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TABLE OF CONTENT
Company Overview.........................................................................................................................3
Internal Environment.......................................................................................................................3
Corporate Culture........................................................................................................................3
Business Model................................................................................................................................5
SWOT ANALYSIS..........................................................................................................................8
Strength:.......................................................................................................................................8
Strong Market Position................................................................................................................8
Broad Portfolio of Services.........................................................................................................9
Robust Infrastructure.................................................................................................................10
Geographical concentration.......................................................................................................11
High Debt...................................................................................................................................11
Opportunities and Weaknesses......................................................................................................12
Opportunities.............................................................................................................................12
Geographical Expansion............................................................................................................12
Expanding Chinese Market........................................................................................................13
Online Shopping........................................................................................................................13
Threats...........................................................................................................................................14
Overall Threat Assessments.......................................................................................................14
TOWS MATRIX............................................................................................................................16
Strategy Analysis.......................................................................................................................16
CPM...............................................................................................................................................17
EFE MATRIX................................................................................................................................18
IFE MATRIX.................................................................................................................................18
Portfolio Analysis......................................................................................................................18
BCG Growth-Share Matrix............................................................................................................19
Recommendation and Conclusion.................................................................................................21

Company Overview
United Parcel Service (UPS) is one of the oldest and most successful courier companies in the
world. It was founded in the year 1907 and started as a messenger company in the United States
of America. Sine their humble beginnings UPS has grown from strength to strength to a$36
billion dollar corporation. UPS is a multinational company and is one of the worlds most
recognized and admired brands around the globe. They are also one of the largest package
delivery companies in the world and a major competitor of FedEx and DHL in supply chain
management operations. Every day, they manage the flow of goods, funds, and information in
more than 200 countries and territories worldwide. (Webmaster [b], 2006)UPS, as the world's
largest package delivery company and global leader in supply chain services, understands that
optimizing their business efficiency is essential for their company to cope with increasing
management pressures. This reflects an UPS's global strategy to offer its customers a convenient
way to streamline their supply chain and improve business performance.

Internal Environment
Corporate Culture
The corporate culture of UPS revolves around its rich history. This is because the company had
spent decades trying and testing their methods to perfect their system on which they're built to
provide their customers with quality and satisfaction. The corporate culture of UPS is always
adapting to the flow of time in order to make sure their business models and methods do not

become obsolete and ineffective. This was due to a lesson they learnt very early on in their
history.There was a time when UPS was known to be as reliable a Santa Claus sleigh because
during the Christmas season when their business was at its peak they were always reliable and on
time. With their deliveries unlike their major competitor at the time the U.S. Postal Services. The
trademark brown trucks of UPS were seen as remarkable and the epitome of workmanship. Then,
as time passed by UPS observed that their business was dropping and they were loosing their
customers to new competitors emerging in the market. After conducting an analysis of their
operations, they realized that their methods and strategies had become obsolete and smaller
companies and old competitors had developed new strategies as times had changed. This lead to
UPS conducting surveys on what their customers wanted and cashing in on the intellectual
capital of their firm to revamp their operation and come with new cutting edge strategies to
capture a large part of the market share once again. (Day, 1995)In UPS the corporation believes
that organizational development is a long term effort to introduce changes which increases the
efficiency throughout an organization and is a tool that enables managers to adapt their strategies
to cope up with the changing demands of the environment. They believe that organizational
development should pave the way for improving quality, increasing innovation and more
customer oriented service. After more than 50 years of success UPS found themselves in a
situation where new companies were stealing their market share. This made, UPS realizes that
efficiency isnt always go handing hand with success. This is because UPS previously was an
operation oriented company. Therefore, after analyzing their environment and monitoring the
changes UPS realized that it was high time to reinvent itself by employing an adopted corporate
culture. This enabled them to change their company operations by refocusing their values from
efficiency to quality, increasing innovation by investing heavily on technology and by investing

in other business opportunities in the form of passenger charters. As a result of

these transformations UPS has evolved into a market driven company with an emphasis on
customer satisfaction. UPSs adoptable corporate culture was put into practice since they realized
that a companys corporate culture should always be adapted to change in order for the company
to thrive in a changing landscape. It is very important to understand that a corporate culture is a
system of shared values and beliefs which has an impact on the people, system and structure of a
particular company. It is a belief system that gives shape to the way things are done, a sense of
how to behave, and where to place priorities in achieving a goal. (Harvey & Brown, 1996)
Therefore, in UPS these stories and historical events serve to enforce the need for an adaptive
culture due to which managers and workers strain to be innovative and be able to apply different
strategies which enables them to be innovative and meet their goals.

