1-Analysis of Existing Business Model
United Parcel Services or UPS is one of the oldest courier companies in the world. This US-based company was founded in 1907 and from then onwards it has been expanding into various geographical and functional areas. It has recently entered the Indian market by partnering with local First Flight Courier Limited Company. The company wants to expand its international reach and presence in urban and metropolitan areas. With the expected increase in e-commerce services as well as demand in consumption of goods in the Indian market, the company believes the logistics area would benefit greatly (Ayyar, 2016). Formally UPS had begun its services in India in 1988(Kachru, 2009). The business model which has been employed currently by UPS is that of the Total Quality approach. This model is implemented in the UPS Indian Outlets as well. This strategy has been implemented across all parts of its business. The reason for using this strategy is to make UPS the best regarding quality. It has been chosen to increase productivity, quality, and efficiency. The main benefit of this model is that it focuses on constant improvement. This cross-functional and management led strategy works as a medium for improvement in customer satisfaction. For its effective implementation UPS enables its staff to be proactive and involved in the development work. Self-managed teams work to provide the strength of the vision of the company and bring it to life with its real-time information sharing and flow between departments along the whole supply chain.
a-Clearly Articulate the Business Model of Firm
Unlike many other companies where information sharing is considered as a way to lose their competitive edge on comparative departments, UPS uses information sharing as a medium to enforce the Total Quality Model as this model require information to flow. Through the use of the TQM business model, UPS ensures that its staff is self-reliant and has the authority to do their jobs with complete understanding and responsibility. It is enabled by making each job complete by ensuring that its five dimensions are enabled. These include autonomy, feedback, skill variety, task significance, and task identity. It enables the staff to be more self-directed.
b-Explicates the value of the business model that it is designed to capture
Though this model has been significantly aligned with the corporate culture of UPS, time can come when it may not fit the process of the company, which can cause the employees to feel disoriented and separated. It calls for the management to address these issues on time with effective solutions. Making sure that staff are well trained and given credit for their work is important. For this, the management needs to communicate the expectations and deliverables on the job to ensure the staff does not have any ambiguity about their role.
2-SWOT Analysis
a-SWOT Elaboration
i-Clearly articulates SWOT Analysis
Strengths
UPS is certainly a major company in the package delivery and courier services industry. The strengths of the company UPS can be identified as; UPS certainly holds a strong Position in Global Market which aids in it Indian market as well. For instance, as of 2016, UPS holds 24% of the International Express market of Europe, 33% of American and 11% of Asia Pacific (Including India), and 1.2% of the contract logistics market (DP-DHL, 2017, p. 30). It holds a broad Portfolio of Services as well. The Robust Infrastructure experience helps it to maintain it. The expanding Operating Margin of UPS Asia Pacific shows the success story of this company which has through its Integrated Global Network experience formed a Global Brand Reputation with distinct has shown its presence in India. The Sound Revenue Growth with the help of its Advanced Supply Chain experience has enabled it to become Largest Package Delivery Brand internationally.
Weaknesses
One of the biggest weaknesses of UPS is its Geographical Concentration. It is operating in the Middle East, Europe, Africa and Asia; however, the biggest chunk of its revenue and market is based in the US. The High Debts are also another factor. The various Legal Proceedings of the Parent US-based UPS are also troublesome for the Indian company. The Lingering Negotiations of Contracts of Parent UPS are another problem which it faces. The Perception of ground delivery as compared to overnight in India causes problems for it as well. The Limited Market Share growth in India can become a critical problem in the future. With Low Employee Productivity of employees and Heavy Charges to Clients, UPS needs to have effective solutions (Pahl & Richter, 2009).
ii-Corroborating the OT
Opportunities
Emerging Markets provide a prosperous opportunity for every multinational. But for UPS it holds more importance as with dependency on the US market, it needs Geographical Expansion for its market growth. It has led it to operate in India. One of the fastest developing countries, with stable economic policies, and the high demand for logistics and online products provide a healthy prospect. The Online Shopping trend and the SMEs establish their businesses also provide an untapped area in the Indian market. Deregulation in the Trucking Industry can also benefit the UPS. By using Strategic Partnerships in India with local companies and Online Agreements with Users, UPS can tap the Indian Middle Class. The Established Air Hub Network also provides another opportunity to increase its air freight (Last10K.com, 2018).
