Bargaining power of Supplier

http://www.canadapost.ca/cpo/mc/aboutus/suppliers/howtodobusiness.jsf It is the policy of Canada Post Corporation to contract for goods and services with the objective of attaining the best overall value. Canada Post contracts with those suppliers who satisfy the Corporation's objectives of obtaining quality goods and services in a timely manner and meeting the specifications and have competitive prices. In so doing, the Corporation, as a matter of principle, conducts its expenditure contracting activities with due regard to applicable laws, regulations, international agreements and conventions, internal policies and competitive tendering processes. Canada Post does this in such a way as to convey its high standards of professionalism and business ethics to the external community. In general, all contracts are issued by Canada Post Sourcing Management following the formal evaluation process. One or more suppliers who best fits our overall needs will be invited to enter into negotiations, which may lead to the formulation of a formal contract. The bargaining power of suppliers is limited in the case of the major players in the Air and truck transportation industry. All of the top companies in the field rely on their own transportation vehicles and information systems. On the other hand, the cost of fuel is a major expense to these companies. Canada post has a very rigorous contract system in place and has more bureaucratic mechanism in place and bargaining power of supplier is very weak since they are dealing with a government body.

Bargaining Power of Buyers

The bargaining power of buyers is increased due to the amount of competitors within the industry. Customers are able to choose to ship their goods with a number of different carriers. A major part of companies, such as UPS, Fedex consumer base is derived from businesses, with an increasing focus on e-commerce. Companies within this industry have to compete extensively on time delivery guarantee,

as well as, cost effectiveness in order to gain market share. Consumers do not want to wait for for the service being provided and delivery time has been a major factor along with pricing for the consumers to decide which company they choose for their needs. http://www.cpcstrategicreview-examenstrategiquescp.gc.ca/finalreport/pt1-eng.html Reliability, security and privacy: One of the strongest reasons why Canadians support Canada Post and the existing postal regime is because they trust Canada Post to be reliable and to guarantee security and privacy in their communications, a point that was raised in many submissions. The financial institutions are particularly interested in the security of their communications, as are companies that send out invoices, statements, accounts and so on. There has also been considerable backlash over intrusive etechnologies, which has culminated in the advent of the national Do Not Call Registry in Canada and in other countries.

Threat of new Entrants

Some argue that a postal service is a natural monopoly where economies of scale and scope and network effects make it most efficient for national postal services to be provided by a single entity. If this were true, however, it would be unnecessary to impose legal restrictions on entry, as new entrants would not be able to compete with a natural monopoly. Due to the increasing high entry barriers that exist in the Transportation, Air and Trucking Industry, the threat of new entrants is extremely unlikely. The industry is in the beginning of a mature stage, companies are, for the most, competing to take rivals market share. In order to enter the market and compete on the global scale of a company, such as Canadian Post, UPS or FEDEX one would need extensive starting capital to finance the cost of transportation vehicles. In addition, established companies in the industry have a loyal customer base with extensive brand recognition and established distribution channels.

Threat of Substitute Products

With advent of Fax machines and now the Email and other digital platforms including digital signatures and private networking systems, transfer of documents in digital format has never been so easier and quicker. Canada Post faces major challenges. Mail volumes are decreasing, as domestic consumers increasingly favour electronic communications, and business mailers seek to lower their costs by using electronic alternatives. The latter poses the greatest challenge as the business and government sectors, which account for 90 percent of Canada Posts letter mail and addressed ad mail volumes, have strong incentives to adopt electronic alternatives. Compounding the problem of volume erosion is the fact that while mail volumes are decreasing, the number of addresses in Canada is rising by approximately 240,000 per year. http://www.parl.gc.ca/Content/LOP/researchpublications/prb0514-e.htm In July 2004, epost acquired the webdoxs service, thereby advancing the electronic bill presentment and payment market in Canada with a registered user base of over 1.6 million. As a result of the webdoxs acquisition, eposts electronic transactions have increased fourfold on a monthly basis since the beginning of 2004.

Industry Rivalry
The transportation Air freight and trucking Industry is a highly competitive environment. The companies involved specialize in the time definite delivery of packages and documents throughout the world. Canada Post is able to compete by differentiating its product while maintaining cost effectiveness. UPS strength is in its ability to integrate its distribution and information systems to provide unique transportation solutions at competitive prices. http://www.cdhowe.org/pdf/commentary_243.pdf Further, Canada Post faces increased competition from international shipping and delivery companies.

These companies have been acquiring, consolidating, and working with courier, air freight, logistics, and ground-carrier firms, and expanding and integrating their networks, putting downward pressure on prices. As well, some global players have expanded their retail and online presence, enabling them to reach the consumer and small business segments, the source of a significant portion of Canada Posts business. For example, UPS and FedEx have captured a significant share of the small packages courier market. In 2000, UPS made a NAFTA Chapter 11 claim against Canada, arguing that Canada has not met its obligations to adequately supervise Canada Posts letter mail monopoly, which has been used to unfairly harm foreign competitors in Canadian markets. Other challenges include changes in the transportation industry. Pressures are being placed on the domestic air cargo industry by high fuel costs, new security rules, changes in commercial airline fleet size, and schedules.