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United Parcel Service

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Background

United Parcel Service

- Founded in Seattle 1907 (Jim Casey)

- Expansion 1920s

- Partnership with Blue Label Air

- 1993 diversified with offering logistics

- 1998 Began offering financial services

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Current Executives

C.E.O.

Michael Eskew (2002)

C.F.O.

D. Scott Davis (2001)

C.I.O

Kenneth Lacy (1997)

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Company Culture

Parking Spaces

Cutting costs (economy class flights)

Uniformity

Egalitarianism (promotion within)

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UPS Today Headquarters in Atlanta, Georgia

357,000 employees (317,000 U.S. ; 40,000 International)

Regional offices located in: Africa Australia/New Zealand Caribbean Central America Europe Middle East North America South America

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Interesting Facts

Fortune 500 ranking: 42

UPS awarded one of Fortune magazine’s Diversity Elite 50 Best Companies for African American, Asians and Hispanics.

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Key Competitors

AMR Corp Atlas Air Worldwide Federal Express U.S. Postal Service DHL International US Airways Lufthansa Nippon Express Yellow Roadway

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UPS vs. Federal Express

Use of technology

Hub strategy

Employees and culture

Service cost structures

Financial performance

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Profitability: UPS vs. Federal Express

2003 2002Revenue $33,485.000 $31,272.000Net Income $2,898.000 $3,182.000Net Profit 8.7% 10.2%Employees 357,000 360,000

UPS Fiscal Year Date: December, 2003 (Millions in U.S. Dollars)

2003 2002Revenue $16,351.0 $15,327.0Net Income $431.0 $443.0Net Profit 2.6% 2.9%Employees 134,000 n/a

(Millions in U.S. Dollars)Fed Ex Fiscal Year Date: December, 2003

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Stock Performance(http://global.factiva.com/en/chmd/chart.asp?instruments=UPS.N)

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2003 Package Operations

2003 Delivery Volume: 3.4 bil packages and documents

Daily Delivery Volume: 13.6 mil packages and documents

Service area: More than 200 countries and territories

Customers: 7.9 mil daily (1.8 mil pick-up, 6.1 delivery)

Operating facilities: 1,748

Delivery fleet: 88,000 cars, vans, tractors, motorcycles

Aircraft: 582

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2003 Revenue by Segment (In billions)www.UPS.com

US DomesticPkg

Intl Pkg

Non Pkg$25.0

$5.6

$2.9

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Competitive Forces Affecting The Company

(Recklies)

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Competitive Rivalry Within The Industry

Federal Express

United States Postal Service

TNT Post Group

Deutsche Post World Net

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Threat Of New Entrants

A good amount of resources to start up and run a company of that nature. The investments needed in information technology are too much and this acts as barriers to entry.

UPS has invested millions of dollars in the development and use of technology and so have many of its major competitors.

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Threat Of Substitutes

New ways to communicate such as e-mail and other forms of communication are being used more frequently.

Federal Express, the United States Postal Service, and others offer a similar service and this is where substitutes can hurt UPS.

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The Bargaining Power Of Customers

Customers can’t bargain with UPS about prices, but they can go somewhere else to get their packages delivered.

This is easy to do and any customer can just switch over to a competitor because membership is not being required if you decide to use a new carrier

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The Bargaining Power Of Suppliers

Because they provide more of a service in delivering packages, there is no real direct supplier to be worried about.

Ground delivery units, aircraft transportation firms, and IT support

Air2Web, Inc. helped with wireless shipment tracking as a part of its service package. Able to link business applications to multiple wireless networks.

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Strategy & Challenges

Their strategic goals changed and were able to integrate new technology with overnight and ground services to compete with Federal Express.

Since the middle of the 1980’s USP has invested $14 billion dollars to build integrated global networks.

In 1990 they introduced their own handheld, called Delivery Information Acquisition Device (DIAD) that captures and transmits delivery data in real time. By integrating it with their services, they stayed ahead of Federal Express with that technology.

The strengths of UPS are their reputation and adaptability. They have been in the business for more than 90 years and have performed to their customers expectations.

Their weaknesses are that they are the largest business in the parcel delivery industry and have the most market share to lose. Also constant changes in technology play a role in their future due to the constant need of upgrading and developing.

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UPS IT/IS Usage

Tracking processSynchronized Commerce

GoodsInformationFunds

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Usage continued

Parts Planning Lower inventory costs Service improvement Enhanced performance

Order to Cash Order flexibility Cost savings Simplicity of the supply chain

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Distribution Services Network

Combines IT networks

Ability to leverage established networks

Inventory staging

99% Reach

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Recommendations

Develop easy to use systems

Market to online shoppers and at home businesses

Employee satisfaction

Maintain on-time delivery