Threats
Firstly, the New Entrants with Lower operating costs are a major threat to UPS India like that of Uber (Jinks, 2016). Other than this, the Fluctuations in INR/USD Exchange Rate become another threat to the company. The Increase in Oil Prices, Probable Indian Economic Slowdown and Financial Problems due to E-commerce and Electronic Mail can become threatening for UPS India as well. The Competitive Landscape of the Indian delivery industry is also very intense. The Increasing Costs of Manpower and Indian Government Regulations can become a problem as well. The Lack of Infrastructure in Indian Markets can become a practical issue. Moreover, UPS can also face some Second Mover Issues in the Indian market as well (Sarsby, 2016).
ii-Sufficient Analysis of the SWOT Analysis Results
The analysis of the SWOT results shows that some strategies can be utilized. Firstly, by using its strong global market position, geographical expansion in India can be achieved. Furthermore, by using its Global brand reputation, strategic partnerships in Indian markets can be built. Also, by using its experience in advanced supply chain, online shopping trend in India can be exploited. With the help of its integrated global network, the middle class of India can be engaged by the company. Its competitive strength can be used for safeguarding against new entrants in the Indian market. The strong market position can be adopted against possible future Indian economic slowdown, and the investment in the advanced supply chain can help in the increasing costs of the workforce. The strategic partnerships with local Indian Companies can help in reducing second mover issues. The geographic concentration may be diluted by moving into Indian markets. The brand reputation must be utilized for coping with the Parent company’s legal proceedings. Moreover, the strong global supply chain would assist in the reduction of charges to Indian clients. Indian SMEs can be targeted to help in increasing Indian market share growth. Other than this, the use of derivatives and hedging can aid in INR/USD exchange rate fluctuations effect.
By using strong services, increasing Indian employee productivity and involving them in the decision making the Indian competitive landscape can be used for its benefit. Also, the use of consultancy on better online services can facilitate tackling E-commerce problems. By investing in the infrastructure of Indian markets, better productivity and goodwill may be achieved by the UPS.
b-Internal Factor Evaluation (IFE) Matrix
All strengths and weaknesses are used for evaluation by utilizing weighted scores of the internal factors. The matrix is attached in the appendix.
c-External Factor Evaluation (EFE) Matrix
All opportunities and threats are evaluated and weighted to form the EFE matrix. The matrix is attached in the appendix.
d-SWOT Bivariate Strategy Matrix
As based on the SWOT analysis, bivariate strategies are constructed. The results are shown in the appendix.
3-BCG Matrix
By using the divisional revenues, the market share of UPS against DHL has been evaluated to show the product categories.
SBU
The divisional performance as rated through its IFE and EFE scores is shown in the Appendix.
References:
Ayyar, R. (2016, January 5). UPS ties up with First Flight Couriers to expand presence across India. Retrieved from https://timesofindia.indiatimes.com/business/india-business/UPS-ties-up-with-First-Flight-Couriers-to-expand-presence-across-India/articleshow/50453400.cms
DP-DHL. (2017). DHL 10K 2017. Retrieved from https://annualreport2017.dpdhl.com/downloads-ext/en/documents/DPDHL_2017_Annual_Report.pdf
Jinks, D. (2016). The Uberfication Of Deliveries. Retrieved from https://www.parcelhero.com/content/downloads/pdfs/uber/uberreport.pdf
Kachru, U. (2009). Strategic Management: Concepts and Cases. Excel Books India.
Last10K.com. (2018). UPS 10K 2017. Retrieved from https://www.last10k.com/sec-filings/ups#fullReport
Pahl, N., & Richter, . (2009). Swot Analysis – Idea, Methodology and a Practical Approach. GRIN Verlag.
Sarsby, A. (2016). SWOT Analysis. Lulu.com.
Appendices
Internal Factor Evaluation (IFE) Matrix
External Factor Evaluation (EFE) Matrix
SWOT Bivariate Strategy Matrix
BCG Matrix
Developing a through matrix by SBU and analysis
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