Business Model
The current business strategy being employed by UPS is the Total Quality approach. They apply
this strategy across all parts of their business. The reason behind the selection of this approach
which was implemented in 1994 according to their previous CEO was because they wanted to
make the quality of UPS the best in the world. The application of this form of business strategy
was done in order to improve their productivity, efficiency and quality. One of the key benefits of
implementing this strategy is that it emphasizes on continuous improvement. It works as a cross
functional, management led philosophy which results in improving customer satisfaction. The
reason that UPS is very effective with this business model is because they have all the basics for
the implementation of this philosophy. Their top management actively supports this model and
makes sure every department in their organization implements it. The other reason is due to

the fact that this model goes hand in hand with UPSs corporate culture. UPS believes in being
highly adaptable in order to improve their services and TQM focuses on continuous
improvement. (Duffy and Tom, 1996)From putting this model into practice UPS makes sure their
staff member of the various departments is pro-active and involved in order to make the
development work. They also have many work teams who are self managed and due to
this model they are more involved because they understand the vision of the organization and
apply strategies and ideas which brings the vision to life. Unlike many other companies where
information sharing between different departments is a bureaucratic nightmare in UPS
information is shared openly between departments. This is because TQM needs information to
keep flowing in order for continued improvement.

It has to be understood that TQM encourages teams to be self reliant and feel more empowered
due to this the staff jobs are broken down to five dimensions.

Feed Back

Autonomy

Task Significance

Task Identity

Skill Variety

UPS makes sure all the dimensions listed above are addressed by their staff and as a result, their
staffs are more self-directed. UPS knows that to successfully employ this strategy to their
staff should have incentives which would make them strive for the betterment of the company.
Therefore, they provide their staff with a network for support and incentives in the form of career
development. (Isidore and Chris, 1996)UPS realized that even though TQM is a business model

which compliments their culture that there are times it might not work. Therefore in order to
make sure it works all the time theymonitor their operations to see if the model is failing or not
being implemented affectively.Since UPS has many self managed teams managers are always
monitoring their employeesmoral. At the same time some employees might feel that they do not
fit into the company process. Therefore managers have to address these concerns in order for
TQM to be effective.UPS makes sure all their staff member are highly trained and given merit
for their work due towhich they will have enough information on their role therefore they are in a
situation where they are able to execute their tasks efficiently.The main reason that the TQM
business model is being implemented by UPS very effectively isbecause their top management
believes that they should keep improving in every faade of their organization in order to provide
the best quality possible in the industry. Therefore they focus on making sure that their staffs are
energized by their quality of their work. This business model is a guide that UPS follows but
they understand that it is not a quick fix, but a way of life that the company should adopt. The
reason this business model has been met with a lot of success in UPS is because they wanted to
be the best in their industry and maintain their position. In order to monitor the success gained by
employing this model UPS conducts a special management session of DOF (Delivering Our
Future - Taking a Leadership Role in Total Quality) in order to create an awareness of the
competitive reasons for Total Quality and the role all management at UPS would play in
the process. (Ferguson, 1995)

SWOT ANALYSIS
Strength:
UPS is one of the major companies in the courier industry due to three key strengths. These
strengths are

Strong market position

Broad portfolio of service
Robust infrastructure
The following part of the report will highlight why the three factors mentioned above are the key
strengths of UPS.
Strong Market Position
When taking into consideration the volume and revenue earned by a company in the courier
industry UPS stands out as one of the largest package delivery companies in the world. UPS
spans across 200 countries and have more than 1.8 million customers. It delivers more than
15million parcels a day on average to both local and international destinations. UPS conducts a
very intensive and extensive integrated global ground and air network, which consists of more
than 140,000 international and domestic access points. There ground fleet consists of a
staggering amount of more than 100,000 vehicles which spans from custom built delivery cars to
large trailers and tractors. Their air fleet consists of more than 500 airplanes. The success of the
company is such that they handle the supply chains for many large and small enterprises in more
than 150 countries in various countries around the globe. UPS is also one of the leading
providers of less-than truckload transportation services. (UPS Prospectus) They also enjoy a
strong presence in the North and South American continent and are known as one of the largest
logistics and air cargo provider in the region. Upon observation of the share price of UPS in the
US Stock Market Dow Jones it can be seen that UPS has enjoyed seven years of consistent

