Introduction
UPS is a company that deals in package delivery and logistics. It was founded on the 28th of August 1907 by Claude Ryan and James E Casey, with headquarters in Atlanta. The company provides services such as distribution, and transportation. The company works in sectors such as the U.S. domestic package, supply chain solutions, and International package. This paper will focus on the SWOT analysis of UPS.
Strengths
Strong Global Presence
UPS has succeeded in expanding its business in UPS express plus as well as UPS Worldwide Express across the globe. In 2021, UPS completed over 25.2 million package deliveries for every business day, which added up to over 6.4 million customer deliveries (Jintana et al. 6). Therefore, having extensive stores is an essential strength since it allows the company to increase its revenue.
Excellent Customer Service
UPS has succeeded in providing customers with facilities that offer customers services electronically. The satisfaction of clients helps boost deliveries due to the increased number of orders, thereby increasing the company’s revenue (Rajendran 15). It has an online website that allows its clients to keep track of their orders, understand their order status via an integrated voice response, and interact freely with its customer service.
Competitive Prices
Price is an important factor when an individual considers making an order or purchasing a product or service. Lowering prices while retaining quality enables a company to ensure the satisfaction of clients by meeting both service and price expectations (Rajendran 15). UPS provides customers with quality and timely deliveries by providing clients with competitive costs for overnight shipping, which offers the company a competitive advantage.
Weaknesses
Dependence on U.S. Market
UPS is over-reliant on the U.S. market, despite diversifying its market. The company generated an income revenue of 58.6 billion dollars from the U.S. local package delivery and freight alone in 2019, while the international delivery freight generated 15.41 billion dollars (UPS 4). Relying on the U.S. market alone is a weakness that could adversely affect the company’s income revenue if a drop in the U. S. economy arose.
Poor Employee Safety
UPS has failed to provide a safe and comfortable environment for its employees. Employees that work in a poor and unsafe working environment cannot be efficient and productive (Rajendran 15). For example, an employee got badly injured after falling from a loading dock at a UPS facility in Manchester. The facility heads used a cart to take him to the hospital instead of calling for emergency services.
Shipping Problems during Holiday Season
UPS largely depends on employees and transportation to deliver its services to clients. Therefore, an increase in transportation costs and hiring more employees would largely affect the company’s business profits. In this instance during the holiday season deliveries tends to increase due to increased orders (TAGG 1). This increase in deliveries forces it to spend more, especially on transportation and hiring new employees to balance the deliveries.
Opportunities
Expand to Everyday Delivery
UPS began delivering goods and services every day due to increased online shopping. High client expectations also pushed the company into considering seven-day deliveries across the world (UPS 4). The company can take advantage of this opportunity to offer its services, enabling it to maximize its profits by increasing deliveries and ensuring that customers are comfortable and satisfied by meeting their demands and expectations.
Extend the Target Market
UPS deals mainly in a business delivery service for online retailers, such as Amazon, despite an increased number of ordinary customers who can also use delivery services. Expanding its target will increase its market share, leading to increased customer deliveries (Jintana et al. 6). Therefore, UPS can extend its target market to ordinary customers and other online retailers like Walmart and Alibaba.
Diversify Portfolio
Instead of only focusing on its domestic package, the company can use its extensive global market to gain a competitive advantage against its competitors. The company can also include the B2C e-commerce retail sector, thereby increasing its market share (Gulc 19). As a result, the company will be able to increase the number of deliveries worldwide, leading to increased revenue.
Threats
Looming Recession
The COVID-19 pandemic has caused the economy to drop globally. UPS had a drop in income revenue of 13% during the pandemic (Gruenwald 1). Since the firm mainly deals in transportation, the restrictions enacted on international travel during the pandemic posed a great challenge to UPS (Gruenwald 1). A company that has diversified its market, it can be hit by the recession threat at any time.
Competition
Competition is one factor that is always present in many businesses, including UPS. UPS encounters competition from other significant players in the market share, such as Amazon and FedEx (UPS 22). The severe competition that the firm faces have led to higher expenditure, causing a decrease in income revenue or profits and market share, despite controlling the market share with the services it provides.
Over-Dependence on Amazon
UPS mostly relies on completing deliveries and transporting products for Amazon. The firm generated approximately 12% of its income revenue from Amazon deliveries in 2019 (UPS 18). However, Amazon is preparing to join the transportation and delivery service. Therefore, the company’s income and market share will be severely affected if Amazon succeeds in joining the transportation service as it will lose its relationship with Amazon.
Conclusion
In conclusion, the paper has examined the SWOT of UPS Company. Its strengths include a strong global presence, excellent customer service, and competitive prices. The weaknesses are dependence on the U.S. market, poor employee safety, and shipping problems during the holiday season. The company opportunities include expanding to everyday delivery, expansion on the target market, and portfolio diversity. Its threats are looming recession, competition, and over-dependence on Amazon.
Works Cited
Gruenwald, Hermann. Parcel Delivery Services Boom during Covid-19. 2020, Web.
Gulc, Aleksandra. “Multi-Stakeholder Perspective of Courier Service Quality in B2C E-Commerce”. PLOS ONE, vol. 16, no. 5, 2021, pp. 1-18. Public Library of Science (Plos), Web.
Jintana, Jutamat et al. “Idea Selection of New Service for Courier Business: The Opportunity of Data Analytics”. International Journal of Engineering Business Management, vol. 13, 2021, p. 184797902110421. SAGE Publications, Web.
Rajendran, Suchithra. “Improving the Performance of Global Courier &Amp; Delivery Services Industry by Analyzing the Voice of Customers and Employees Using Text Analytics”. International Journal of Logistics Research and Applications, vol. 24, no. 5, 2020, pp. 473-493. Informa U.K. Limited, Web.
TAGG. “UPS, Fedex And USPS Announce Peak Holiday Season Surcharges For Ecommerce Order Fulfillment And Parcel Shipments – TAGG Logistics.” TAGG Logistics –, 2021, Web.
UPS. UPS Annual Report. 2019, Web.