide level.
• UPS is the US’s 3rd largest employer with nearly 400,000
11. FUNCTIONAL ANALYSIS (Finance)
OBJECTIVE: Highly liquid company has been investing at a faster rate
than returning cash to investors, which are for most employees.
• The company is highly liquid with 1 ½ times the cash necessary
to cover current liabilities. UPS increased its dividends at 20% per
year for the past five years with an even higher growth in the rate
it has been buying back stock, at 47% over the same period.
• The firm has been paying down debt over the last five years while
steadily increased Fixed Assets and Working Capital, in line with
developing the infrastructure to support the latest in logistics
technology and their customers’ push towards JIT manufacturing.
Over the past five years, Working capital has increased 24% per
12. FUNCTIONAL ANALYSIS (Finance)
• The firm’s capital structure is in line with a company that has been
run by traditional long time employees. 50% of the capital structure
is equity with the remaining sources of capital split between current
liabilities at 20% and long term debt at 14%.
• The company is investing its cash in to Working Capital. The
evidence there is a 28% growth rate in cash versus a 14% rate for
Retained Earnings, which is experiencing a decelerating growth rate
for the past five years.
• To make strategic technology group from a small strategic planning
process. This was basically required for finding major gap in
• Competition from both private companies and large government
• Execution of Scenario-planning session.
• To tackle the impact of axis of uncertainty.
• Formation of scenarios for future strategic planning.
• To manage the strategy road map and implement the centennial
• To tackle the implication for technology and infrastructure
initiatives, growth strategies and options, and workforce
development at both the global and region level.
• Since most managers in the company were focused on short term
goals. It was difficult to keep the perception in mind that this was
not about UPS but rather how the world affected UPS.
• To resolve the strategic integration responsibility.
15. STEPS TAKEN BY UPS TO FACE THE
• As opportunities arose, UPS had shifted from message delivery to
• Several steps that unfolded over a period of years were involved
in the implementation of the new strategic process. The senior
management completed a crucial second step two years later in
1999,when they drafted the UPS charter, redefining UPS’s mission
and purpose and providing a detailed statement of the company’s
values and strategies.
• UPS moved from “leadership in package distribution” to “enabler
of global commerce” due to the new mission and purpose.
16. STEPS TAKEN BY UPS TO FACE THE
• The “centennial plan”, the third step in the strategic process was
formed from the outcomes of that meeting. As UPS’s version of a
five year strategic plan, it was designed to guide the company to
its centennial anniversary by providing themes and broad
, overarching direction.
• “Strategy road map”, which was the fourth step in the strategic
process was developed to take the centennial plan to an
executable level of detail.
17. STRATEGIES ADOPTED BY UPS
• Investing in the core business of worldwide distribution and
• Building competencies in the integration of goods, funds, and
• Using technology to create new services.
• Attracting talented people.
• Studying customer behavior and anticipating their needs.
• Practicing innovation that leads to growth.
• Developing an environment that enables them to treat each
customer as if he or she were the only one.
18. MAIN LESSONS
• UPS has done a remarkable job of leveraging their core
competencies for the new world of e-commerce. They have
figured out how to deliver their core business services in new
ways, while leveraging their tremendous infrastructure assets.
• They haven't forgotten where they came from. In that they have
managed to preserve their company culture. It has served them
very well in promoting the creative thought necessary to come up
with new ways to do business and grow the company.
• They were brave enough to change the vision, starting at the top,
and committing themselves to it from the top all the way down
through every employee of the company. They managed to do it
quickly by making changes in their processes and organizational
19. MAIN LESSONS
• UPS has been aggressive in finding new revenue streams with
existing and new customers. They understand not only their
customers and related needs, but have also figured out ways to
deliver more value. They have expanded the roles they can play in
the overall value web by leveraging their infrastructure and
20. PREPARED BY GROUP 9:
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