growth. Its strong market position is also highlighted by many financial magazines. Fortunes 500
listed UPS as the 43rd most successful company in terms of revenue earned. Newsweek magazine
ranked UPS as the 85thGreenest Company in America. Black enterprise magazine listed UPS
among the 40 best companies in the world and according to Hispanic Business Magazine it was
among the Top 50 companies for staff diversity. UPS biggest badge came from Inter-Brand when
they were listed among the Top 100 of the Best Global Brands. It was also included in the
Americas Top Corporations for Womens Business Enterprises every year since 1999. (UPS
Prospectus) The strong market position UPS enjoys enabling them to serve a broad range of
customers across various parts of the globe and be a major player in many international markets.
It also enjoys a very strong brand image due to its strong market position and as a result enjoys
the benefit of economies of scale.
Broad Portfolio of Services
UPS enjoys many benefits due to the very diverse end markets that it serves. It offers a number
of services across its three different business spectrums. When taking into consideration the USA
UPS domestic contingent consists of both air and ground delivery of small packages and letters
to and from all the states in the US. The main reason UPS is preferred over all their competitors
is because UPS provides guaranteed, on time delivery of their packages. UPS delivers to more
businesses and zip codes in the US, and worldwide from the US, than its competitors. The
international package segment of UPS also provides air and ground delivery of small packages
like its domestic segment counterpart to over 200 countries and territories around the world. The
freight and supply chain segment of UPS forwards freights, troubleshoot management issues and
provides international trade services. They also specialize in troubleshooting various
transportation issues air, ground, ocean freight and customs brokerage trade and materials

management. They are unique from all their other competitors because they provide a diverse
range of financial services. They provide short term and long term financing, working capital,
secured lending, letters of credit, credit cards and equipment leasing. They also help companies
to balance revenues in the face of a slowdown in a particular segment.

Robust Infrastructure
Unlike other companies in the industry UPS has a very strong transportation infrastructure, UPS
has a strong transportation infrastructure. It operates a ground fleet of approximately 101,900
The customer pool of UPS enjoys convenient collections because UPS has more than
141,000domestic and international access points. These access points consist of more
than 35,000branded drop boxes, 1,100 customer centers 4,800 independently owned and
operated The UPS Store and Mail Boxes Etc. locations worldwide, 2,700 alliance partner
locations, 12,000authorized shipping outlets and commercial centers, and 81,900 UPS drivers
who can accept packages given to them. On top of that UPS owns more than 20 principal US
package principal operating facilities. A strong infrastructure provides the company the
advantages of reputation, service quality and economies of scale that differentiate it from its
competitors. (UPS Prospectus)
Weakness
Even though ups enjoys a substantial amount of growth they have two major weaknesses. They
are:
Geographical concentration
High Debt

Geographical concentration
One of the biggest business factors that UPS needs to take into consideration is their
exposure.Even though they have operation in Africa, Asia, Europe and the Middle East they
concentrate primarily on their domestic market based in the USA. Even though they enjoyed
higher revenues for the FY09 75% of it was generated from their domestic market. When this
is compared to their competitors like DHL, FedEx, and TNT they have operations in various
European and Asian countries such as The Netherlands, Germany, Italy, China, India, Brazil,
Australia, among others. They rely too much on one region in which they operate domestically.
This exposes the company to a lot of negative influence. For example the recession in the US had
a major impact on UPS. This is because they are overly exposed to the risk of downturns in
the country's macroeconomic conditions and increases its business risk. (UPS Prospectus)
High Debt
UPS is experiencing a worrying trend in the form of rising trends. This can be seen from the
increasing debts they accumulated of three continuous financial years from FY08to FY11.This
has provided UPS with a dilemma where they should generate a constant cash flow in the form
of cash to service in order to reduce their rising gearing. When taking into consideration their
debt equity, which is 1.1% of their competitors who debt equities are

Atlas Air Worldwide Holdings (0.64)

UTi Worldwide (0.4)

Pacer International (0.29)

Opportunities and Weaknesses

Opportunities
Due to globalization and the exponential rate at which the global market, many business
opportunities open up that UPS could capitalize on. The most significant opportunities that are
available for UPS are:

