SWOT Analysis of UPS
Only a few companies can do well in an industry for more than a hundred years, and UPS is one of them. Even when the economy was really bad, UPS faced it and became even stronger. UPS became the biggest delivery company by using really good plans and methods during its long history. We can learn a lot by looking at what UPS is good at, where it needs to improve, its chances, and the challenges it faces. Here’s the SWOT analysis of UPS.
About UPS
United Parcel Service (UPS) is a big shipping and receiving company from the United States that started in 1907. It began as the American Messenger Company, mainly dealing with telegraphs. But now, it’s a really huge company, listed in the Fortune 500 and one of the biggest shipping companies globally.
Company Name: United Parcel Service (UPS)
Founders: Claude Ryan, James E. Casey
Founded: August 28, 1907
Headquarters: Atlanta, Georgia, United States
Parent Company: The Vanguard Group Inc.
President: Nando Cesarone
CEO: Carol B. Tome (Jun 01, 2020)
Type: Courier and Transportation Services
Sector: Transport and Logistics
Tagline: “What can Brown do for you?”
Unique Selling Proposition (USP): Using CDA (Continuous Descent Approach) helps save fuel.
Customers: Businesses, companies, individuals
Target Consumers: Individuals and firms
Revenue: 90,958 billion USD (2023)
Net Income: 6,708 billion USD (2023)
Strengths of UPS
- Worldwide Presence
UPS made its fast delivery services, called UPS Express Plus and UPS Worldwide Express, available in 40 new places. Now, it can deliver packages on time to companies in 140 different countries and areas. Also, it runs small delivery services in over 220 countries.
- Tracking System
UPS has a really good online tracking system that keeps an eye on 295 million deliveries every day.
- “SMART” Network
To make sure deliveries work well, it’s important to smoothly connect how things are picked up and how they are delivered. UPS spent 20 billion dollars to create a big facility called SMART (Southeast Metro Automated Routing Terminal) in Atlanta. This place links up all the machines and systems UPS uses in its entire network to make everything work together smoothly.
- Great Service
To make customers happy and keep them coming back, businesses must always give good service. This is super important in delivery. UPS does a great job with customer service and makes its customers happier than FedEx does.
- Incredibly Smart
Sending packages all around the world and making sure they arrive on time is a big challenge. To do this, the person in charge of computer stuff at UPS created a clever system to help, and they got a special award from Forbes for being so innovative.
- Quick Delivery
UPS is really good at delivering things on time all the time. They use simple handheld gadgets for talking and scanning packages and for customers to sign. They also use advanced technology like GPS and rerouting to make sure things get delivered faster than other companies.
- Attractive Prices
The best way to get and keep customers is to give them really good service without charging too much. In the shipping and delivery business, UPS has good prices for delivering things quickly and for all the other types of deliveries too.
Weaknesses of UPS
- Overdependence on United States
Even though UPS does business all around the world, it depends a lot on the United States. In 2019, they made 58.6 billion dollars from delivering stuff within the US and moving big loads but only 15.41 billion dollars from sending things to other countries. If the US has a tough time because of an economic downturn, UPS will have a tough time too.
- Impact of Holiday Season
To ensure UPS can handle many orders and deliver on time when many people shop online during busy times, they have to spend a lot more money than usual. They spend a huge amount of money because they have to deal with almost twice as many packages as they do on regular days. This extra spending can make it harder for UPS to make as much money as possible during the busiest holiday shopping times.
- Upgradation Costs
The people in charge have been putting off making things better, like getting new equipment and delivery systems, for a really long time, like many decades. They’re still using old-fashioned stuff from the 1800s in a world that moves really fast in the 2000s. But fixing everything and making it modern would cost a lot of money, about as much as UPS makes in five years.
- Poor Safety for Workers
When the place where people work is not good and safe, it makes the employees feel bad, and they can’t work as well or get as much done. Some UPS workers got hurt; one even died because they got sick with COVID-19.
- Transportation Expenses
The cost of moving things around a lot affects the delivery business a whole bunch. UPS spends money when they hire other companies to help with transportation. In 2019, about 19 percent of all the money UPS used for running things went to these hired transportation companies. If the cost of moving things keeps increasing, UPS might not make as much money as it wants.
Opportunities for UPS
- Drone Delivery
UPS has been trying out and making better its drone delivery stuff. They tested these flying machines at Wake Med hospitals to move lab samples between different parts of the hospital campus.
- Utilize E-commerce
Many new companies are starting up in the online shopping world, and it’s growing fast. These companies need help delivering stuff, and UPS can do better by strengthening its online shopping services.
- Acquisitions and Collaborations
When companies join together or buy each other, they can grow fast and start working in new places. Even though UPS couldn’t take over the whole European market when they tried to team up with TNT Express and it didn’t work, they can still buy smaller European companies that do similar things to get more customers in Europe.
- Enhance Product Portfolio
UPS has three main parts of its business. One thing it can do is get into the online shopping business for regular people, help out small and medium-sized businesses, and use its big worldwide network to compete with other companies.
- Target New Markets
UPS mainly delivers packages for businesses, including online stores like Amazon, but more regular people are using delivery services now. The company can grow even more by also delivering to regular people, not just businesses.
- 7-Day Delivery
UPS used to deliver packages for 6 days a week, from Monday to Saturday. But because lots of people shop online and want their stuff quickly, UPS now delivers packages on Sundays too.
Threats to UPS
- Competition
UPS faces tough competition from companies like DHL, YRC, Amazon, FedEx, Old Dominion, and many others. This makes it hard for UPS to keep its share of the market and make good profits.
- Dependence on Amazon
Amazon, which is a huge online shopping company, made up about 11.6 percent of all the money UPS made in 2019. But since Amazon is starting to do its own delivery and transportation stuff, UPS could lose money if things change in how they work together.
- Trade Wars
UPS does business all over the world, and it needs money from different places to stay strong and keep making profits. But when there are problems and arguments between countries about trade, it can be a big danger to UPS.
- Risk of Protest
UPS workers haven’t gone on protest since 1997, but because of the problems and difficulties of working during the pandemic and other issues, many workers are getting upset and angry. Even a short strike can make the company lose millions of dollars.
- Recession
The pandemic caused much damage worldwide, and some countries are in bad financial times. UPS couldn’t predict how much money it would make in 2020 after its profit dropped by 13 percent in the first three months. If the financial problems get worse, UPS could lose even more money.
- Covid-19 Pandemic
UPS is expected to make about 7 percent less money in the whole year of 2020 because the pandemic made everything stop. If there’s another wave of the virus, UPS could lose even more money. This could be a big threat to the company.
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