Geographical Expansion
Expanding Chinese Market
Online Shopping

Geographical Expansion
One of the biggest weakness UPS is their over reliance on the US market therefore to insulate the
company from the negative effects that could impact the macro environment of the states UPS
should seriously consider expanding to regions around the globe. UPS first showed the intention
of reaching across borders when they acquired a unit of IntereuropaGlobalni Logisticni Services
which is a firm that has been delivering small packages within Slovenia since 1991. (Yahoo,
2009) This business move showed a lot of promise since UPS will now be able to invest in
its global brand, transportation network, technology and workforce to serve its growing customer
in a more effective and efficient manner. One should also consider that once UPS has
consolidated its hold on the market share of Slovenia they would be able to focus on expanding
across the borders into the breakaway countries of the former USSR.Also with the growing
strength of FedEx and DHL in the Middle East region and Asia it is very heartening to see a new

global player enter the scene in the form of UPS as they strive to garner a large portion of the
market share in the region. This intention was highlighted by UPS when they announced a new
joint venture which is headquartered in the United Arab Emirates. (Webmaster [a], 2009)
Also with new entrants entering the Mexican courier industry UPS to ensure that they do not
loose their market share to the new entrants came up with a new service in the form of UPS
Standard which gives their existing customers concessions.All this information shows that UPS
has to seriously consider to aggressively garnering more of the market share globally since they
have the recourses and the capital to do so.
Expanding Chinese Market
The Chinese economy is currently the worlds fastest growing industry and attempts made by
DHL and FedEx to secure a foothold in China has been rebuffed by the Chinese Government.
This provides a unique scenario to UPS who could learn from the mistakes committed by their
biggest competitors and severely hamper them by trying to arrange favorable terms with the
Chinese government to conduct operations in China. They could promise the government to hire
only Chinese workers and provide them a high caliber of training and in order to sweeten the pie,
they could agree to a 5-10 year profit sharing venture with the government. This may at first
seem like UPS is making a loss, but in a region which is soon becoming the financial hub in the
world and with close proximities to Honk Kong and Singapore it can be said with a certain
amount of confidence that UPS stands to benefit more than they will lose.
Online Shopping
The online shopping industry has grown explosively in the last five years with an unprecedented
rate of growth that this is a field that UPS should definitely consider before expanding into one
of their competitors do. Total sales generated by e-commerce have grown explosively over the
last five years. Though the economy took a massive beating from the backlash of the recession

online retail still shows more signs of the consumerism during recession than consumer retail as
whole. A majority of US online consumers changed their mindsets from 'cutting back' to
spending cautiously' and shifted more of their shopping habits online. Therefore, this is a golden
opportunity for a company like UPS to use its supply chain which is one the best in the world
and pool its capital and recourses to open an online market.

Threats
The main threats that UPS faces are:

Compliance with Government Regulations

Strikes and work stoppage

Intense Competition

Overall Threat Assessments

Government regulation affects the business of UPS since they are subject to numerous other laws
and regulations in connection with its non-package businesses, including customs regulations,
The Food and Drug Administration regulation of the transportation of pharmaceuticals, and state
and federal lending regulations. These laws and regulations affect the company's operations on
its customer sites and in some instances, impose added costs on the company's business. A
violation of these laws and regulations could result in the imposition of fines and penalties or the
termination of the company's contracts. Such regulations could put pressure on the company and
affect its cost structure. (Cleland and Carmel, 1996)In terms of work stoppage the company may
lose its customers permanently, if it is unable to provide uninterrupted service and this could
adversely affect the companys business, financial position and results of operations. The terms
of future collective bargaining agreements also may affect UPS? Competitive position and

results of operations. Labor problems could disrupt the company's operations, resulting in lower
revenues and loss of credibility. (Cleland and Carmel, 1996) Last but not the least is the intense
competition in the transportation industry continues to consolidate and competition remains
strong. As a result of consolidation, the companys competitors may increase their market share
and improve their financial capacity, and may strengthen their competitive positions. Business
combinations could also result in competitors providing a wider variety of services and products
at competitive prices, which could adversely affect UPS financial performance.

TOWS MATRIX
Strengths

Tows Matrix

Opportunities

1. Geographic expansion
2. Online shopping
3. Expanding Chinese
market

Weaknesses

1. Strong Market Position

2. Board Portfolio Services
3. Robust infra Structure

1. Geographic concentration
2. High Debts

SO
UPS can make use of a strong
brand name to expand its
business in new emerging
markets

WO
By expanding their business
around the globe UPS can
insulate itself from the US
market since it is overly reliant
on it. They should start
investing ore on R&D to create
new service and new products
and become first movers in the
industry. This is something
DHL and FedEx always did
before UPS
WT

Through diversification, and

increasing their portfolio UPS
can efficiently use the internet
as a one stop shopping ability
for its customer

Threats
ST
1. Government regulation
UPS can use its strong brand
2. Strikes and work stoppage
name and sophisticated supply
3. Intense competition
chain to act as a deterrent
when a new company enters
the market.

Through broadening their

portfolios UPS can incur more
revenue through which they
reduce their gearing which is
increasing for three years in a
row

It can also have a separate

department, which liaises with UPS can reduce competitor
the workers union in the UPS rivalry by targeting on a wide
to ensure their moral is high
range of geographic location
and thereby have a broader
portfolio.

Strategy Analysis

CPM

Critical Success Factors

2
3

Research
Development

Product Quality

USPS

Score

FEDERAL
EXPRESS
Rating Score

0.08

Ratin
g
4

Rating

Score

0.32

0.24

0.32

0.09

0.36

0.36

0.27

0.09

0.36

0.27

0.27

0.07

0.21

0.28

0.21

0.08

0.32

0.24

0.24

0.11

0.44

0.33

0.22

0.10

0.4

0.40

0.30

0.08

0.32

0.32

0.24

0.06

0.18

0.18

0.12

0.09

0.27

0.36

0.27

0.07

0.14

0.21

0.28

0.08
1.0

0.24
3.56

0.32
3.51

0.24
2.98

&

Financial Position
Market Share

UPS

Advertisement

Weight

Price Competitiveness
Management
Global Expansion

9 Customer service
10 Sales And Distribution
Network
11
Production Capacity
12 Alliances
Total

EFE MATRIX

ExternalFactorEvaluationMatrix(EFE)
Opportunities

Weigh
t
0.25

Ratin
g
2

1.

GeographicExpansion

2.

ExpandingChinesemarket

0.30

1.20

3.

Onlineshopping

0.12

0.36

Threats

1.
2.
3.

Compliancewithgovernmentregulation
Strikesandworkstoppage
Intensecompetition
TOTALS

Weigh
t
0.12
0.12
0.09
1.00

Ratin
g
2
2
3

Weighted
Score
0.24
0.24
0.27
2.81

Weigh
t
0.25
0.25
0.10

Ratin
g
4
3
4

Weighted
Score
0.50

IFE MATRIX

InternalFactorEvaluationMatrix(IFE)
Strengths

1.
2.
3.

Strongmarketposition
BroadPortfolioofService
Robustinfrastructure

Weighted
Score
1.00
0.75
0.40

Weaknesses

1.
2.

DependencydomesticmarketinUSA
HighDebts
TOTALS

Weigh
t
0.25
0.15
1.00

Ratin
g
1
2

Portfolio Analysis
To conduct an appropriate analysis of UPS the BCG Growth Share Matrix will be utilized

BCG Growth-Share Matrix

Star

Question Mark

Financing

Book Keeping

Cash Cows

Dogs

Package Deliveries

Local Posts

Weighted
Score
0.25
0.30
2.70

From the above matrix it can be seen that the real star of UPS is a new service they are providing
to the market in the form of financing. Due to the current landscape where the US economy is
coming from a recession, many analysts predict the US market to start growing. Due to this
many people would like to apply for loans and UPS using its strong brand name could attract
customers and make them steer away from the banks. This would be easy for UPS since many of
the general public in the US blame the bank for the severe backlash they faced with the
recession.
Therefore, providing short term and long term financing, working capital, secured
lending, letters of credit, credit cards and equipment leasing could be the next big star for UPS,
since many of their competitors havent even explored this option. The cash cow according to the

matrix is the delivery of packages that UPS conducts. This is because it has been the companys
main staple in the balance sheet in terms of revenue earned. Their markets are growing
internationally and locally and especially in the US UPS has a very strong market presence since
more than 70% of their revenues come from domestic operations. The real question mark for
UPS is book keeping. This is because many companies could easily hire an accountant for book
keeping and they would be considerably cheaper than UPS and therefore it is not very clear
whether this service will pick up or fall into dogs.
The final part of the matrix (dogs) consists of local posts. This is because with the use of
e-mail many people in the US are using e-mails to communicate with each other instead of
letters. Therefore delivery of letters among states is decreasing. Do not be mistaken that UPS is
loosing business in their domestic home front. What they lack in letters they make up for it in a
parcel, especially during holiday seasons when loved ones send parcels and gifts to each other.

Recommendation and Conclusion

UPS should focus one single service, customer as well, because of these customer groups can be
developed to solution service, customer if they have more experience and grow up in a future.
UPS should position them like a business partner for helping customer to success. Develop
customer knowledge through various media and advertising. Focuses more on sustainable
development, especially human resources. Improve incentive system and others compensation /
benefits. Recruit new generation / talent, into the proper development system. Build organization
in which diversity of generation, allow people to initiate new ideas for work process
improvement. UPS brand is just transportation provided in mostly customer perception, UPS

should to position a brand image to be consulted who provide solution on best practices with
experienced team, not only theory.